Q1 2024 Kinaxis Inc Earnings Call
Please wait the conference will begin shortly.
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Operator: Good morning, ladies and gentlemen. Welcome to the Kinaxis, Inc. Fiscal 2024 First Quarter Results Conference Call. Currently, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at the time for you to queue up your questions. I'd like to remind everyone that this call is being recorded today, Thursday, May 9, 2024. I will now turn the call over to Rick Wadsworth, Vice President of Investor Relations at Kinaxis. Please go ahead, Mr. Wadsworth.
Speaker Change: Good morning, ladies and gentlemen, welcome to the can access Inc. Fiscal 2024 first quarter results conference call.
Speaker Change: Currently all participants are in a listen only mode.
Speaker Change: Following the presentation, we will conduct a question answer session.
Speaker Change: Instructions will be provided at that time for you to queue up for your questions.
Speaker Change: I'd like to remind everyone that this call is being recorded today Thursday may nine 2024.
Speaker Change: I will now turn the call over to Rick Wadsworth, Vice President of Investor Relations at Codexis, Inc. Please go ahead Mr. Wadsworth.
Rick Wadsworth: Thanks, Operator. Good morning, and welcome to the Kinaxis earnings call. Today we'll be discussing our first quarter results, which we issued after the close of markets yesterday. With me on the call are John Sicard, our President and Chief Executive Officer, and Blaine Fitzgerald, our Chief Financial Officer. Before we get started, I want to emphasize that some of the information discussed in this call is based on information as of today, May 9, 2024, and contains four forward-looking statements that involve risks and uncertainties. The actual results may differ materially from those set forth in such statements.
Rick Wadsworth: Thanks, operator, good morning, and welcome to the can access earnings call today, we'll be discussing our first quarter results, which we issued after close of markets yesterday with me on the call are Johnson card, our President and Chief Executive Officer, and Brian Fitzgerald, Our Chief Financial Officer.
Rick Wadsworth: Before we get started I want to emphasize that some of the information discussed in this call is based on information as of today May nine 2024 and contains forward looking statements that involve risks and uncertainties actual results may differ materially from those set forth in such statements for a discussion of these risks and uncertainties you should review the forward looking statements.
Rick Wadsworth: For a discussion of these risks and uncertainties, you should review the forward-looking statements disclosure in the earnings press release as well as in our CDAR filings. During this call, we will discuss IFRS results and non-IFRS financial measures, including adjusted EBITDA. A reconciliation between adjusted EBITDA and the corresponding IFRS result is available in our earnings press release and our MD&A, both of which can be found on the investor relations section of our website, Kinaxis.com, and on CDAR+.
Rick Wadsworth: Closure in the earnings press release as well as in our SEDAR filings SEDAR filings.
Rick Wadsworth: During this call, we will discuss <unk> results and non <unk> financial measures, including adjusted EBITDA.
Rick Wadsworth: Conciliation between adjusted EBITDA and the corresponding <unk> result is available in our earnings press release, and our MD&A both of which can be found on the Investor Relations section of our website can access dot com and on SEDAR plus.
Rick Wadsworth: Participants are advised that the webcast is live and is also being recorded for playback purposes. An archive of the webcast will be made available in the Investor Relations section of our website. Neither this column or the webcast archive may be re-recorded or otherwise reproduced or distributed without prior written permission from Kinaxis. To begin our call, John will discuss the highlights of our quarter, as well as recent business developments, followed by Blaine, who will review our financial results and outlook.
Rick Wadsworth: Participants are advised that the webcast is live and is also being recorded for playback purposes, an archive of the webcast will be made available on the Investor Relations section of our website. Neither this call nor the webcast archive may be rerecorded or otherwise reproduced or distributed without prior written permission from taxes.
Rick Wadsworth: Finally, John will make some closing statements before opening the line for questions. We have a presentation to accompany today's call, which can be downloaded from the Investor Relations homepage of our website, Kinaxis.com. We'll let you know when to change slides. Before I turn the call over to John, I'm excited to announce that, for the first time, we're making our annual user conference, Connections, open to investors. It will take place from June 17 to June 20 in Miami. You can review event details at Kinexions.com, and if you're interested in joining us, please reach out to me directly at rwadsworth at Kinaxis.com before registering as we do have capacity limitations. It's over to you, John.
Rick Wadsworth: To begin our call John will discuss the highlights of our quarter as well as recent business developments, followed by Blaine, who will review our financial results and outlook finally, John will make some closing statements before opening the line for questions.
Rick Wadsworth: We have a presentation to accompany today's call, which can be downloaded from the investor relations homepage of our website can access dot com, we'll let you know interchange slides.
Blaine: Before I turn the call over to John I'm excited to announce that for the first time, we're making our annual user conference connections open to investors. It will take place from June 17 to June 'twenty in Miami, you can review event details at connections Dot com and if you're interested in joining US. Please reach out to me directly at our Wadsworth.
Speaker Change: It can access dot com before registering as we do have capacity limitations.
John: Over to you John.
John Ernest Sicard: Thank you, Rick. Good morning, everyone, and thank you for joining us today. I'll be starting with slide four. We delivered solid results for the first quarter, including $119.4 million in total revenue, or 18% growth. $73.4 million in SAS revenue, representing 16% growth, and a 19% adjusted EBITDA margin. This is a very strong result.
John: Thank you Rick good morning, everyone and thank you for joining us today.
John: I'll be starting with slide four.
John: We delivered solid results for the first quarter, including $119 4 million in total revenue or 18% growth.
John: $73 4 million in SaaS revenue, representing 16% growth.
John: And a 19% adjusted EBITDA margin, which is a very strong result.
John Ernest Sicard: As we have committed to on recent calls, we are focusing on profitability, and we've taken another important step towards that goal recently, which I'll speak to shortly. Moving to slide five.
John: As we have committed to on recent calls we are heightening our focus on profitability and we've taken another important step towards that goal recently, which I will speak to shortly.
John: Moving to slide five.
John Ernest Sicard: One of the great privileges of working here at Kinaxis is being able to talk about how our industry views it. Hopefully, you've had the opportunity to see the latest Gartner Magic Quadrant for Supply Chain Planning solutions, which was launched a couple of weeks ago. Of the 20 vendors evaluated... Gardner positions Kinaxis highest on our ability to execute, making the company's 10th consecutive leaders quadrant within the report. We occupy the top right corner, while only one of the three competitors we see most is in the leaders' quadrant at all.
John: One of the great privileges of working here. It can access is being able to talk about how our industry views us.
John: Hopefully you've had you've had the opportunity to see the latest Gartner magic quadrant for supply chain planning solutions.
John: Which was launched a couple of weeks ago.
John: Of the 20 vendors evaluated.
John: Gartner positioned can access highest on our ability to execute.
John: Making the company's 10th consecutive leaders quadrant within the report.
John: We occupy the top right corner, while only one of three competitors. We see most is in the leaders quadrant at all.
John Ernest Sicard: We see this dynamic play out in the field every day, and it's reflected in our strong competitive win rates and outstanding customer retention rates. We are thrilled with this recognition as it implies to the market that if you want a solution that is proven to work for you, Kinaxis is the responsible choice. And how gratifying is that? Now, on to slide six.
John: We see this dynamic play out in the field every day and it's reflected in our strong competitive win rates and outstanding customer retention rates.
John: We are thrilled with this recognition as it implies to the market that if you want a solution that is proving to work for you.
John: <unk> is the responsible choice and how gratifying is that.
John: Now on to slide six.
John Ernest Sicard: We are dedicated to remaining both a product leader and a company that executes on its promises to our customers. This philosophy continues to be reflected in some go-to-market and product partnerships we announced in the quarter, including with Volantic, a regional systems integrator that has decades of experience successfully delivering supply chain solutions across Europe. We also announced agreements with Elixim and Climatic, both being solution extension partners that complement our capabilities around production planning and scheduling and sustainability.
John: We are dedicated to remaining both a product leader and a company that executes on its promises to our customers.
John: This philosophy continues to be reflected through some go to market and product partnerships, we announced in the quarter, including with Walenta, Inc. A regional systems integrator that has decades of experience successfully delivering supply chain solutions across Europe.
John: We also announced agreements with Alexa and climatic both being solution extension partners that complement our capabilities around production planning and scheduling and sustainability.
John Ernest Sicard: Overall, our PartnerLink program, which includes all partner categories, has grown to more than 170 partners and over 2,500 certified consultants worldwide, making it one of the industry's largest networks of supply chain transformation experts and specialists. We continue to rapidly add exciting brands to our customer base. In the quarter, we won the same number of new customers as we did a year ago.
John: Overall, our partner linked program, which includes all partner categories has.
John: <unk> has grown to more than 170 partners and over 2500 certified consultants worldwide.
John: <unk> at one of the industry's largest networks of supply chain transformation experts and specialists.
John: We continue to continue to rapidly add exciting brands to our customer base in.
John: In the quarter, we won the same number of new customers as we did a year ago IMAX.
John Ernest Sicard: I'm excited to be able to name just a few of the new brands that have joined the Kinaxis family. We're extremely pleased to welcome Harley-Davidson, one of the most iconic motorcycle brands in the world.
John: I am excited to be able to name just a few of the new brands that have joined the can axis family.
John: We're extremely pleased to welcome Harley Davidson.
John: One of the most iconic motorcycle brands in the world.
John Ernest Sicard: It's so inspiring to be able to associate Kinaxis with leaders like them. We can also name two customers we won through our VAR channel, Dr. Wolf Group, a Germany-based provider of cosmetics and over-the-counter medical products, and the Taco Group, which offers interior products such as flooring based in Indonesia. I am very, very, very pleased with the momentum coming from the Bar Channel. These, among some others, including a large automotive company in India and one of the world's most recognized European luxury goods brands, are all great successes and reflect how we can serve companies of any size across diverse industries. Anywhere in the world, all on the same powerful platform.
John: It's so inspiring to be able to associate can access with leaders like this.
