Q2 2024 Five9 Inc Earnings Call
Otherwise indicated financial figures discussed are non-GAAP.
And now I'd like to turn the call over to 590, Chairman and CEO, Mike Burkland.
Mike Burkland: Thanks, Emily and thanks to everyone for joining our call. This afternoon I'm.
Speaker Change: I am pleased to report that we achieved a key milestone in Q2 with annual revenue run rate exceeding $1 billion, primarily driven by LTM enterprise subscription revenue growing 21% year over year.
Mike Burkland: Adjusted EBITDA margin increased sequentially to 17% of revenue, helping drive strong LTM operating cash flow of $126 million or 13% of revenue.
Mike Burkland: Before I move on to the business updates, let me comment on our outlook for the remainder of the year.
Barry: We are reducing our top line annual guidance by three 8% based on the latest trends we saw in June bookings and other factors that Barry will elaborate on.
Speaker Change: In response, we will be laser focused on managing expenses to generate improved margins and cash flow. As a result, we are raising the midpoint of our annual non-GAAP EPS guidance. This is also consistent with our objective of driving shareholder value through balanced profitable growth further supporting our positive long term outlook.
Mike Burkland: And now turning to the business updates today I want to focus my comments on some announcements, we believe will drive significant future growth for $5 nine by improving AI powered customer experiences.
Barry: First I'll comment on our agreement to acquire Equion, and then I'll touch on our AI strategy and the latest innovations that are extending our leadership position in AI.
Barry: I'm excited to announce our agreement to acquire <unk>, a significant step in extending our AI powered CX platform and market reach today.
Barry: Today brands are increasingly wanting to proactively reach customers for sales e-commerce collections and appointment reminders as well as service and support.
Barry: <unk> excels in orchestrating proactive outbound omnichannel customer engagement across numerous CX use cases, and as assisted leading financial services retail and health care businesses to connect with their audiences and increase revenue through higher contact and conversion rates.
symphony conductor: Our symphony conductor <unk> platform uses AI and contextual data to predict personalized and orchestrate when and how to best reach customers.
Speaker Change: Adding <unk> capabilities to five nines intelligence CX platform is a big step toward realizing our ambition to become the orchestration engine for every interaction across the entire customer journey, including marketing e-commerce sales as well as customer service.
symphony conductor: In addition, the multimodal interactions handled by Acme on generate incremental contextual data that will further strengthen the value of our AI.
Speaker Change: <unk> and <unk> have already been partnering to win some of the largest enterprise CX opportunities in the industry and we're very bullish on the opportunities we see in the pipeline.
symphony conductor: We anticipate the <unk> transaction to close in the second half of 2024.
symphony conductor: Now turning to our AI strategy since 2018, five nine has been focused on harnessing the power of AI to elevate CX today consumers will tell you that their interactions with many brands are disjointed and not satisfactory. This is often due to customer interactions being spread across many platforms and touch points each of which is siloed.
symphony conductor: This has driven our ambition to orchestrate every interaction between a consumer and a brand through five nines intelligence CX platform powered by $5 nine genius AI.
symphony conductor: Our platform provides advanced orchestration for elevated customer experiences, allowing us to bring together all of these interactions and personalize them using contextual data.
symphony conductor: Our strategy has been consistent throughout embedding AI across our platform.
symphony conductor: Delivering practical AI solutions that drive tangible business value and helping our customers leverage AI responsibly.
symphony conductor: Also with our engine agnostic approach, we enable our customers to continually take advantage of the rapid innovation and AI.
symphony conductor: But technology alone is not enough to deliver this vision and so we combine it with our trusted AI and CX experts to help our customers navigate through this evolving world of AI.
symphony conductor: And now I'd like to share two significant steps, we've taken to extend our leadership position in AI.
symphony conductor: First we're excited to announce the general availability of Gen. AI studio. This pioneering products serves as a central hub for brands to apply Gen AI across all CX touch points within the 509 platform and beyond.
symphony conductor: We now have the unique ability to break down data silos by leveraging contextual data not just within our platform, but also from external systems, such as CRM marketing E Commerce and more all through a single pane of glass.
symphony conductor: This comprehensive 360 degree view of the customer experience enables us to deliver hyper personalization and improved business outcomes.
symphony conductor: And second we're announcing the newest member of the $5 nine genius AI suite.
symphony conductor: AI knowledge AI knowledge allows brands to provide concise answers to many common questions that our customers might have.
symphony conductor: By training custom Gen AI models with knowledge unique to their brand.
symphony conductor: My knowledge can be used for voice and chat bots, enabling self service answers to a much wider set of use cases than were previously possible with prior generation FAA coupons.
symphony conductor: That in turn reduces the need for calls and chats to reach live agents saving brands money.
symphony conductor: Knowledge is also integrated into five nine AI agent assist allowing agents to get quicker and more accurate answers to customer questions that allows them to offer accurate and faster service.
symphony conductor: Improving CX, while also reducing handle times and reducing costs.
symphony conductor: And best of all AI knowledge reduces the amount of time people have to sit waiting on hold something all of us can appreciate.
symphony conductor: These latest AI innovations are important additions to our market, leading AI portfolio, which today is enabling some of the world's largest brands to elevate their CX.