John: We can also named two customers we won through our var channel Doctor Wolf Group, a Germany based provider of cosmetics and over the counter medical products.
John: And the Telco group, which offers interior products such as flooring based in Indonesia.
John: I am very very very pleased with the momentum coming from the var channel.
John: These among amongst some others, including a large automotive company in India and one of the world's most recognized European luxury goods brands.
John: Are all great successes and reflect how we can serve companies of any size across diverse industries anywhere in the world.
John: All with the same powerful platform.
John Ernest Sicard: I'm also looking forward to being able to name some very large new enterprise customers as we progress through 2024. Now, since the macro environment changed at the beginning of 2023, our largest opportunities have been the most time-consuming to get across the line. Historically, these have been the biggest drivers of our ARR and SAS growth. We continue to see great interest from companies wanting to transform outdated approaches to supply chain management, and perhaps even more satisfying, several companies coming to us following failed attempts to deploy competitive solutions.
John: I am also looking forward to being able to name some very large new enterprise customers as we progress through 2024.
John: Now since the macro environment changed at the beginning of 2023, our largest opportunities have been the most time consuming to get across the line.
John: Historically these have been the biggest drivers of our IRR and SaaS growth.
John: We continue to see great interest from companies wanting to transform outdated approaches to supply chain management, and perhaps even more satisfying several companies coming to us following failed attempts to deploy competitive solutions.
John Ernest Sicard: I remain as excited as ever about the opportunities ahead. Earlier, I mentioned that we took another major step related to our focus on returning to higher profitability. In the first quarter, we started restructuring our organization to focus on our next wave of growth, including eliminating roughly 6% of our workforce, a process that will be substantially complete in Q2. Supply chain markets continue to evolve rapidly.
John: I remain as excited as ever about the opportunities ahead.
John: Earlier, I mentioned that we took another major step related to our focus on returning to higher profitability.
John: In the first quarter, we started a restructuring of our organization to focus on our next wave of growth, including eliminating roughly 6% of our workforce a process that will be substantially complete in Q2.
John: Supply chain markets continue to evolve rapidly.
John Ernest Sicard: And we are reshaping the organization to ensure the company is aimed at and able to capitalize on the very best opportunities ahead. Almost immediately, we will be reinvesting some of the savings from this initiative into key product innovations and go-to-market priorities throughout the remainder of the year and into 2025. While detailed plans are still underway, I can give you some examples of some of these themes to accelerate our go-to-market efforts. We have tremendous opportunities to work even more closely with certain large, strategic, longstanding partners.
John: And we are reshaping the organization to ensure the company is aimed at and enable to capitalize on the very best opportunities ahead.
John: Almost immediately we will be reinvesting some of the savings from this initiative into key product innovations and go to market priorities throughout the remainder of the year and into 2025.
John: While detailed plans are still underway I can give you some examples.
John: Of some of these themes.
John: To accelerate our go to market efforts.
John: We have tremendous opportunities to work, even more closely with certain large strategic long standing partners.
John Ernest Sicard: And this will require some additional investment to capitalize on. We also see an opportunity to reallocate some sales and marketing spending into customer-facing roles that will make a more direct impact on sales growth on the product innovation side. We're working towards some very exciting announcements at Kinect, which will include AI becoming an even more integral part of our platform. So we're reinvesting to align the skill sets in R&D accordingly. As part of the changes we've made to date,
John: And this will require some additional investment to capitalize on.
John: We also see an opportunity reallocate some sales and marketing spending into customer facing roles that will make a more direct impact on sales growth.
John: On the product innovation side.
John: We are working towards some very exciting announcements at connections.
John: Which will include AI, becoming an even more integral part of our platform. So we're reinvesting to align the skill sets in R&D accordingly.
John: As part of the changes we've made to date.
John Ernest Sicard: I want to congratulate Claire Rzeszkiewicz, who has been promoted to Chief Sales Officer. Claire has been with us for over four years and began by successfully leading and growing our European sales team. She then took on global sales responsibilities almost two years ago, working under Paul Carreiro. Paul led our sales functions through the fastest-growing years, and we are extremely grateful for his leadership over that time and wish him continued success. I'm pleased to be able to increase our adjusted EBITDA margin guidance for 2024 to 18 to 20 percent.
John: Want to congratulate Clair Ridge Russky.
John: Who has been promoted to chief sales officer.
John: Claire has been with us for over four years and began by successfully leading and growing our European sales team.
John: Then took on global sales responsibilities almost two years ago working under Paul Carreiro.
John: Paul let our sales functions through the fastest growing years and we are extremely grateful for his leadership over that time and wish him continued success ahead.
John: Finally.
John: I am pleased to be able to increase our adjusted EBITDA margin guidance for 2024% to 18% to 20%.
John Ernest Sicard: We have committed to consistently achieving a 25% adjusted EBITDA margin within the next three years, and we are making great progress toward this goal. Now, I'll turn the call over to Blaine to review the financials for the quarter and discuss our increased outlook in detail. Thank you, John.
John: We are committed to consistently achieving a 25% adjusted EBITDA margin within the next three years.
John: And we are making great progress towards this goal.
John: Now I'll turn the call over to Blaine to review the financials for the quarter and discuss our increased outlook in detail later.
Blaine Fitzgerald: Thank you, John, and good morning. As a reminder, unless noted otherwise, all figures reported on today's call are in U.S. dollars under IFRS. Starting on slide 7, I'm pleased to report solid Q1 financial results. Total revenue in the first quarter was up 18% to $119.4 million. Our SAS revenue grew 16% to $73.4 million, and our subscription term license revenue was $6.7 million, in line with the outlook we provided last call. Subscription term licenses largely follow the normal cadence of renewals among our small group of on-premise customers, those that have the option to move their deployments on premises.
Blaine: Thank you John and good morning, as a reminder, unless noted otherwise all figures reported on today's call are in U S dollars under <unk>.
Blaine Fitzgerald: Professional services activity resulted in $34.4 million in revenue, for 30% growth over Q1 2020. This is an ongoing reflection of strong customer additions and expansions in recent periods. Maintenance and support revenue for the quarter was up 10% to $4.8 million.
Blaine Fitzgerald: First quarter gross profit increased 20% to $72.9 million, and gross margin in the quarter was 61%, up from 60% in the comparative period. The higher total gross margin results from a 17-point expansion in our professional services margin to 24%, reflecting strong demand, partially offset by a slightly lower software gross margin, which reflects our ongoing transition to a public cloud-first hosting model. Adjusted EBITDA was $22.7 million, for a 19% margin compared to 17% in the first quarter last year.
Blaine: Starting on slide seven I.
Blaine: I am pleased to report solid Q1 financial results.
Blaine: Total revenue in the first quarter was up 18% to $119 $4 million.
Blaine: Our SaaS revenue grew 16% to $73 4 million and.
Blaine: And our subscription term license revenue was $6 7 million in line with outlook, we provided last call.
Blaine: Subscription term licenses largely follow the normal cadence of renewals among our small group of on premise customers are those that have the option to move their deployments on premise.
Blaine: Professional services activity resulted in $34 $4 million in revenue for 30% growth over Q1, 2023, and ongoing reflection of strong customer additions and expansions in recent periods.
Blaine: Maintenance and support revenue for the quarter was up 10% to $4 8 million.
Blaine: First quarter gross profit increased 20% to $72 9 million.
Blaine: And gross margin in the quarter was 61% up from 60% in the comparative period.
Blaine: The higher total gross margin results from a 17 point expansion and our professional services margins to 24%, reflecting strong demand, partially offset by a slightly lower software gross margin, which reflects our ongoing transition to public cloud <unk> hosting model.
Blaine: Adjusted EBITDA was $27 million for a 19% margin compared to 17% in the first quarter last year.
Blaine Fitzgerald: Our profit in the quarter was $6.2 million, or $0.21 per dollar to share, compared to $0.04 in Q1 last year. As John mentioned, we are reshaping Kinaxis to ensure that we are aligned with the best opportunities ahead of time and that we remain on our path to higher profitability. Consequently, we have reduced our workforce by approximately 6% across functions and geographical regions.
Blaine: Our profit in the quarter was $6 2 million.
Blaine: Our <unk> 21 per diluted share compared to <unk> in Q1 last year.
Blaine: As John mentioned, we're reshaping can access to ensure that we're aligned with the best opportunities ahead of us and that we remain on our path to higher profitability.
Blaine: Consequently, we have reduced our workforce by approximately 6% across functions and geographical regions.
Blaine Fitzgerald: We estimate related costs will total between $5 million and $10 million, with $1.8 million of the amount recognized already in the first quarter of 2024. These charges impacted Q1 profit, but not adjusted EBITDA, as we view them as non-recurring and outside of normal operations. We expect the remaining costs to be recognized in the second quarter, by the end of which we expect this initiative to be substantially complete. Cash flow from operating activities was $32 million compared to $38.9 million in Q1 2013.
Blaine: We estimate related cost will total between $5 million and $10 million with $1 8 million of the amount recognized already in the first quarter of 2024.
Blaine: These charges impacted Q1 profit, but not adjusted EBITDA as we view them as nonrecurring and outside of normal operations.
Blaine: We expect the remaining cost to be recognized in the second quarter by the end of which we expect this initiative to be substantially complete.
Blaine: Cash flow from operating activities was $32 million.
Blaine: Compared to $38 nine in Q1 2023.
Blaine Fitzgerald: Cash, cash equivalents, and short-term investments grew to $303 million from $209.3 million at the end of 2020, despite investments in our share buyback, which I'll just discuss momentarily. On slide 8, our annual recurring revenue, or ARR, grew to $327 million, an increase of 15% from Q1 2023. We won the same number of new accounts as we did in the first quarter last year, but the largest enterprise deals, a big part of our growth historically, continue to be more difficult to get over the line in this environment. As a result, and as we have experienced through 2023, average steel sizes continue to be smaller than previously experienced.