Speaker Change: Turning now to our market opportunity related to AI as we've said in the past AI represents a tam expansion for <unk> for instance, if a hypothetical five nine customer is able to automate 15% of interactions and therefore reduce seats and labor cost by 15% given.
symphony conductor: Given that we are providing the software for that automation, our subscription revenue increases on a net basis by 30% in other words, it's a win win for both our customers and us.
symphony conductor: Now, let's get a little more specific and take a look at three real life examples from our customer base.
symphony conductor: The first is a health care company in a long time <unk> customer with 1000 agents that as a supplier of medical test kits.
symphony conductor: As call volumes were increasing the implemented our IPA and patients were able to automatically schedule, a pickup or delivery three times faster without waiting in queue for an agent. In addition, they saw overall agent handle time declined by 10% and.
symphony conductor: And since that IV implementation five nine's total subscription revenue from this customer has increased 20%.
symphony conductor: The second example is a financial institution, which we're seeing increase in call volumes within a month of our IV implementation. They saw an 8% reduction in agent talk time, while increasing customer satisfaction due to faster response times and this case five nights total subscription revenue from this customer increased 30%.
symphony conductor: And the third example is a fortune 500 medical device company since the deployment of our IV a overall call duration was reduced by 16%, resulting in cost reduction by a nice total subscription revenue from this customer increased 30%.
symphony conductor: In summary, we remain very optimistic about the long term opportunities in this massive market that is expanding even further with AI.
symphony conductor: And we believe we are well positioned to further strengthen our leadership position with the ongoing innovations to our $5 nine genius AI suite.
symphony conductor: Our AI solutions are driving significant and tangible business outcomes.
symphony conductor: For our customers to elevate CX and with that I will turn it over to our president and CRO, Dan Burkland, Dan. Please go ahead.
Dan Burkland: Thank you, Mike and good afternoon, everyone today, I would like to start off by discussing our bookings for the second quarter and sharing some key go to market initiatives. In Q2, we had a challenging bookings quarter, primarily due to customer budgets being more constrained and scrutinized as a result, we did not have any mega deals and we had fewer $1 million.
symphony conductor: Our deals than expected during the quarter.
symphony conductor: In addition, while we are very proud of our talented sales team. We are taking action to further improve our sales execution and efficiency, including recently promoting an accomplished 10 year 509 veteran to EVP of sales, giving us a single 100% dedicated sales leader and we're also realigning resources across market segment.
symphony conductor: And partnering more aggressively with certain technology solutions and integrations.
symphony conductor: And now I'd like to share some key wins for the quarter.
symphony conductor: The first example is a new customer who in March was preparing to place a significant order with $5 nine including the <unk> solution.
symphony conductor: May recall last quarter I described Q1 deals over $3 8 million and <unk>.
symphony conductor: For a company, who helps universities with recruiting enrollment and fundraising.
symphony conductor: On March 30, we were still completing the Esso W. Details for the equity portion and the customer agreed to place the orders for the $5 nine solutions.
symphony conductor: Shortly thereafter, we completed DSO W and received an order for an additional $1 $3 million of IRR for the <unk> portion, making that an anticipated $5 $2 million a customer to five nine.
Speaker Change: The second example is a health care provider with the leading virtual care platform, who is looking to improve and elevate experiences with their patients doctors nurses and pharmacies.
symphony conductor: They've got all in with 509, including our chat email SMS AI agent assist salesforce integration and the full Wm suite.
symphony conductor: To enable hyper personalized experiences at every touch point.
Speaker Change: We anticipate this initial order will result in over $1 1 million to five nine.
symphony conductor: The third example is also in the health care field, a full service pharmacy benefits management company, who had been using another leading C cost provider, but did not feel they were getting the focus and attention from their provider to help them truly elevate their AI experiences and deliver better business outcomes.
Speaker Change: With an acceleration of AI and the vast array of solutions companies are looking for a partner with a team of experts, who will listen annualized Taylor and apply continuous optimization at meaningfully improve those business outcomes.
Speaker Change: As a result, they purchased our chat E mail Salesforce integration, our WAM suite powered by Varian voice stream for Colorado, <unk>, and our AI agent assist solutions, including transcripts and summaries we.
Speaker Change: We anticipate this initial order will result in over $1 1 million, an IRR to five nine.
symphony conductor: And now I'd like to share two examples of existing customers, who have expanded their use of <unk> by adopting our AI and automation solutions to elevate their CX.
symphony conductor: The first example is a health care provider, who has been a five nine customer since 2018, they had been spending approximately $4 $5 million annually with five nine.
symphony conductor: They've been using several advanced solutions from $5 nine, including our BCC with SMS AI agent assist and our workflow automation in.
symphony conductor: In Q2, they added our Wm suite powered by <unk> to perform EQM performance management and interaction analytics with this add on order, we anticipate their AOR with $5 nine to now be over $6 1 million.
symphony conductor: The next example is a fortune 200 company and a top rated insurance provider, who has been a 509 customer for over two years and has been using our omnichannel AI agent assist voice IV digital IEA and our variant Wm suite.
symphony conductor: With an IRR over $4 $9 billion to 509 in.
symphony conductor: In Q2, they added $5 nine AI insights in order to leverage both real time and historical conversational data to prescribe and apply the 509 platform in ways that will result in maximizing business outcomes and truly elevate the customer experience.
Speaker Change: With this add on order, we anticipate their <unk> with.
symphony conductor: With <unk>, we will now be approximately $5 $5 million.
Speaker Change: While we've had some headwinds in Q2, our long term outlook remains strong given our leading platform and AI strategy as well as our continued partner and channel expansion.
Speaker Change: This was validated once again by the most recent bird survey in July where we were ranked number one by far in each of the following three categories.
symphony conductor: The best AI solutions.
symphony conductor: Most likely to benefit from AI and the easiest <unk> provider to work with.
symphony conductor: And now I'd like to turn it over to Barry to take you through the financials Barry.
Barry: Thank you Dan.
Barry: We reported record revenue of $252 1 million for the second quarter.
Speaker Change: With annual run rate exceeding that.
Barry: Looking at the components of revenue as Mike mentioned LTM.
Mike Burkland: LTM enterprise subscription revenue grew 21% of.
Speaker Change: Q2, total subscription revenue grew 17% year over year, driven by our new logo assignments, which continue to be strong increasing meaningfully quarter over quarter Q1.
Mike Burkland: Also AI and automation portfolio.
Speaker Change: Which now makes up 8% of enterprise subscription revenue.
symphony conductor: Continues to be the fastest growing category of athletics with AI agent assist.
Speaker Change: Second biggest offering of the IEA.
symphony conductor: Showing particularly strong growth of 111%.
Barry: Enterprise business made up 88% of LTM revenue.
Barry: Our commercial business, which represented the remaining 12% grew again in the single digits on an LTM basis.
Barry: Recurring revenue, which is comprised of both subscription and telecom usage.
Barry: Made up 92% of total Q2 revenue.
Barry: As a reminder, we.
Barry: We expect that one to three percentage point mix shift.
Barry: <unk> telecom usage each year to continue.
Barry: The main reason for this is because our logic customers.
Barry: Often use the existing carriers or telecom usage.
Barry: Additionally, our channel partners like <unk>, and AT&T with the carriers and we will not take business away from them.
Barry: We see this continued mix shift as a positive long term trend, but corporate revenue growth and gross margin.
Barry: Professional services made up the remaining 8% of revenue.
Barry: LTM database retention rate declined slightly from 109 to one as anticipated.
Barry: Second quarter adjusted gross margins were 65%.
Barry: <unk> by approximately 130 basis points year over year.
Barry: Primarily driven by the substantial temporary investments that we're making as we scale to support the momentum without much of a market.
Barry: And international expansion.
Barry: Second quarter, adjusted EBITDA was $41 $8 million, representing a 16, 6% margin a.
Barry: A decrease of approximately 200 basis points year over year.
Barry: Primarily driven by our strategic investments, most notably ephedrine.
Barry: In India.
Barry: Of which we expect it to them the significant long term opportunities for us.
Barry: Second quarter non-GAAP EPS was <unk> 52 per diluted share.
Barry: Same as Q2 of 2023.
Barry: With regards to our balance sheet and cash flow highlights in Q2, we continued our strong cash flow generation delivering $126 million of LTM operating cash flow equivalent to 13% of revenue.
Barry: This is driven by EBITDA and.
Barry: And that has shrunk DSO performance, which came in at 33 days.
Barry: We have now delivered 32 consecutive quarters of bundled LTM operating cash flow.
Barry: And we remain optimistic that our potential for continuing cash flow generation.
Barry: Turning now to guidance.
Barry: As you know our quota, though we confirm the annual revenue guidance of 16% year over year enrollment.
Barry: $2 million and $55 million, which is based on three key assumptions.
Barry: <unk>.
Barry: Visibility into the ramp schedule of the backlog.
Barry: Second contributions from the new logos.
Barry: And third an infection that database retention rate in the second half of the year.
Barry: With respect to the first item.
Barry: Our backlog remains unchanged as you continue to ramp up backlog largely on schedule with no long ebbs and flows.
Barry: However, with regard to the other two factors leasehold.
Speaker Change: We saw a trend in the latter part of the second quarter regarding new logos, Yogurts and dollar base retention rate, which are causing us to lower our forecast.
Barry: Therefore, we are not guiding hangar revenue two $1.015 billion, which is three 8% below prior.
Barry: Annual guidance.
Barry: Let me elaborate in more detail.
Dan Burkland: Dan explained.
Dan Burkland: Our Q2, new logo bookings came in softer than expected, especially in the last few weeks of June which is when we typically cover a majority of the ideals.
Jimmy: Given that most enterprise new logos as Jimmy take three months to go live.
Barry: <unk>.
Barry: The lower than expected go gets in June bookings.
Barry: Did you have a negative impact on our Q4 recurring revenue forecast in addition, the.
Barry: Headwind will be particularly strong for P. S revenue in both Q3 and Q4 since we started recognizing revenue as soon as implementation works thoughts.
Barry: Also given the softer new logo bookings in Q2, we are prudently adjusting our new logo bookings.
Barry: Cost in the second half.
Barry: When the impact of P. S revenue forecast for the remainder of the.
Barry: Turning to <unk>, while we continue to expect customers with longer than 12 months rins to positively contribute to <unk>. We are no longer assuming an inflection in the second half of the year.
Barry: This is because we are prudently assuming an elongated seasonality and until these bookings.
Barry: We were originally forecasting too.
Barry: To align with the weak economic data points.
Barry: That have been coming out recently.
Barry: And this has been further confirmed by our discussions with seasonal customers.
Barry: In terms of Q3, we are guiding maybe into the midpoint of $255 million or 1% quarter over quarter growth.
Barry: Which is the same as our guidance button heading into the third quarter or 8%.
Barry: Over the last nine years.
Barry: As for the bottom line, we will be laser focused on aggressively managing expenses.
Barry: And scrutinizing since it includes strategic investments in order to improve profitability in the second half.
Barry: As a result.
Barry: We are raising the midpoint of the annual non-GAAP EPS guidance.
Barry: $2 17.
Barry: Two $2 in 2007.
Barry: With regards to the quarterly progression of our non-GAAP EPS, we are guiding to a midpoint of 38 cents for Q3 and 69 cents for Q4.
Barry: Which implies EBITDA margin to improve sequentially each quarter.
Barry: Q4 exceeding 20%.
Barry: Please note that our top and bottom line guidance does not include any impact from that ground.
Barry: We expect the 'twenty 'twenty four revenue impact to be immaterial.
Barry: Please refer to the presentation posted in our Investor relations website for additional instruments, including share count taxes and capital expenditures.
Barry: As well as a more detailed analysis on visual representation of the Tam expansion from AI that might discuss stadium.
Barry: In summary.
Barry: We will remain focused on executing against this massive market opportunity that is further expanding the day on which.
Barry: Which would drive long term shareholder value.
Barry: In addition, we look forward to updating you on our progress of achieving stronger profitability for the remainder of the year.
Speaker Change: Operator, Please go ahead.
Speaker Change: Thank you and we'll now move over to the Q&A portion of our call. As a reminder, please limit yourself to one question.
Speaker Change: Our first question today comes from Ryan Macwilliams from Barclays.
Ryan Macwilliams: Hey, guys. Thanks, taking the question.
Ryan Macwilliams: And then for Barry just on the headwinds to the dollar based net retention rate.
Barry: Is this mostly macro impacting coal volumes or are you noticing a pickup in customer agent head count reductions and was there any changes to turn rates in the quarter. Thanks, Yeah. So I'll take the last part first in terms of luggage and no there was no.