Blaine: Cash cash equivalents and short term investments grew to $303 million from $293 million at the end of 2023, despite investments in our share buyback, which ill discuss momentarily.
Blaine: On slide eight our annual recurring revenue or <unk> grew to $327 million.
Blaine: An increase of 15% from Q1 2023.
Blaine: We want the same number of new accounts as we did in the first quarter last year with the largest enterprise deals are big part of our growth historically continue to be more difficult to get over the line in this environment.
Blaine: As a result, and as we experienced through 2023 average deal sizes continue to be smaller than previously experienced.
Blaine Fitzgerald: Also, for the first time in over a year, ARR was negatively impacted by foreign exchange. Quarterly fluctuations in FX rates affected the balance by approximately $2.4 million. In constant currency using Q1 2023 rates, AR grew by 16%. On to slide 9.
Blaine: Also for the first time in over a year <unk> was negatively impacted by foreign exchange. According fluctuations in FX rates affected the balance by approximately $2 4 million.
Blaine: In constant currencies in Q1 2023 rate air grew by 16%.
Speaker Change: On to slide nine.
Blaine Fitzgerald: At quarter end, our total remaining performance obligation was $734 million, and SAS RPO was $690 million, for 29% and 31% growth, respectively. The three-year caliber for both Total RPO and SAS RPO is an impressive 24%. I encourage you to focus on these excellent longer-term results as quarterly results naturally fluctuate significantly with normal renewal cycles. Further details on our RPO can be found in the revenue note to our finance team. On slide 10.
Speaker Change: At quarter end, our total remaining performance obligation was $734 million.
Speaker Change: In SaaS, RVO was $690 million or 29% and 31% growth respectively.
Blaine: The three year CAGR for both total RPM SaaS RVO is an impressive 24%.
Blaine: I encourage you to focus on these excellent longer term results as quarterly results naturally fluctuate significantly with normal renewal cycles.
Blaine: Further details on our RPM can be found in the revenue note to our financials.
Blaine: On slide 10.
Blaine Fitzgerald: We are reiterating all the revenue metrics of our previously issued 2024 guidance. We are monitoring AR growth and foreign exchange fluctuations closely as the year progresses. It is important that we see some of the deals in our pipeline with large enterprise customers close soon, as a housekeeping matter.
Blaine: We are reiterating all the revenue metrics of our previously issued 2024 guidance.
Blaine: We are monitoring AOR growth and foreign exchange fluctuations closely as the year progresses.
Blaine: It is important that we see some of the deals in our pipeline with large enterprise customers closed soon.
Blaine: As a housekeeping matter.
Blaine Fitzgerald: I'll remind you that we expect to recognize roughly 10% of our full year of subscription term license revenue guidance in Q2. We are pleased to raise or adjust the EBITDA margin guidance. We now expect to achieve a margin of 18-20% for the year, which reflects the workforce reduction and some reinvestment during 2024 into some strategic areas, particularly for go-to-market and product priority. I remain confident in our goal of consistently delivering a 25% adjusted EBITDA margin within the next three years, normalized for expected subscription term license variables.
Blaine: I'll remind you that we expect to recognize roughly 10% of our full year subscription term license revenue guidance in Q2.
Blaine: We are pleased to raise our adjusted EBIT margin guidance.
Blaine: We now expect to achieve a margin of 18% to 20% for the year.
Blaine: Which reflects the workforce reduction and some reinvestment during 2024 into seven strategic areas, particularly for go to market and product priorities.
Blaine: I remain confident in our goal to consistently delivering 25% adjusted EBITDA margin within the next three years normalized or expected subscription term license variability.
Blaine Fitzgerald: On slide 11, we have continued to be active in our normal course issuer bid, which allows us to purchase up to 5% of our stock for approximately 1.4 million shares. During the first quarter, we invested approximately $21.3 million to repurchase over 196,000 shares. Together with our activity last quarter, we have now purchased approximately 525,000 shares. We are pleased with these investors. Since our last call, we have made important changes to the organization, which, together with future reinvestment, will leave us in a stronger position in our market and with a stronger financial model to enable our success. I'm excited about what lies ahead. I'll now turn the call back to John. Thank you, Blaine.
Blaine: On slide 11, we are continuing to be active on our normal course, issuer bid, which allows us to purchase up to 5% of our stock or approximately $1 4 million shares.
Blaine: During the first quarter, we invested approximately $21 $3 million to repurchase over $106 96000 shares together with our activity last quarter. We have now purchased approximately 525000 shares.
Blaine: We are pleased with these investments.
Blaine: Since our last call. We have made important changes to the organization, which together with future reinvestment will leave us in a stronger position in our market and with a stronger financial model to enable our success.
Blaine: I am excited for what lies ahead.
Blaine: I'll now turn the call back to John Thank you Blayne.
John Ernest Sicard: Hopefully, you saw the comments in our earnings news release thanking our long-standing Chair of the Board of Directors, Ian Giffen. Ian will be leaving the board after Kinaxis's upcoming annual meeting, having served as a director of Kinaxis since 2010, and as chair since 2018. As we noted, Ian's achievements in business and governance are renowned in Canada, and we can't thank him enough for his countless contributions to Kinaxis and in the service of our shareholders.
Ian: Hopefully you saw the comments in our earnings news release thinking our longstanding chair of the board of directors Ian Gifting.
John: Ian will be leaving the board after can access is upcoming annual meeting having served as a director of <unk> since 2010.
John: And as chair since 2018, as we noted <unk> achievements in business and governance are renowned in Canada, and we can't thank him enough for his countless contributions to can access and in service of our shareholders.
John Ernest Sicard: Bob Courteau, who has sat on the Kinaxis board since 2016, and I'll be stepping into the role of chair after the AGM. Previously, Bob was CEO of Altus Group, a well-known real estate software company, and former president of SAP North America, as well as its COO of Global Customer Operations, among other senior management roles and directorships in his career. I look forward to continuing to work with Bob in his new role on the Kinaxis board. The first quarter was an important one for us in many ways.
John: Bob Courteau, who has sat on the <unk> board since 2016.
John: We'll be stepping into the role of chair after the AGM previously Bob with CEO of Altice group of well known real estate software company and former President of North America as well as its CFO of global customer operations, among other senior management roles and directorships in his career.
Ian: I look forward to continuing to work with Bob and his new role on the connection sport.
Ian: The first quarter was an important one for us in many ways.
John Ernest Sicard: The financial results were solid and a good start to the year. Customer wins remain strong, and as some larger deals come to fruition, ARR will begin to better reflect the growth opportunity we see ahead of us. For the 10th consecutive time, Gardner recognized us as a significant leader in their magic quadrants.
Ian: Our financial results were solid and a good start to the year cut.
Ian: Customer wins remained strong and as some larger deals come to fruition.
Ian: I'll begin to better reflect the growth opportunity, we see ahead of us.
Ian: For the 10th consecutive time Gartner recognized us as a significant leader in their magic quadrant.
Ian: And positioned us highest on ability to execute.
John Ernest Sicard: We have reshaped our team for better focus on the best opportunities we have ahead of us. This allows for some reinvestment into high-priority, go-to-market, and strategic product innovation, and ultimately strengthens our financial plan. I'm excited about the direction Kinaxis is headed in.
Ian: We have reshaped our team to better focus on the best opportunities. We have ahead of US This allows.
Ian: For some reinvestment into high priority go to market and strategic product innovations.
Ian: And ultimately strengthens our financial plan.
Ian: I am excited about the direction can access is headed towards and I'm looking forward to talking more about our plans at connections.
John Ernest Sicard: And I'm looking forward to talking more about our plans at Connection. Thank you for your ongoing interest in the company. I welcome your questions. I will turn the line over to the operators to start the Q&A session. Thank you, and the floor is now open.
Speaker Change: Thank you for your ongoing interest in the company.
Speaker Change: I welcome your questions and I will turn the line over to the operator to start the Q&A session.
Operator: Thank you, and the floor is now open to your questions, so to ask a question at this time, please press start and the number 1 on your telephone keypad. We're going to pause for just a moment to compile the Q&A roster. Our first question comes from the line of Thanos Moschopoulos with BMO Capital Markets. Your line is now open.
Speaker Change: Thank you and the floor is now open for your questions. So to ask the questions alright.
Speaker Change: Alright, and then number one on your telephone keypad.
Speaker Change: Or is that a plus for just a moment to compile the Q&A roster.
Speaker Change: Our first question comes from the line of tennis chocolates with BMO capital markets. Your line is now open.
Thanos Moschopoulos: Hi, John. With respect to the large deals that have been delayed, just to clarify, have they been stuck in sort of a holding pattern, or are they inching along, albeit more slowly than you would typically see in a better environment?
Tennis Chocolates: Hi, good morning.
Tennis Chocolates: John with respect to the large deals that have been played.
Speaker Change: Just to clarify.
Tennis Chocolates: <unk> been stuck in sort of a holding pattern or are they inching along albeit more.
Tennis Chocolates: More slowly than you would typically see better environment.
John Ernest Sicard: We're actually negotiating as we speak for some of these, and the process is simply just taking longer after being declared the vendor of choice, what we call VOC. The process seems to be taking more time, and it's becoming more difficult to get ink dry, as I stated, with large enterprises, as I'm going to assume it's the result of the Gardner Magic Quadrant, but it's been quite remarkable to have three phone calls, direct phone calls, reach-outs with large enterprises. So I think momentum is there, but the macro conditions are just making these negotiations take significantly more time than in the past.
Speaker Change: We're actually negotiating as we speak.
Tennis Chocolates: For some of these and.
Tennis Chocolates: The process is simply just taking longer.
Tennis Chocolates: After being sort of declared vendor of choice, what we call POC.
Tennis Chocolates: The process seems to be taking.
Tennis Chocolates: More time, and it becoming more difficult to get ink dry as I as I stated it.
Tennis Chocolates: I think especially the last two weeks.
Tennis Chocolates: Momentum has been.
Tennis Chocolates: Striking.