Speaker Change: Pick up.
Speaker Change: Darla.
Speaker Change: Actually slightly during the quarter.
Speaker Change: In terms of the.
Speaker Change: Packed.
Speaker Change: The.
Speaker Change: And then so basically continuing to grow.
Speaker Change: It is simply growing at a slower rate, but we did was we.
Speaker Change: We highlighted our most seasonal customers Ryan.
Speaker Change: By going back a few years looking at the H one to H to change.
Ryan Macwilliams: Ooh, which companies were the biggest drivers for that and it was.
Ryan Macwilliams: Pectic bunge in not just in consumer, but also in health care and education things.
Ryan Macwilliams: Things like fashion.
Ryan Macwilliams: Gourmet Foods online education health care insurance home they call it.
Speaker Change: And we.
Speaker Change: He spoke with them.
Speaker Change: And as Dan can elaborate as it customarily do in the middle of the year.
Speaker Change: And they are talking about a.
Dan Burkland: A meaningful reduction in terms of the rate of seasonal uptick in the fourth in the in the August December period, and that is why do we took into account.
Speaker Change: So there's still just to clarify that theyre still adding seats they are still adding.
Speaker Change: Seasonally but just doing so.
Speaker Change: More conservative manner and not at the rates they once were.
Speaker Change: And then I didn't address usage part of the question for us.
Speaker Change: They doesn't living doesn't cadmium and in dollars of course, the usage from the telecom guess east coast, but slowly over time, but they tend to move in tandem.
Speaker Change: So it's mostly changes in guidance from your customers run their plants for the fourth quarter.
Speaker Change: Succinctly stated, yes, thanks, guys I appreciate it.
Speaker Change: Thank you.
Speaker Change: Our next question will be from Scott Berg from Needham.
Speaker Change: Okay.
Scott Berg: Hi, everyone and thanks for taking my question here lots of them.
Scott Berg: I guess I wanted to start off with any changes in the sales organization.
Scott Berg: Sounds like a lot of changes sounds a little bit like a knee jerk reaction to a single quarter, especially given your bookings last four quarters five quarters had been generally pretty positive you guys been fired up with some large ones. There help us understand why all of these changes and I guess is it really a reaction to the second quarter or something more broad.
Scott Berg: That you are trying to watch rollout yeah. Thanks, Scott and one thing just to note. We are in a room that we may be audibly challenged so we're trying to speak up because we heard our mic wasn't quite picking up the audio so.
Speaker Change: We're gonna be speaking a little louder than normal if you have trouble hearing us do not hesitate to let us know.
Speaker Change: I will repeat ourselves but.
Speaker Change: This was absolutely not a knee jerk reaction in any way shape or form it it's really a.
Speaker Change: Situation, where.
Speaker Change: We had an EVP of sales several years ago.
Speaker Change: I've been stretched thin with lots of different responsibilities across the company.
Speaker Change: I really enjoyed my time with you all and working on strategy and working with our partners and we just wanted to make sure. We have somebody every single day that is 100% dedicated to the sales execution.
Speaker Change: Making sure we have the right market coverage doing some realigning of our segments I know, we've talked about commercial and mid market enterprise and strategic teams and just making sure that we've got the most optimal coverage model. So that we can maximize our bookings so nothing nothing it's not a lot of changes, it's really just adding more X.
Speaker Change: For Ts and more focus into the sales execution and that's going to be for the long haul we have an EVP of sales leave about four years ago, and I said I'm not going to replace them I will just roll up my sleeves and do it all.
Speaker Change: We've now come to a point, where we're a billion dollar company.
Speaker Change: On a run rate basis, and really feel like we need to add to the leadership team. So that's what we've done.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Matt Van Vliet from BP I T.
Speaker Change: Okay.
Speaker Change: Hey, good afternoon, and thanks for taking the question I guess.
Speaker Change: Looking at all the contract terms for a bunch of the AI and automation products are shaping up how are your customers looking at purchasing that and how much of a change in dynamic of our revenue model do you expect to occur over the next couple of years.
Speaker Change: It sort of wrapped in that cannot maybe offset some of these lower seasonal uptick on a seat basis by by adding more product. Thanks.
Dan Burkland: Thanks, Matt I'll start Dan feel free to chime in.
Dan Burkland: You know we've talked about pricing for a while now Matt in terms of AI and automation solutions.
Dan Burkland: We offer both consumption based pricing and other models for all of our AI solutions don't want to be clear about that.
Dan Burkland: Some are more appropriate on a per seat basis. Some are more appropriate on a per port basis. Some are more appropriate on a consumption basis and quite frankly, we offered options to our customers relative to that.
Speaker Change: We've also talked about the.
Speaker Change: The expanded Tam from AI and you'll.
Speaker Change: You'll see on our Investor presentation up on our website quantification of that I talked about in my prepared remarks.
Speaker Change: Yeah, and a 15% automation case, where everything you know 15% of transactions go to self service, we get a 30% increase in our town.
Speaker Change: And.
Speaker Change: Happy to do a little more math and there's some math on the in that slide on the investor deck, as well, but Dan feel free to chime in yeah.
Dan Burkland: I know you said it well.
Speaker Change: Totally.
Dan Burkland: When I give flexibility to the customers to purchase and the way that fits their business model the best and sometimes that's proceed.
Dan Burkland: But there's obviously lots of AI products that don't really tie to a seat.
Dan Burkland: Like insight as an example, I gave one of the examples of customers that's across the domain or across the tenant if you will and so certain things are best done.
Dan Burkland: On a consumption basis, whether that be on a per minutes like our long distance usage or whether it be on a per gig of data.
Dan Burkland: We have transcription services summary services and so those are clearly.
Dan Burkland: Some people wanted just to add that to their seat if it's for a human but others will want to simply do it on a consumption basis, especially when we're transcribing.
Dan Burkland: And delivering summaries of things like.
Dan Burkland: Ipas or dba's, they really don't tie to an agent. So therefore, it's more appropriate to do it on a consumption.
Dan Burkland: Okay.
Speaker Change: Great. Thank you. Thanks.
Matt: Thanks, Matt.
Dan Burkland: Next well hear from Arjun Bhatia from William Blair.
Arjun Bhatia: Alright, perfect. Thank you guys.
Arjun Bhatia: So I understood I think what you were saying about the seasonal patterns and how you are baking that into outlook, but when you think about the June bookings how much of that.
Barry: Would you attribute to macro versus go to market execution, and then Barry what would you.
Barry: Encourage us to think from June bookings in Q4 seasonality as we just think about our 2025 gross estimates. Thank you.
Barry: Yes.
Barry: Great question about the bookings, it's absolutely a combination of the two I mean, when we look at it and we say.
Speaker Change: Is the is the scrutiny and.
Speaker Change: Budget constraints.
Speaker Change: Macro in some senses sure budgets are tight people are prioritizing you've got to build and deliver a very compelling ROI to get to the top of the stack, if you will and get prioritized.
Speaker Change: But theres also a sales execution in my mind wasn't.
Speaker Change: Up to snuff it certainly wasn't up to the standard that we like to hold our folks too.
Speaker Change: Had one of the most.
Speaker Change: And continue the most productive.
Speaker Change: Our world class sales organizations that we're extremely proud of.
Speaker Change: But we're never going to rest on our laurels, we're always going to want to look for new ways to maximize the effectiveness and maximize our success and so just adding more focus.
Speaker Change: Being able to execute at an even higher level is something that we're looking for it to but yes, a little bit of macro a little bit of sales execution, a little bit of customers kind of having all of this technology coming out of not only from us.
Speaker Change: And from the other folks right within our space, but lots of SaaS products are facing the same dilemma, which is how do you help the customers prioritize their budgets.
Speaker Change: We're focused on it we're very.
Speaker Change: Very bullish about the future and as Mike mentioned, we've got a portfolio, that's just continuing to to be.
Mike Burkland: Very accepted by our customers and prospects and they love, where we're going with everything so long term. We think we are absolutely in the driver's seat to two.
Mike Burkland: Helped drive this market.
Mike Burkland: John with respect to 2025.
John: We would love to.
John: Give you a announcer.
John: We are creatures of custom and we customarily do this in November when we report I think quite a give an initial look and then thoughts.
John: Coming up later on and especially given the current.
John: Turbulence in the economic environment, we prefer to stick to that.
Speaker Change: Alright fair enough. Thank you okay.
Speaker Change: Next well hear from Piper Sandler Jim Fisher.
Speaker Change: Okay.
John: Okay.
Jim Fisher: Great I turned into a fisher as opposed to a fish, but right.
Speaker Change: But I don't have as good of a sure.
John: Felipe, but I apologize for that.
Speaker Change: I did want to work off of Ryan's by your question on kind of two aspect guys. You guys had been expecting <unk> to be Crawford I get the rationale why but why wouldn't and Aurora kind of stay at this range into the foreseeable future and how much do these AI cross sells actually impact and there aren't at this point.
John: So.
Speaker Change: Again, let me take the last part first.
John: They cross sell for AI is somewhat helpful, but to be perfectly candid.
Speaker Change: The attach rate is much higher on the new bookings.
John: And.
John: It's still so small in an installed base that.
John: It just can't move the needle that materially.
John: In terms of the N R R.
Speaker Change: You do need to think of it in terms of two buckets top bucket, which is somewhat smaller but important and then the bottom bucket, which is bigger in terms of the top bucket. These are they.
John: The Mega deals that they can find a calling them that take more than 12 months too.
John: To go alive, and therefore help the.
John: They are in the meantime, and that has been the case, we predicted it would be the case and it is a case with normal ebbs and flows.
John: We are seeing clearly.
John: That's some slowing of the growth.
John: Is in the bottom bucket, if you will the irregular.
John: Did it run of the mill deals.
John: And we.
John: We know our Suzhou is if people are going to be that that's not to do with the negative aspects of I thought that people.
Speaker Change: Reducing the seats because of that it's simply because of the macro environment. When we speak to these customers. We look at things like Ah I forget the exact phraseology, but a difficult environment constrained, we're getting out of that particular business et cetera, and that's what's driving the DVR or one thing, though that we are.
Edwin: Supremely confident about is that at a certain point in time that Edwin.
Speaker Change: The economy is going to rebound and we will then be in an extremely good position because I love our retention has been excellent and it's easy to add seats to accommodate that extra growth.
Speaker Change: Thank you guys. Thank.
Jim Fisher: Thanks, Jim.
Speaker Change: Next we'll hear a question from CPE Penny Karri.
John: Zillow.
John: Okay.
Speaker Change: Thanks for taking my question.
Speaker Change: I want to focus on that because you sound I can it looks like you have a partnership with them more than two years now and are you guys talked about some of the deals they add more than million million half kind of deal with it so help us understand like how many customers do they have what kind of overlap you have and what's the revenue.
Speaker Change: They have it.
Barry: And Barry like when he said no revenue contribution it May trail is it because of that there therefore write down or anything else.
Speaker Change: Barry I'll start and then you can chime in situ.
Barry: <unk>. Thanks for the question Yeah, we're really excited about <unk>.
Barry: As I said in my remarks.
Barry: They bring us an ability to expand into a broader CX category beyond.
Barry: Inbound customer service now we have outbound solutions, but there is an omnichannel outbound proactive engagement.
Barry: Our platform and it's a best in class.
Barry: And it it really brings us into the world of marketing and E Commerce and sales in some respects. So it's a massive opportunity its a big step for us on our mission to really be the orchestration engine for interactions between our brand and the consumer across the entire customer journey. So I'll just repeat that.
Speaker Change: In terms of.
Barry: The size of the business.
Speaker Change: Still a pretty small business.
Barry: And yeah. That's that's the kind of acquisition, we look for great technology very innovative.