Tennis Chocolates: Just the last seven days I have had at least three conversations.
Thanos Moschopoulos: Thanks for the color. And just to clarify, are you seeing delays with respect to expansions with some large enterprise customers or delays confined to the new logo and
John Ernest Sicard: I'm seeing it mostly on new logos, frankly, not so much on the expansion front. There's a healthy pipeline of large enterprises, some that we expected to close in the first quarter, and they continue to be quite active, let's just say, into this one. And hopefully, we'll be in a position to name those in the not-too-distant future. I haven't seen the same with the existing base,
Tennis Chocolates: Good active let's just say into this one.
Tennis Chocolates: And and hopefully we'll be in a position to name those in the not too distant future I haven't seen the same with with the existing base now.
Thanos Moschopoulos: And finally, just given the enterprise delays in your mid-market and VAR traction, are we now at the point where mid-market and VAR represents more than half of your bookings? Uh, yeah, so right now it doesn't, uh, we do...
Tennis Chocolates: And finally I'm just given the <unk> in your mid market and bar attraction over now at the point, where midmarket in Barb represents more than half of your <unk>.
John Ernest Sicard: Yes, so right now, it doesn't. We do have, there's really four elements that I usually look at, large enterprise, enterprise, mid-market, and SMB slash bar. Right now, we still have the majority coming from enterprise or large enterprise, but I will say this quarter the majority of that came from enterprise.
Speaker Change: Yeah. So right now it doesn't we do have there's really four elements I, usually look at large enterprise enterprise mid market and SMV Slash bar.
Speaker Change: Right now we still have the majority coming from enterprise or a large enterprise, but I will say this quarter. The majority of that came from enterprise.
Speaker Change: Thanks for <unk>.
Richard Tse: Our next question comes from Richard Tseng with National Bank Financial. Your line is now open. Yes, thank you.
Tennis Chocolates: Our next question comes from Richard.
Richard: National Bank financial your line is now open.
Richard Tse: Yes, thank you. I have a sort of related question on the scalability of some of these deals that you've had over the past year. No doubt it seems like you've had a number of large enterprise wins there, and they kind of came in perhaps at a compressed value of normally what they'd be sort of signed at. So where do we stand now in terms of taking those wins to kind of their, you know, quote-unquote normal stage or size?
Richard: Yes, Thank you Sir.
Richard: Sort of related question on the scaling of some of these deals that you've had over the past year no doubt. It sounds like you had a number of a large enterprise wins there.
Richard: They kind of came in perhaps a compressed value of normally what they'd be sort of signed that.
Richard: So where do we stand now in terms of taking those wins to kind of there you know quote unquote normal stage or size.
John Ernest Sicard: Yeah, so it's obviously early days on the expansion front for a lot of those new logos that we brought in in 2023 and 2022. However, I'd say the percentage that I'm seeing in the pipeline that comes from expansion is significantly higher than we've ever seen before. We were obviously low double digits in the past in terms of what was represented in the pipeline from expansion or cell-based opportunities. Today that number is much larger, and so we are seeing some significant expansions that are set up for 2024 in our current pipeline.
Speaker Change: Yeah, sorry, it's it's.
Speaker Change: Obviously early days on the experience from front for a lot of those new logos that we brought in in 2023 and 2022. However.
Richard: I'd say the the percentage that I'm singing in the pipeline that comes from expansion is significantly higher than we've ever seen before.
Richard: We were obviously low double digits in the past in terms of what was represented in the pipeline from expansion or a cell base opportunities.
Richard: Today that number is much larger and so we are seeing some significant expansions that are set up for 2024.
Richard: In our current pipeline.
Richard Tse: Okay, thanks. And just if you look at the restructuring initiative, I'm kind of curious to get some understanding of what sort of triggered you to sort of make that call and I guess sort of recognize that you have to redeploy some of that savings towards some of these sort of product and go-to-market initiatives, like maybe just help us kind of get a bit of a feel for, you know, what prompted all that.
Speaker Change: Okay. Thanks, and just if you look at the restructuring initiative I'm kind of curious to get some understanding of what sort of triggered you to sort of make that call in I guess or recognize that you have to redeploy some of that savings towards somebody sort of product and go to market initiatives like maybe just helpless.
Speaker Change: Kind of get a better feel for what prompted all of that.
John Ernest Sicard: Sure, you know, first I would say, you know, we doubled the size of the company, I want to say, inside of a two to three year period. And, you know, looking at the current state of the market and as it is evolving, I would call this a slight course correction rather than a new direction.
Speaker Change: Sure first I would say.
Richard: Double the size of the company I want to stay inside of.
Richard: Two to three year period.
Richard: And you know looking at the current state of the market.
Richard: And as it is evolving I would call. This a slight course correction rather than a new direction.
John Ernest Sicard: And so this is really a situation where we see an opportunity to rebalance our what I'll call talent density. There are areas in which we have invested heavily with some presumption of market conditions, and other areas which we are now realizing we need more capacity in. So this was an opportunity for us to reshape the organization based on the state of the business. I see this as... You know, in the grand scheme of things, a responsible move.
Richard: And and so this is really a situation, where we see an opportunity to rebalance our what I'll call talent density there's areas in which we had invested heavily in with some presumption of the market conditions.
Richard: And in other areas, which we are now realizing we need more capacity.
Richard: So this was an opportunity for us to reshape the organization based on the state of the the business I see this is.
Richard: In the Grand scheme of things Ah responsible.
John Ernest Sicard: We're going to be focused primarily on go-to-market and Strategic Product Innovations, which we'll talk about pretty extensively at Connection, and making sure that we're investing heavily in those areas. But obviously, go-to-market is a big part of that and ensuring that we are getting ready to take advantage of what's ahead of us. The primary focus, as I mentioned in the earlier statements, is, I'd say, a heavier investment in working with some of our largest, most longstanding partners and leveraging their enormous network of capability, enormous network of sales capability. But those things take investments, you know, to bring to fruition. So that was the motivation, Richard, really a rebalancing exercise and a reshaping exercise. And so this is making it affordable and responsible for us.
Richard: Decision to look at the organization and take this opportunity to rebalance the talent density and ensure that we have all the right people in the right spots at the right time, we're going to be focused primarily on go to market.
Richard: Strategic product innovations, which we'll talk about pretty extensively of connections and making sure that we're investing heavily in those areas.
Richard: But obviously go to market is a big part of that and ensuring that we are getting ready to take advantage of what's ahead of us the primary focus as I mentioned in the earlier statements.
Richard: I'd say a heavier investment in.
Richard: In working with some of our largest most longstanding partners and leveraging their enormous network of capability of enormous network of sales capability.
Richard: But those things take investments.
Richard: To bring to fruition. So that's the that was the motivation Richard really a rebalancing exercise.
Richard: And Ah reshaping exercise and and so this is this is making it affordable and responsible for us.
Richard Tse: Okay, and just a super quick one here for me, you know, a few years ago you talked about kind of perhaps replicating what Salesforce did with Force.com. Is this big increase in the partner channel to like 170 a way of sort of replicating that strategy, or is that sort of something incremental or different to that? Well, it's, you know, this, um...
Speaker Change: Okay, and just a super quick one here for me you know a few years ago, you talked about kind of attack, perhaps replicating what salesforce stage with force Dot Com is this big increase in the partner child to like 170, a way of sort of replicating that strategy or is that sort of southern incremental are different to that.
John Ernest Sicard: Well, you know, this notion of becoming one ring to rule them all, to quote a famous movie, by leveraging a platform strategy is still very front and center for us. You know, I think, frankly, as I mentioned in the earlier remarks, talking about a large-scale India-based automotive company and then one of the highest luxury goods companies in the world, the most iconic ones, you think, wow, what do they have in common with exactly one platform?
Speaker Change: Well, it's it's you know this.
Speaker Change: Notion of becoming one ring to rule them all love to quote a famous movie by leveraging a platform strategy is still very front and center for us.
Speaker Change: You know I think.
Speaker Change: Frankly, as I mentioned in the earlier remarks, you know talking about large scale, India based automotive company and then one of the highest luxury goods companies in the world and what is the most iconic once you think wow, what do they have in common.
Speaker Change: Exactly one platform.
John Ernest Sicard: That's very much in line with our thesis here, that in order to become the titan of supply chains, which is the motivation here, you have to be able to satisfy the needs of... Anyone supplying anything, any good, if you will, in the world. And so the platform strategy is very key to that. And we continue to invest heavily in that function. I was glad to be able to mention two additions to our solution extension partners today.
Speaker Change: That's very much in line with our thesis here.
Speaker Change: That in order to become the tightening of supply chain.
Speaker Change: Which is the the motivation here you have to be able to satisfy the needs of <unk>.
Speaker Change: Anyone supplying anything any good if you will in the world and so the platform strategy is very key to that and we continue to invest heavily in that in that function I was glad to be able to mentioned two additions to our solution extension partners today.
Speaker Change: Okay. Thank you.
Paul Michael Treiber: Our next question comes from the line of Paul Treiber with RBC Capital Markets. Your line is now open.
Speaker Change: Our next question comes from the ninth.
Speaker Change: <unk> capital markets. Your line is now open.
Paul Michael Treiber: You can elaborate on your comment about rebalancing the talent density. Specifically, what areas did you see where there was overcapacity or maybe didn't match current market conditions?
Speaker Change: Oh, thanks, very much and good morning, just wanted open you can elaborate on your comment about rebalancing that the talent density specifically what areas, where you did you see that you're over capacity or maybe didn't match current market conditions.
John Ernest Sicard: So, yeah, we're, you know, first I'll say that the 6% was quite uniform geographically. I just want to make that statement that we looked at the entire company across all areas of the organization and across all levels of function, leadership included, to make sure that we were creating an optimal state and providing the necessary funds to rebalance. Frankly, I'd rather not comment specifically on the areas where we're investing heavily.
unknown: So yeah. We're you know at first I'll say that the 6% was quite uniform geographically, it's Wanna make that statement that we looked at the entire company across all areas of the organization and across all levels of of function leadership included.
unknown: To make sure that we were creating an optimal state you know and and providing the necessary funds to rebalance.