Barry: Very synergistic in terms of the customers that we win together some of the largest of our large enterprise customers are maggots are.
Barry: Are using <unk> and that.
Barry: That to us is a huge proof point.
Speaker Change: And you heard the size of the deals from you know and they are our perspective in terms of aqueous solution. So this is not a.
Barry: Tiny revenue opportunity going forward, even though it's a fairly early stage company that I frankly, I think we've picked them up with the perfect time. So that's the kind of acquisition, we like to do Barry.
Barry: Yeah and.
Barry: Wow.
Barry: The company has kind of been growing currently it's still quite small as Mike said.
Speaker Change: In particular with respect to Q4 and you alluded to this in your question.
Speaker Change: We need to look at the quarter their contracts in detail. Please.
Speaker Change: Them under $5 nine policy accounting policies.
Barry: And see what sort of haircut it will be because we know that already and we just haven't had the time to do that yet so stay tuned.
Barry: We will keep you fully informed about what actually transpired.
Barry: Okay. Thank you.
Barry: T.
Barry: Next we will hear from Terry Tillman truest.
Terry Tillman: Yes, thanks for taking my question.
Terry Tillman: It's a bit of a multi parter, but there's a number of things to unpack. So hopefully youll bear with me here I mean this is one of those areas I feel like is an imperative contact centers you all been talking about it for a while as well if you wanted to do AI and automation and Bruce you actually you got to get to the cloud. So some of the deals that slipped out of June and you didn't close any mega deals I think you said.
Speaker Change: I mean, what are they saying, they're just going to kick the can down the curb 25 or 26 or do you think some of these deals are going to close in the <unk> you just want to be conservative and kind of related to this because of these mega trends. What are you seeing at the top of the funnel around demand Gen is any of that changing some of those forward leading indicators. Thank you.
Speaker Change: Yeah, Thanks, Terry I'll start it and feel free to chime in very Mike, but if you look at the quarter at the end of at the end of June in particular, which as we naturally like many sales organizations have quite a hockey stick right at the end of the quarter.
Mike Burkland: And some of the decisions like you said are they just going to stick with with Prem and kick it down the road some more.
Speaker Change: It's less that and more looking at the prioritization of their budgets right. They've got to look at things that are going to return right away and a lot of things.
Speaker Change: And some of the larger mega deals and multimillion dollar annual deals.
Speaker Change: They know that ROI isn't going to start realizing itself for a year plus.
Speaker Change: So it's it is one of those things thats easy to kind of say Oh, we need a return in the next six months that.
Speaker Change: That's not even going to start generating.
Speaker Change: I'll return for a year plus the other thing to note is.
Speaker Change: We had some pushes as well that just pushed out into the next quarters.
Speaker Change: One of the reasons for our adjusted guidance is that those deals that happen from.
Speaker Change: From now on don't contribute to the to the year from a revenue perspective, so as bullish as we are with our pipeline and with our market coverage and top of funnel as you mentioned.
Speaker Change: It still doesn't help us for this year because the commercial business, yeah, we can get that up and running and the stuff. We sell in this quarter, we can get a little bit of revenue by the end of the year, but for the enterprise business and the strategic business. Those are definitely 2025 impacts to the revenue revenue number.
Speaker Change: Anything else.
Speaker Change: Yes, I'll just add one thing Terry and that as Rfps continue to be at record levels. So to me that's always a good indicator of the health of the demand in the market.
Terry Tillman: We see that continuing to stay at that new normal which is relatively double what it was say five six quarters ago.
Terry Tillman: Yeah.
Speaker Change: One other thing that we talked to and I talked to in the prepared remarks about the added focus on our partnerships. We're also seeing our channel partners and our routes to market.
Speaker Change: Enjoying as I mentioned.
Speaker Change: <unk> rated us in the Bird survey.
Terry Tillman: <unk>.
Terry Tillman: Easy to do business with number one and are preferring our AI story and solutions.
Speaker Change: Number one as far as most likely if all the folks that they distribute whose.
Speaker Change: Who's going to benefit most from AI and they chose <unk> by far so we're feeling very good about that approach and they help fill the top of the funnel along with us.
Speaker Change: Thanks, a lot thanks.
Speaker Change: Right.
Speaker Change: Next we will hear from DJ Hynes from Canaccord.
DJ Hynes: Hey, guys.
DJ Hynes: So Barry your old guidance had pretty material reacceleration baked in for the second half.
DJ Hynes: It was predicated on kind of the implementation backlog standing up where it sounds like nothing has really changed there and then the seasonal stuff kicking it right I understand that that's not happening.
Speaker Change: Does this mean that the acceleration gets pushed out by a couple of quarters or is what youre seeing now calling into doubt that that reacceleration happens.
DJ Hynes: So.
Speaker Change: We cannot.
Speaker Change: Comment DJ on the timing of the.
Speaker Change: A reacceleration.
Speaker Change: Because we've given our guidance and we're not going to go beyond that.
DJ Hynes: We've been pretty explicit about that.
DJ Hynes: I do want to.
DJ Hynes: And all of us.
Speaker Change: I'll stop there.
Speaker Change: I mean, if there was ever a time to make an exception to the rule of Berry.
DJ Hynes: What the Hell.
DJ Hynes: So.
DJ Hynes: What I'm a bit worried about and all of this conversation is that there is.
DJ Hynes: A lack of clarity in terms of our responses in terms of what has driven that.
Speaker Change: Reduction in the in the guidance that you asked about <unk>.
Speaker Change: There are three.
DJ Hynes: <unk>.
Speaker Change: I'll give you the ordinal ranking.
DJ Hynes: The biggest.
DJ Hynes: Most material.
DJ Hynes: <unk> margin is the.
Speaker Change: Aloha go gets that we referred to.
DJ Hynes: It may be a bit surprised by that but we we got we got meaningful P. S revenue, especially as the companies go higher and higher up in the chain.
DJ Hynes: And then scale.
DJ Hynes: We also have the Q4 revenue from.
DJ Hynes: Two lines.
DJ Hynes: Cutting revenue I'm talking about subscription revenue.
DJ Hynes: And so that is the biggest one of the three.
DJ Hynes: The second one.
DJ Hynes: We obviously like all other companies.
DJ Hynes: Sure with his feet a number that's a little bit lower than nine total forecast that we have scrubbed it very very carefully.
Speaker Change: I want to do this.
DJ Hynes: Once every 10 years type of thing.
DJ Hynes: And.
DJ Hynes: This is not an environmental big beats.
DJ Hynes: But that is the second biggest and the third biggest is the one that we've been spending the most of them don't know about which is the seasonal.
DJ Hynes: And.
DJ Hynes: That's actually the water ranking so.
Speaker Change: I wanted to get that off my chest.
Speaker Change: Alright I appreciate it thank you.
P J: Thanks P J.
Taylor mckinnis: Next we will hear from Taylor mckinnis spend new UBS.
Taylor mckinnis: Yeah.
Taylor mckinnis: Yeah, Hi, Thank you. So much can you guys hear me, we can yes, Taylor perfect awesome minute place if not the great service that that's good I'm very I'm just.
Speaker Change: Just wondering if you could just give us a little bit of color on the three different buckets and how those might be impacting the guide to for instance, if we look at the old guide and incremental recurring revenue our air are needed in the second half to hit that guide can you maybe give us a sense of the portion of that that was coming from existing ramp new logos and seasonal.
Speaker Change: Increase so and then how that might differ under the new guide just so we can happen help therein in quantifying it yeah. So thank you Tanner and why I'm actually going to do is talk about the.
Speaker Change: Recurring revenue increased year over year.
Speaker Change: Assuming 8% for the second half of this year as well and from memory, maybe off a little bit but not by much we're talking about a year over year increase in the second half of recurring revenue on the order of $42 million.
Speaker Change: And.
Speaker Change: The breakout of that is roughly 70% of that from the installed base, 30% from.
Speaker Change: The new logo, the PFS and the recurring revenue in the fourth quarter.
Speaker Change: Perfect. Thank you so much.
Speaker Change: Thank you.
Speaker Change: Next we will hear from Peter Levine from Evercore.
Peter Levine: Thanks, guys for squeezing me in here.
Peter Levine: I appreciate all the color maybe just one on just gross margin op margin, we've seen some compression kind of talked about the fed ramp.
Speaker Change: Investments in the infrastructure, but they need to show us like Wednesday inflection right because I think that's maybe one pain point for some is we're not seeing the leverage in the model as we would've expected at this point in time my cannot take that sure Barry go ahead.
Peter Levine:
Speaker Change: We're going to see inflection in gross margins in the second half of the ETA.
Speaker Change: <unk> guided to that explicitly without 227 EPS.
Speaker Change: And you can get from day to the EBITDA margin, which we said explicitly.
Speaker Change: Q3 will be higher than Q2, and Q4 will be higher than Q3, it'll be above 20%.
Speaker Change: We feel very good about that Peter.
Speaker Change: There's not 100% certainties, but.
Speaker Change: The stars and the Moon aligning to get some dividends. We also discontinued with headroom to figure out what is material, but it doesn't hit too.
Mike Burkland: Too much in the core aspect, India, Mike come likely soon.
Speaker Change: And between all of these initiatives starting to pay dividends, we will see improved gross margins in the second half.
Speaker Change: It looks like are you seeing any pricing compression just on their core voice contact center seat I know, it's typically been a 150 per month is that steady or are you seeing any.
Speaker Change: I know, there's a lot more competitors in the space today than it was 12 to 24 months ago, maybe just any color on the core voice. It yeah. It's it's stayed very steady in fact, yes, there is theres occasions on AR.
Speaker Change: Deal by deal basis, where somebody will get super aggressive to go try to buy business, but for the most part which maintained very very steady pricing on the quarter and the beauty. There is we got so much more add on skus that when we look at it given customer when we used to sell a.
Speaker Change: And enterprise with.
Speaker Change: 10000 employees and you've got a you know, let's say a thousand seats or so when we would go into those environments.
Speaker Change: The revenue that we could extract or get wallet share. If you will that we could get from that customer was much lower.
Speaker Change: Even just two or three years ago, because we've added so much more to the portfolio. When you start looking at the different AI solutions that we have obviously the idea is the most common and most prevalent but then you've got the whole <unk> suite.
Speaker Change: We've got other partnerships that we brought into resell other products. So we're getting more and more if you look at our revenue per seat metric. It's continued to rise very steadily across our base overtime. So its not price erosion thats actually been.
Speaker Change: Moving in the other direction in a positive way.
Andrew: Thank you Andrew.
Speaker Change: Next we will hear from meta Marshall Morgan Stanley.
Marshall Morgan: Great. Thanks, so much.
Marshall Morgan: Maybe a question just on <unk>.
Speaker Change: Noted kind of sales execution, but I guess I just wanted to get a sense of is the time to get these deals signed off on a long journey just because of the amount of things that you were kind of throw it into the RFP is like while you're trying to throw in kind of AI and other pieces of it it's just kind of taking longer to get those approvals more so.
Speaker Change: And then execution and then just as a second question I know you guys have that kind of expanded the professional services. It's just that channel are kind of enabled more implementation by the channel just any different trends that you're seeing there. Thanks, yeah. Thanks needed to cover the first one is.
Speaker Change: As far as the added approvals in <unk>.
Marshall Morgan: Several extra meetings with all the data that's flowing around with AI and all the different solutions absolutely.
Speaker Change: Absolutely you have more meetings, but that's been the case for several quarters I mean, we've talked about that for the last year year to two years and so once you have that initial delay.
Speaker Change: It shouldn't affect sales right and it's just that we started the deal earlier.
Marshall Morgan: When they come in so we track very closely days to close from the moment that the opportunities entered into our system to when it closes.
Speaker Change: It had elongated a little bit.
Speaker Change: A while back.
Speaker Change: Because of that extra extra time.