Speaker Change: Frankly, I'd, rather not comment specifically on the areas.
unknown: We're we're we're investing heavily in some of that will be you know, perhaps a little more obvious at connections. When we describe some of the new product innovations that were that were focused on.
John Ernest Sicard: Some of that will be, you know, perhaps a little more obvious at Connections when we describe some of the new product innovations that we're focused on. And the only other area I can mention again is, and I hope, you know, in the very near future, we'll be able to talk about this particular initiative we're working on with an extremely large, longstanding partner of ours and investing heavily in that particular area. Initiative.
unknown: And the only other area I can mention again is Ah and I Hope you know in the very near future, we'll be able to talk about this particular initiative, we're working on with an extremely large longstanding partner of ours.
unknown: Ah you know in investing heavily in that in that particular.
unknown: Initiative.
Paul Michael Treiber: And just a question on guidance. Blaine mentioned the delays, and there's obviously no change to guidance. At what point do you need to see the deals come to fruition before it may impact growth in 2024? Or in other words, to what degree is there a buffer in guidance that already incorporates some of the slower, longer deals?
unknown: And it's just a question on guidance in a plane flying mentioned you know the delays and there's there's obviously no change the guidance at what point do you need to see the the deals companies permission before it may impact growth in 20th four or in other words.
unknown: You know to what degree is are are offering guidance that already incorporate some money.
unknown: Smaller than a longer deals here.
unknown:
John Ernest Sicard: Yeah, I always like your when you throw in a buffer for guidance. We obviously are very confident in the 17 to 19 still, but Q2 is an important quarter for us. We've been obviously looking very closely at the large enterprise deals, and we have a number that are sitting right now in Q2 that we hope to convert in that quarter. The more large enterprise deals that we get throughout the year will help us to, again, continue to confirm that guidance that we have in place.
Speaker Change: Yeah, I always like when when you throw in a buffer for guidance.
Speaker Change: We obviously, a very confident in the 17 to 19 scale, but Q2 is an important corner for US. We we've been obviously, you're looking very closely at the large enterprise deal and we have a number of that are sitting right now in Q2 that we hope to convert that quarter.
Speaker Change: The more large enterprise deals that we get throughout the year will help us to.
Speaker Change: Continuing to confirm that the guidance that we have in place but.
John Ernest Sicard: But at this stage, I think we are completely focused on Q2. I think there are a lot of great opportunities that are sitting there, including the large enterprise deals that we're talking to right now. And we'll kind of get back to you again at the end of Q2 if things come out better than we expected or if the opposite happens.
Speaker Change: At this stage I think we are completely focused on cue too I think there's a lot of great opportunity there sitting there, including the large enterprise deals that we're talking to you right now.
Speaker Change: And will will kind of get back to you again at the end of QQ, if things are kind of better than we expected or if the opposite happens.
Paul Michael Treiber: And then just one last one, just in regards to professional services growth, it's been very strong, you know, despite ARR slowing. I imagine that as that team works through the backlog there, but do you see professional services eventually aligning with ARR, or would it be less than ARR if contribution from partners increases? So how do you see the mix between professional services and ARR? A really good comment. I don't necessarily think of
Speaker Change: And then just one last one just in regards to professional services grow up as being very strong despite air or swallowing.
Speaker Change: <unk> add that that team works through it through the backlog there like do you see eventually professional services aligning with a R R or would it be less an error or a contribution from from partners increases. So how how do you think the mix between professional services in a R y.
Speaker Change: <unk>.
Blaine Fitzgerald: It's a really good comment. I don't necessarily think I'll ever be aligned to ARR just because of the nature of that revenue stream that comes in. But again, what we do hope is that we start turning that growth that we're seeing in that part of the business slowing down, and not because of the fact that we're not seeing the demand. It's because we are intently trying to push that more towards partners. John mentioned that we have had a lot of increased discussions around with our SIs right now, and that is intentional.
Speaker Change: Okay. So you're really good comment I don't necessarily think I'll ever be aligned to air or just because of the nature of.
Speaker Change: I've got a revenue stream that comes in but I again, where we do hope is that we start tring that growth that we're seeing on that that part of the business slowing down and up because.
Speaker Change: Ah Ah Ah Ah the fact that we're not seeing the demand is because we are intentionally trying to push that more towards partners John.
Speaker Change: John mentioned that we have a lot of.
Speaker Change: Kris discussions and.
Speaker Change: Around with her with her advise right now and that is that is intentional. We we believe that this is the right path for us to go forward to help with our go to market activity on the software side of our business and to focus more on that area, which has a much higher Martin on it comes in.
Blaine Fitzgerald: We believe that this is the right path for us to go forward, to help with our go-to-market activity on the software side of our business, and to focus more on that area, which has a much higher margin. I do think that there is an opportunity to start seeing that 29 to 30% of total revenue coming down to a more reasonable number, obviously closer to what our ARR is right now, but I don't think they'll be correlated in the future. I think that there could be completely two different revenue streams and growth patterns that we... Thanks for taking the questions.
Speaker Change: I do think that there is an opportunity to start seeing that 29% to 30% of total revenue coming down to a more reasonable number obviously closer to whatever areas right now, but I don't think there'll be correlated in the future I think if they're gonna be completely two different.
Speaker Change: Revenue streams, and and a brother with patterns that we see.
Speaker Change: Thanks for taking the questions.
Daniel Chan: Our next question comes from the line of Daniel Chan with TV Calendars. The line is now open. Good morning. APAC continues to decline for about three quarters in a row now, and it's been on a pretty steady downward trend for
Speaker Change: Our next question comes from the line of Daniel Chin with T V talent.
Daniel Chan: Your lines now open.
Daniel Chan: Hi, Good morning, APAC continues to decline for about three quarters in a row now and it's been a pretty steady downward trend for about one and a half years. Just wondering if you could provide some color around that.
Daniel Chan: Sure.
Blaine Fitzgerald: Sure. Yeah, I think we went through a period, and it's interesting because numbers are generally, they'll happen after an event takes place, obviously, and we'll see that later on in the financial statements. I think at this stage, we're actually going in the right direction. We have some nice surprises that we've been seeing some momentum over there. I think we have a great new leader that is doing some really nice things to build our name in AIPAC stronger than we've ever seen before.
Speaker Change: Yeah, I think we went through a.
Speaker Change: Period.
Speaker Change: It's interesting because the numbers are generally they will happen. After after an event will take place obviously and then we'll see that later on in the.
Speaker Change: In the financial statements I think at this stage, we are actually going in the right direction. We have some some nice surprises that we've been seeing on some momentum over there I think we have a great new leader that is doing some really nice things to.
Speaker Change: Build our name Ian APAC stronger than we've ever seen before.
Daniel Chan: I think our partner network is going to be helping us a lot more in that region, which we've historically struggled in. But it's something that I think we have a breakthrough in. I think we've gone through that trough, and what you're just seeing are the remnants of what took place in the past. I think now we're actually on a slight upswing, which I'm hoping to see that momentum continue. Sounds good. And then maybe more of a competitive...
Speaker Change: Think our partner network is going to be helping us a lot more in that region, which we historically struggle then.
Speaker Change: But it's it's something that I think we had a trough I think we've gone through that trough and what you're just seeing as the remnants of of.
Speaker Change: Of that activity that that took place in the past I think now we're actually on a slight upswing, which is I'm, hoping to see that momentum continue in the future.
Speaker Change: That sounds good.
Speaker Change: And then maybe more of a competitive questions Liana just bought one network just wondering how that affects the competitive dynamic and does it make you think about expanding your product portfolio. Thank you.
John Ernest Sicard: Yeah, it's a great question. And, you know, naturally, we have what I'll call a value thesis for the market. And when we're looking at acquisition opportunities, it's always applied to that value thesis. And so we're not just buying revenue, let's just say. That's just not our model. I can't comment on their rationale for doing such a thing.
Liana: Yeah. That's a great question and you know naturally we have Ah what I'll call a value thesis for the market and when we're looking at acquisition opportunities it's always apply.
Liana: Apply to that value thesis.
Liana: And so we're not just you know buying.
Liana: Revenue, let's just say that's just not our motto you know I can't comment on their rationale for doing such a thing.
John Ernest Sicard: It certainly doesn't impact the way I think about our own thesis and what I would call responsible acquisition, procedure, you know, in terms of how we look at it. So, you know, we are, you know, nothing to telegraph, if you will, immediately here, but we do have a pretty strong muscle around business development with an executive that is focused on that every single day. There are some interesting, I'd say, properties out there that would fall into the value thesis.
Liana: It certainly doesn't.
Liana: Impact the way I think about our own thesis and what I would call responsible.
Liana: Acquisition mm procedure, you know in terms of how we look at things. So you know we are.
Liana: Nothing to Telegraph, if you will immediately here, but we do have a you know.
Liana: Pretty strong muscle around business development with an executive that is is focused on that every single day. There are some interesting I'd say properties out there that would.
Liana: Fall into the value thesis.
John Ernest Sicard: As you would imagine, there are a lot of elements to determining whether an acquisition is sound, a business decision or not, and so we continue along those lines. And so long as things, you know, fit our vision for the future of the supply chain, then we'll look at those things. I, you know, I have to say, looking at the Gardner Magic Quadrant, I'm going to point to this again, there's nothing I am more proud of than being recognized for our ability to deliver on our promises.
Liana: As you would imagine there are a lot of elements to determining whether an acquisition is sound sound business decision or not and and so we continue along those lines and so long as things you know fit our vision for the future supply chain.
Liana: Then then we'll look at those things I you know I have to say you know looking at the gardener magic quadrant and with a pointed this again, there's nothing I I'm more proud of than being recognized for our ability to deliver on our promises it's more than just size and so on if you make a <unk>.
John Ernest Sicard: It's more than just size and so on. If you make a promise, making a promise is easy; keeping a promise is 90% of the work. And so I'm really thrilled that there's so much space between Kinaxis and our competitors in that dynamic.
Liana: <unk>, making a promises easy keeping a promise is 90% of the work and and so I'm really thrilled that.
Liana: There's so much space between can access.
Liana: And our competitors in that in that dynamic.
Speaker Change: Thank you.
Stephanie Doris Price: Our next question comes from the line of Stephanie Price with CIBC. Your line is now open.
Liana: Our next question comes from the line of Stephanie price would CIBC your lines no open.
Stephanie Doris Price: Hi, John. You mentioned investments in SI partners a few times. I was hoping you'd give us a bit of an update on your larger SI partner relationships, what you're seeing there, and, you know, if there's been slowness with them as you work on these larger deals as well.
Stephanie Doris Price: Hi, Good morning, John mentioned.
Stephanie Doris Price: You mentioned investments and S. I partners a few times I was hoping you give us a minute update on your large or S. I partner relationships, what you're seeing there and you know what station slowness with them. If you work on your electric deal with as well.
John Ernest Sicard: Yeah, I think it's no surprise here that supply chain, as a discipline, continues to go through a lot of transformation post-pandemic. You know, many of the chief supply chain officers I speak to are saying things like, I need to leave it better than I got it. Many of them are realizing that the mechanisms that have governed supply chain over the last 30 years may not survive the next three. They have to be rethinking a generational shift in how supply chain is going to work.
Speaker Change: Yeah, I think there's no there's no surprise here that Ah supply chain as a discipline.
Speaker Change: Continues to go through.
Speaker Change: A lot of transformation Postpay endemic you know many of the the chief supply chain officers I speak to.
Speaker Change: Are saying things like I need to leave it better than I got it many of them are realizing that the mechanisms that governs supply chain over the last 30 years may not survive. The next three they have to be rethinking about a generational shift.
Speaker Change: In house supply chain is going to work.
John Ernest Sicard: It's not just the technologies, the new technologies that are now coming to bear, but it's also the new techniques that are starting to manifest as providing great value. Now, all of this is music to an SI's ears.
Speaker Change: It's not just the technologies the new technologies that are now coming to bear but it is also the new techniques that are starting to manifest is is providing a great value. You know all of this is music to an S eyes ears, you're talking about a generational shift and what I would describe as the opera.
John Ernest Sicard: You're talking about a generational shift in what I would describe as the operating system of the planet, the supply chain. And so the largest SIs, and many of which we've had strong relationships with for multiple years, see exactly what we're seeing. And, of course, they're in every geography that matters.
Speaker Change: Rating system of the planet the supply chain and and so you know the largest size and many of which we've we've had strong relationships with for multiple years see exactly what we're seeing.
Speaker Change: Of course, there and every geography that matters there in privileged conversations that were not in and and so you know they can do things that we can't do it.
John Ernest Sicard: They're in privileged conversations that we're not in. And so, you know, they can do things that we can't do. And we can do things they can't do. So there's a perfect opportunity here for us to establish a go-to-market strategy that takes the best of what we both have to offer. And I think the ultimate result of that will be an acceleration into that market.
Speaker Change: And we can do things they can't do so there's a perfect opportunity here for us to establish a go to market strategy. It takes the best of what we both have to offer.
Speaker Change: And I think the ultimate result of that will be an acceleration into that market.
Stephanie Doris Price: Thanks, that's good color. And then just on the pipeline, in Q4 I think you noted an all-time high in the pipeline. And just thinking about that versus Q1 ARR growth, is it primarily these large deals that are taking a long time to convert, or is there a lot in the pipeline that's in earlier stages as well? Just hoping to get a bit more color on the pipeline here.
Speaker Change: Okay. Thanks, that's good color and then and then just in the pipeline.
Speaker Change: Thank you for thinking of an all time high in the pipeline and just you know thinking about that very shakes. Two one era gross like is it primarily need large deals there came on to convert or or is there a lot in the pipeline earlier stages as well just just hoping to get that that North Carolina pipeline here. Thanks.
John Ernest Sicard: So I'd say the pipeline, you know, remains quite healthy. It absolutely is the large enterprise deals that are taking more time. In fact, the deals coming in from our VARs...
Speaker Change: But I would say the pipeline remains quite healthy Ah. It absolutely is the large enterprise deals that are taking more time.
Speaker Change: In fact, the the deals coming in from our bars.
Speaker Change: R.
John Ernest Sicard: Remarkably, uh, faster. We'd love to see our large enterprise deals fall into that category, where they're measured in months and not years, but yeah, right now, I'd say the color on the pipeline is really just that. You know, I was on the phone last night with one of our partners. I'd say one of the largest life science companies on the planet, and we're working to get the ink dry on that. So it's just taking a long time. That's what we're seeing more than anything.
Speaker Change: Remarkably.
Speaker Change: Faster [laughter], we'd love to see our large enterprise deals fall into that into that category.
Speaker Change: Where it is measured in months not years, but yeah right now I'd say the color on the pipeline is is really just that you know I was on the phone last night with one of our.
Speaker Change:
Speaker Change: I'd say one of the largest life science companies on the planet and we're working to get the ink dry on that so it's just taking long that's what we're seeing more than than anything else.
Stephanie Doris Price: Great. Thank you very much.
Stephanie Doris Price: Great, thank you very much.
Speaker Change: Great. Thank you very much.
Martin Toner: Our next question comes from the line of Martin Toner with ATB Capital Markets. Your line is now open.
Marching Tolden: Our next question comes from the line marching told him with a T V capital markets. Your line is now open.
Martin Toner: Good morning. Thanks for taking the question. In the past, you've talked about the amount of growth coming from existing customers versus new ones. Can you talk a little bit about that, how that land and expand strategy is contributing to growth at the moment?
Marching Tolden: Good morning. Thank you for taking my question Uhm and the constant talked about.
Marching Tolden: Growth coming from existing customers versus new can you talk a little bit about that how 'bout lane and expand strategies contributing to growth at the moment.
Blaine Fitzgerald: Sure, so I guess at the year-end or in 2023, we talked about being around 60-40. Meaning that we have 60% of our...
Marching Tolden: Sure.
Speaker Change: Like I said a year in her in 2023, we talked to her but we were on 60 40.
Marching Tolden: That we had 50 per cent of our.
Marching Tolden: New era are coming from the.
Blaine Fitzgerald: The new customers and then the expansion is about 40%. That's pretty similar to what we had in Q1. But it's not representative of what we are seeing right now in our current pipeline.
Marching Tolden:
Marching Tolden: The new customers and then the expand was about 40 per cent, that's pretty similar to what we had in Q1.
Marching Tolden: If not representative of what we are seeing right now on our current pipeline mm.
Blaine Fitzgerald: I'll say that Q4, as an example, has a substantial amount of expansion activity sitting there right now. Overall, we are continuing to focus a little bit more on the expansion side of our business. I feel I'm being brought into more and more discussions to try and understand how we can expand and upsell and cross-sell the expanded opportunities and modules and solutions that we have in place. A large part of this is trying to make sure that we match the value needed from our customers with their current health and where they're at. As of right now, I'd say the future pipeline looks a little bit more heavily weighted toward expansion than we've seen previously.
Marching Tolden: I would say that Q4 as an example has a substantial amount of expansion activities sitting there right now.
Marching Tolden: But we overall, we are continuing to focus a little bit more on the expansion side of our business.
Marching Tolden: I feel I'm being brought into more and more discussions.
Marching Tolden: Trying to understand how we can have we can expand and upsell crosstown.
Marching Tolden: That'd be expanded.
Marching Tolden: Opportunities in module conclusions that we have in place.
Marching Tolden: But also a lot of a large part of this is trying to make sure that we match the value needed from our customers.
Marching Tolden: With their current health and where they're at but as of right now I'd say, the the future pipeline looks a little bit more heavily weighted on expansion than we've seen previously.
Martin Toner: Thanks for that. At Connections, a big focus was extending the product and its functionality into supply chain execution, which you guys have talked about as quite a large market. Can you talk a little bit about whether or not that's impacting results now and how you think it might going forward?
Speaker Change: Thanks for that and connections.
Speaker Change: Big focus was extending.
Marching Tolden: Productivity functionality into supply chain execution, which you guys have talked about is quite a large market.
Marching Tolden: Can you talk a little bit about whether or not that's impacting your results now and how you think it might going forward.
John Ernest Sicard: Yeah, so, certainly we're pleased with having won some business even in Q1 around supply chain execution. One of the largest opportunities ahead of us this year is in supply chain execution. I think that what we are describing as supply chain orchestration, which is the fusion between planning and execution, is really gaining traction. You know, this is one of the areas of innovation that we're hyper-focused on. You know, this isn't a new concept. If you're a supply chain practitioner and you talk about the fusion of planning and execution, you might think, man, we were talking about that 15 years ago.
Speaker Change: Yeah. So you know certainly we're pleased with you know having won some business even in Q1 rose splashing execution.
Marching Tolden: One of the largest opportunities ahead of us and this year isn't supply chain execution I think that what we are describing his supply chain orchestration, which is the fusion between planning and execution is really taking traction.
Marching Tolden: I think the.
Marching Tolden: You know this is one of the areas of innovation that were that were hyper focused on.
Marching Tolden: This isn't a new concept you know if you're a supply chain practitioner or you talk about the fusion of planning and execution.
Marching Tolden: You might think man, we were talking about that 15 years ago.
John Ernest Sicard: It just was impossible then, and so we are certainly investing in proving it, not just saying the words, but proving it. So, we're quite excited about where we are; there's still some work to do. It's not easy. If it were easy, others would have solved it.
Marching Tolden: It just was impossible, then [laughter] and and so we are certainly investing and proving it.
Marching Tolden: Just saying the words, but proving it.
Marching Tolden: So we're quite excited about where we are there's still some work to do it's not easy if it if it were easy others would solve this.
John Ernest Sicard: We're being told by some of the large analysts that there are really only a handful of companies in the world attempting it. We are one. I might believe we're the furthest along, and so we're going to continue to invest in that thesis. You'll see a lot more about that at Connections, for sure. And if anything, I think it's going to have an impact on our future, our future success, because we will. If not the only company in the world that is capable of proving that such a fusion is possible.
Marching Tolden: You know, we're being told by some of the large analysts that there's really only a handful of companies in the world attempting eh we are one.
Marching Tolden: I might believe we're the furthest along I want to believe that.
Marching Tolden: And so so we're going to continue to to to invest in that in that thesis.
Marching Tolden: You'll see a lot more about that at connections for sure.
Marching Tolden: And if anything I think it's going to have a an impact on our future.
Marching Tolden: Our future success, because we will be.
Marching Tolden: If not the only one of the only companies in the world that are capable of proving that that's such a fusion as possible.
Martin Toner: Gotcha. Thanks for all that. Last one from me. How's the retail slash hospitality restaurant vertical looking with this?
Speaker Change: Gotcha. Thank you spell that last one for me How's the retail slash <unk> hospitality restaurant vertical lucky with it.
John Ernest Sicard: Yeah, so we're thrilled to be able to say that we're live with [inaudible] outstanding, you know, in terms of both the demand side and the replenishment side, so we're really happy with our progress there. We have more opportunities, I'd say, that we're working on through our hobby relationship.
Speaker Change: Yeah. So we're we're thrilled.
Marching Tolden: To be able to say that we are alive with.
Marching Tolden:
Marching Tolden: With the well one of the largest quick service restaurants in the world.
Marching Tolden: And and the results are nothing short of.
Marching Tolden: Outstanding.
Marching Tolden: In terms of both.
Marching Tolden: The demand side on the replenishment side. So we're really happy with with our progress there we have more opportunities I'd say that we're working with.
Marching Tolden: Through our hobby relationship.
John Ernest Sicard: And we've implemented another QSR brand as well along the way that we can't mention, but we're equally thrilled with our progress with them. And you know, it's a, I'd say, a very strategic area for us in breaking into retail. We're going to continue to focus on QSR, but ultimately, it's a path to retail.
Marching Tolden: And we've implemented another I'm curious our brand as well along the way.
Marching Tolden: That we can't mentioned, but were equally thrilled with our progress.
Marching Tolden: With them and.
Marching Tolden: And you know it's a it's a.
Marching Tolden: It's a very strategic area for us and and breaking into retail we're going to continue to focus on Q S. R. But ultimately it's a path to retail.
Marching Tolden: Okay.
Martin Toner: That's great. Thanks, John. That's it for me. I'll pass it along.
Speaker Change: That's great. Thanks, John that's it for me your first one.
Douglas Taylor: Our next question comes from the line of Doug Taylor with Kanica. Your line is now open.
Speaker Change: Our next question comes from the line is Dovetailing mechanical or.
Douglas Taylor: Thank you. Good morning. I have a question for Blaine.
Speaker Change: Lines now okay.
Douglas Taylor: Last quarter, you talked about the 800 basis points of temporary EBITDA impact related to both the cloud duplicate costs and also the cyclical STLs. So the question is, I just wanted to confirm whether the restructuring has any impact on bringing any of that savings forward and, you know, maybe just get you to comment on the progress with the cloud transition initiative overall.
Speaker Change: Alright, Thank you good morning.
Speaker Change: Question for for blame you know last Corey you talked about the 800 basis points to temporary EBITDA impacts related to both the cloud.
Dovetailing: Duplicate costs and also the cyclical stl's. So the question is you know with the you just wanted to confirm whether the restructuring has you know any impact on bringing any of that.
Dovetailing: Savings for words, and you know maybe just get you to comment on the progress with the cloud transition initiative overall.
Speaker Change: Sure that would be.
Blaine Fitzgerald: Sure, Toby. As I mentioned last quarter, there is a normalization impact that we do internally just to understand, are we tracking in the right direction? And can we compare ourselves to how we've seen Adjusted EBITDA in the past? The two main components are the cost that is associated with migrating over to public cloud. And the second piece is the normalization that we have on subscription term late.
Speaker Change: Alright, as I mentioned last last quarter. There is a normalization impactor, we we do an internally just to understand army tracking in the right direction and kind of compare ourselves to how we had been adjusted EBITDA in the past.
Speaker Change: The two main components is the costs that are associated with migrating over to public cloud and the second pieces in the normalization that we have on subscription term license.
Blaine Fitzgerald: In Q1, I can say that we had an advantage from the subscription term license because we had a higher amount of revenue than you would expect on an average quarter, and so that was about a 1% normalization impact that you would have. But public cloud is still around 5%, and so when you net those off, it's about a 4% difference that we have, and if we go with what we just increased our guidance to, 18-20%.
Speaker Change: Q, what I can say that we had an advantage from the subscription term license because we had a higher amount of revenue than you would expect on an average average quarter. That's what I was about 1% normal Asia normalization impact that you would have but.
Speaker Change: But public cloud is still around 5% and so when you net those opposite of 4%.
Speaker Change: Different that we have and if we go with.
Speaker Change: What time would just increase or guidance to 18 to 20 per cent.
Blaine Fitzgerald: We are still looking at that we think there's a 4% impact on that normalization that we have in place. The other piece I would throw out is we absolutely had no impact on our cloud services and the migration over to public clouds in the future. The rebalancing was focused on, we know that this is an important thing. Maybe just to reiterate why this rebalancing is so important for us. Over the past year, one of the things that have come up is that we've seen so many different opportunities. There were a lot of questions such as, can we put more into AI? Can we put more into integrations around our platform? Can we put more into having indirect sales with our partners?
Speaker Change: We are still looking that we think that is a 4% impact on that normalization that we have in place.
Speaker Change: At least for Q1, the other piece I would throw it is we absolutely had no impact on our.
Speaker Change: Cloud services, and the and the migration over to over to a public cloud in the future. The the rebalancing was was focused on we know that this is an important thing maybe just to reiterate why this rebalancing so important for us like.
Speaker Change: Over the past year, what are the things that has come up as we've seen so many different opportunities there's been a lot of.
Speaker Change: Question is can we put more into AI can we put more into like integrations are on our platform can we put more into.
Speaker Change: I mean indirect sales with our partners.
Blaine Fitzgerald: And the answer has been that we have a path towards getting to a certain profitability level. But the answer is no at that stage because we had other investments we were doing. So what we've done over the last little while is to go back and figure out how can we not say no to these very important investments that we need to make and go forward. The cloud and going to public cloud is an important investment for us.
Speaker Change: And the answer has been we have a path towards getting to a certain profitability level. The answer is no at that stage because we had other investments were doing so what we've done over the last in awhile to regain go back and figure out how can we not say no to these very important investments that mean to me and go for it now cloud.
Speaker Change: Cloud and going to public cloud isn't important investment for us we're not changing our direction. We're continuing to move forward in the exact same directory, we know how important it is for us to scale up at the appropriate level. So.
Blaine Fitzgerald: We're not changing our direction. We're continuing to move forward in the exact same direction we have. We know how important it is for us to scale up at the appropriate level, so that is not one of those things we had to say, we're going to take this off the agenda because of other investments. That is, continue to do so, but we have other investments we need to make in the future, and we're going to continue to do that going forward. So the rebalancing has no impact on our migration to public clouds.
Speaker Change: So that it is not one of those things we had to say we're gonna take this off because of other investments that has continued to do it but we have other investments we need to make in the future. We're gonna continue to do that going forward. So that rebalancing had no impact on our migration Colorado.
Douglas Taylor: I appreciate the color. Our next question comes from the line of Mark Schappel with Luke Capital Markets. The line is now open. All right.
Speaker Change: I appreciate the color all best line. Thanks.
Mark William Schappel: Our next question comes from the line of Mark Schappel with Luke Capital Markets. The line is now open. Hi, thank you for taking my question.
Speaker Change: Our next question comes from the line of more chapel.
Speaker Change: The markets.
More Chapel: No open.
More Chapel: Alright. Thank you for taking my question John building on an earlier question. The sales organization appears to have a lot on its plate currently given the restructuring and the appointment of under sales officer.
Moe Chapel: I was just wondering if you could just provide additional details on maybe some changes we can expect it took a sales team let me go to market emotion.
More Chapel: In the coming quarters are too.
John Ernest Sicard: Yeah, so it's certainly early days for Claire and her new role. But, you know, she's no Trinking Violet, so she's also made some great changes thus far and obviously been part of our strategy, our go-to-market strategy discussions. You know, as I said previously, one of the areas that we'll be eager to share when the timing is right is the strategy around leveraging some of our largest partners as part of that go-to-market strategy. So stay tuned for that.
John: Yeah. So it's it's certainly early days.
More Chapel: For Claire in her new role that said.
More Chapel: You know she has no tricking violet. So she has a she has also made some some great changes, thus far and obviously been part of our strategy or go to market strategy discussions.
More Chapel: You know as I said previously one of the areas that.
More Chapel: Will be eager to share when the timing is right is the strategy around <unk>.
More Chapel: Leveraging some of our largest partners as part of that go to market strategy. So so stay tuned for that that takes some investment. It takes you know what I'll call. Some talent density changes within within sales.
John Ernest Sicard: That takes some investment. It takes, you know, what I'll call some talent density changes within sales. So, you know, we're going to continue, obviously, to invest in sales against the opportunities we see in front of us. I'd say the only color I would add is... Um, you know, a focus. I'd say focusing more on our partner relationships and turning that, you know, equation into 1 plus 1 equals 3. That's really the real focus. And that's the tension grabber, let's just say, as it relates to our go-to-market investors.
More Chapel: So we you know we're we're gonna continue obviously to invest.
More Chapel: In sales against there are opportunities here that we see in front of us I'd say the only color I would add is.
More Chapel: You know a.
More Chapel: I'd say, a focus [laughter] I'd say, a focus on leveraging more our partner relationships and turning that equation into one plus one equals three.
More Chapel: It's really the the real.
More Chapel: [noise] attention grabber, let's just say as it relates to our go to market investments.
Speaker Change: Great. Thank you.
Suthan Sukumar: Our next question comes from the 9FC, Suthan Sukumar. Your line is now open.
Speaker Change: Our next question comes from the ninth of Suzanne Supermom.
More Chapel: So.
Suzanne Supermom: Your lines now open.
More Chapel: Uh-huh.
Suthan Sukumar: Good morning, gentlemen. The first question I had is, with respect to the pipeline, with respect to really new deals in your pipeline and earlier stage conversations that you're having with prospects, what would you call out as having changed the most with respect to scope and requirements for these newer projects?
Suzanne Supermom: <unk>. Good morning, Gents first question I had is you know with respect to the pipeline.
Suzanne Supermom: You know with respect to really new deals and your pipeline and earliest th conversations that you're having with prospects what would you call out as having changed the most you know with respect to sculpin requirements for these new newer projects.
John Ernest Sicard: You know, scope is really dependent on the vertical itself. We're speaking to prospects that tell us they are going to sell 100% of what we manufacture. The issue is how we allocate finished goods that come out of the other end, and in other cases, demand is wildly variable, and supply is consistent, and then we have customers that deal with variability on both sides, so it really does depend on the industry itself, you know, that drives the ultimate use cases. In the end, they all have one thing in common. It's an inability to absorb volatility, and the ferocity and velocity of volatility are increasing.
Speaker Change: You know scope, it's really dependent on the vertical itself. You know we were speaking to prospects that tell us we are going to sell 100% of what we manufacturer. The issue is how we allocate finished goods that come out the other end and in other cases demand is wildly variable.
Suzanne Supermom: Supply is.
Suzanne Supermom: Consistent and then we have customers that deal with variability on both sides. So it really does depend on the industry itself.
Suzanne Supermom: Ah that drives the ultimate use cases in the end they all have one thing in common.
Suzanne Supermom: It's an inability to absorb volatility and the ferocity and velocity of volatility is increasing it's sort of a uniform truth and supply chain.
John Ernest Sicard: It's sort of a uniform truth in the supply chain. And so, the way it's described to me is less, you know, let's just say I tend to focus on those macro conditions first with any prospect because they all suffer from the same ailment. It might be slightly different, you know, from a different chain link, but they all suffer from the same ailment. I don't see any difference, frankly, in terms of the conversations we have.
Suzanne Supermom: And and so the way. It's described to me is less you know, let's just say I'm.
Suzanne Supermom: I tend to focus on those macro conditions first with any prospect because they all suffer from the same ailment it might be slightly different from a different chain link, but they all suffer from the same ailment I don't see any difference frankly.
Suzanne Supermom: You know in terms of the conversations we have and the other thing is I don't see any difference between companies that do under $100 million of.
John Ernest Sicard: And the other thing is I don't see any difference between companies that do under $100 million, of which we have customers, or customers that do $400 billion or more, and we have customers like that too. And they talk very much about business problems in the same way.
Suzanne Supermom: Of which we have customers.
Suzanne Supermom: Our customers that do 400 billion or more than we have customers like that too and they they talk very much about the business problems in the same way.
Suthan Sukumar: Great. Thank you.
Speaker Change: Great. Thank you.
Suthan Sukumar: For my second question, John, I just wanted to touch on inorganic growth. You guys spoke about that a little bit on this call. But, you know, just at a high level, how important is M&A as part of your broader growth strategy?
Speaker Change: For my second question, John just wanted to touch on inorganic growth you guys spoke that a little bit here and a call, but you know just at a high level of your how important is emanate as part of your broader grilled strategy in and what has changed with respect your priorities for a future emanate.
John Ernest Sicard: You know, I, I, um... I've talked about it before, you know, what I'll call the value thesis here is around, perhaps the words I'll use are supply chain orchestration, and I know those are just words, but in my mind, it's the fusion between planning and execution. I've said this before, I think supply chain planning may become a term that will be obsolete in the not-too-distant future. You won't do planning without execution, you won't do supply chain execution without understanding the implications of your plan and your promises to the street, and so on.
Speaker Change: You know I I.
Speaker Change: I've talked about it before you know what I'll call the value thesis here is around.
John: Perhaps the words I'll use our supply chain orchestration and I know those are just words, but in my mind is the fusion between planning and execution I've said this before I think supply chain planning may become a term.
John: That will be obsolete and they're not too distant future you won't do planning without execution, you won't you won't do supply chain execution without understanding the implications to your to your plan and your promises to the street and so on and so when I think about our acquisition strategies first I would say I'm not Ah Ah.
John Ernest Sicard: And so when I think about our acquisition strategy, first, I would say I'm not a roll-up company; I'm not, you know, a company looking to just roll up revenue, and, you know, there's no quote Danaher system to follow here.
John: Roll-up company I'm not Ah Ah.
John: You know a company you're looking to just roll up revenue and you know there's no quote danner her system to follow here can access.
John Ernest Sicard: You know, so we are looking very much under a value thesis that follows that mission of fusing planning and execution together. There are a lot of areas in the supply chain that we have not tackled yet. And so we're looking at opportunities that are either acqui-hires that could help us accelerate those value propositions into rapid response. They might be in areas like finance and accounting, for example. You might think that's odd, but FP&A is an area that directly impacts the supply chain, and a lot of companies that deal with cash preservation would be extremely well received to have supply chain planning and execution and FP&A all rolled into one. Certainly areas around logistics, warehousing, there's various areas like that that are part of the overall thesis that we can either acquire or do acqui-hires to accelerate our value property.
John: You know so we are looking very much Ah you know under a value pieces that follows.
Speaker Change: Mission of abusing planning and execution together there are a lot of areas of supply chain that we have not tackled yet.
Speaker Change: And so we're looking at opportunities that are either actually hires that could help us accelerate those value propositions.
Speaker Change: Into into rapid response, they might be in areas like F. PNA. For example, you might think that's odd but F P and a as an area that directly impacts.
Speaker Change: Supply chain and a lot of companies that deal with cash preservation that would be extremely well risk.
Speaker Change: Received to have supply chain planning and execution at an F. P&A all rolled into one certainly areas around logistics warehousing, there's various areas like that that are part of the overall thesis.
Speaker Change: We can either require or actually hires to accelerate our value proposition.
Speaker Change: Okay, Okay great.
Suthan Sukumar: Thank you, John. I'll pass the line. Thank you.
Speaker Change: Thank you John I'll pass line.
Speaker Change: Thank you.
Kevin Krishnaratne: Our next question comes from Ilana, from Kevin. Krishnaratne. The line is now off. Hey there, good morning. Just one for me.
Speaker Change: Our next question comes per line Kevin.
Kevin: Christian around it.
Kevin: It's called you back your line is now open.
Kevin: Hey, there good morning, Uhm, just one for me, you're calling you that's actually being notably impacting era gross mm.
Kevin: I think I'll do one per cent impact <unk>, how does ethics, you know implicate your your <unk> maintain sent to the 19 in other words could the the Guy that's been raised were it not for what you're seeing an effects if any comments terreblanche I appreciate it.
Blaine Fitzgerald: Sure. So for FX, for AR, it was generally the Euro and the Japanese Yen that had the biggest impact on AR, which has a point-in-time type of calculation for the status, revenue, and total revenue guidance. I would say there are very few things that FX could do right now that would have made an increase at this stage. I think there is a, we obviously look at British Pounds, we look at Euro, we look at Japanese Yen, all of which have an impact on it.
Kevin: Sure.
Speaker Change: So for for F X for air or it was generally euro and Japanese yen that the biggest and back to an era, which is.
Speaker Change: A.
Terreblanche: Point in time type of calculation.
Speaker Change: Or the status revenue in total revenue guidance.
Speaker Change: You're right.
Speaker Change: Barely at all.
Speaker Change: FX can do right now that would have made a increase at this stage.
Speaker Change: I think there is a we we obviously look at.
Speaker Change: British pounds relocated euro it'll get Japanese yen I'll always have an impact on it.
Blaine Fitzgerald: But in Q1, we had, for the purposes of revenue, we had a little bit of an upswing because of GDP for the British pounds, but that was offset by the Japanese yen. And so we know that FX can be volatile, it can change, especially in the US election year, so we are keeping a close eye on what happens throughout the year. But we are, at this stage, I think. There probably was very little that it would have done to make us increase guidance because of FX, but we are making sure that it doesn't obviously put us at risk of falling out of our guidance right now.
Speaker Change: But in Q1, we had for the purposes of revenue, we had a little bit of an upswing because of our.
Speaker Change: G B P. A british pounds, but that was offset by Japanese yen and so we we know that I'm Mexican can be volatile can change, especially in a U S left and here we are keeping a close eye on what happens throughout the year.
Speaker Change: From your.
Speaker Change: At this stage I think.
Speaker Change: There probably was very level.
Speaker Change: Diamond to make us increased guidance because of ethics, but we are making sure that because obviously put us at risk of falling out of our guidance right now.
Speaker Change: Great. Thanks very much.
Speaker Change: [noise].
Operator: There are no further questions. I'll now turn the call back over to Mr. Wadsworth.
Speaker Change: No further questions I'll now turn to call back over to Mister <unk>.
Rick Wadsworth: Thank you, Operator, and thank you, everyone, for participating in today's call. We appreciate your questions, as always, and your ongoing interest in and support of Kinaxis. We look forward to speaking with you again when we report our second quarter results. Bye for now.
Speaker Change: Thank you operator, and thank you everyone for participating on today's call. We appreciate your questions as always Andrew ongoing interested in and supportive can access.
Speaker Change: We look forward to speaking with you again, when we report our second quarter results Bye for now.
Operator: This concludes today's call. You may now disconnect.
Speaker Change: Includes today's call give me now disconnect.