Speaker Change: In Q2, we had some elongated sales cycles as well, but I don't I don't equate it with that and the approval its necessary as much as I do with the budgets and the prioritization and the timing of.
Marshall Morgan: The customers are in the same boat right, they're looking at the macro economy, and having trouble pulling the trigger on.
Marshall Morgan: Spending their entire budget and they've had budgets being reduced to so it's just a more competitive environment not so much with our direct competitors, but youre competing for overall spend by those enterprises and some of those folks have kind of paused or delayed or pushed some of their budget to lay.
Marshall Morgan: In the air because they want to wait and see what's going to happen with the economy as well.
Speaker Change: And maybe I'll comment on your other question about what we call project pull through right. When this is enabling third party partners to do the implementations we continue to.
Marshall Morgan: See the percentage of implementations being done by partners increase consistently every quarter.
Andy: Andy and team have done a great job of just leaning in with more partners were still being pretty focused here in terms of how many partners were allowing to do this because again.
Andy: You know white-glove slash NPS scores are.
Marshall Morgan: We've always taken a lot of pride in that and we're making sure that our partners continue to do that and they are doing it very well.
Marshall Morgan: Yeah.
Marshall Morgan: Great. Thank you thanks Peter.
Speaker Change: Our next question comes from some odd Simona from Jefferies.
Simona: Hi, Good evening. Thanks for taking my question, maybe first one just I appreciate all the disclosure and there's a lot of moving parts, but if I just if I think about the implied <unk> guidance.
Speaker Change: <unk>, 9% subscription revenue growth, Barry and what I'm trying to understand is to get to that number it tends to suggest that maybe new booked dollars were down in the first half of the year versus 2023 is that right in his new book are are.
Speaker Change: Down flat or up and for the first half and I guess more importantly, Q because just the magnitude of that $40 million reduction to the implied for Q numbers suggest that right.
Speaker Change: New bookings may be actually coming in are declining or contracting can you just help us understand that part of it. Please yeah. One thing great. Some odd one thing you've got to understand is that the mega deals and those million dollar deals cause lumpiness.
Speaker Change: Quarter to quarter.
Marshall Morgan: And year over year quarter over quarter, when I say, a Q2 versus Q2.
Marshall Morgan: You may recall last year in Q2, we had a significant 20 million dollar insurance company that we booked.
Speaker Change: We didn't have that this quarter. So could you say that bookings were down you could [laughter].
Speaker Change: But the revenue that that $20 billion insurance company is generating that's that's a long long implementation cycle. So.
Speaker Change: The health of the bookings that occurred meaning.
Speaker Change: Meaning the timing of when they convert to revenue.
Speaker Change: We didn't have any of those big Mega deals that are going to start revenue in a year or two from now so in one sense most of that'll get revenue starting at the beginning of 2025.
Speaker Change: So it's hard to just look at a singular quarter and ascertain and come to a conclusion that a hot that's an impact it depends what's in those bookings. So if you take out some of those big anomalies.
Speaker Change: We had a very very.
Speaker Change: Steady solid quarter I'll put it that way, but we just didn't have those big when you looked at the million dollar deals that I shared 1111, and then we had the one that kind of straddled the Q1 Q2.
Speaker Change: Which was more significant but but that's the overall pipeline is healthy we feel very good about.
Speaker Change: The top of funnel as well as what we're forecasting for the remainder of the year.
Speaker Change: Great and then maybe just a follow up.
Speaker Change: I fully appreciate the complexity of what.
Speaker Change: We have a world that is changing rapidly and there's a lot of a lot of volatility.
Speaker Change: And I guess my question, though is it feels like it's been about four to six quarters, where it seems the visibility and the guidance is lower or maybe there may not be as much visibility as anticipated.
Speaker Change: I look at the guidance history is it time to maybe rethink the way that you're building up your guidance youre, making some kind of permanent change the assumptions.
Speaker Change: Because I think that's creating volatility in our estimates and the outlook I'm just curious if theres any rethinking on the.
Speaker Change: Framework to guidance in and of itself.
Speaker Change: So very fair question.
Speaker Change: Asia is a tense its implying a future tense about thinking we've rethought.
Speaker Change: We are not going to be.
Speaker Change: As you.
Speaker Change: We're not going to have the beats its not the environment for them, but.
Speaker Change: Look for every foreseeable thing that we could look for and put it in there and.
Speaker Change: Of course as always.
Speaker Change: Donald Rumsfeld said unknown unknowns, but leaving that as a singular exception.
Speaker Change: Done in the very best we can we don't like that environment that we will end.
Speaker Change: Understood I appreciate the thoughtful answers as always and thank you for the color. Okay. Thanks Ahmad.
Speaker Change: Our next question will be from Michael Funk from ESI.
Michael Funk: Hey, guys. Good evening and thank you for the question.
Michael Funk: So kind of related to the last question Barry on the Derisking and the guidance and the confidence level in the guidance understand you talked to customers to help you think about the back half of the year, I mean, but little bit less ramp.
Speaker Change: In fourth quarter.
Speaker Change: What is your impression, though the customers outlook for the economy and a lot of debate around recession, no recession, because their outlook incorporate a recessionary environment or not and if that did occur, but that'd be more down side your guidance yeah.
Speaker Change: Great question, Michael Thank you Ann.
Speaker Change: In its perplexing to me.
Jamie Dimon: This huge debate about are we in a recession are going into recession that we not Jamie diamond, taking it from 20% to 35% risk.
Speaker Change: Look at the Bank of America credit and debit card spending.
Speaker Change: In June it was down the hustle of about <unk> five.
Speaker Change: And by the way, that's nominal real tender, which matters to us it's negative J D. J P. Morgan Chase data is similar.
Speaker Change: And then we look at actual internal data.
Speaker Change: And it's clear that it's not as strong as it.
Speaker Change: It was in the past.
Speaker Change: And so in short in summary.
Speaker Change: The debate go on what we have seen is weakness amongst not just the consumer vertical but wanted to others, a little bit which we've allowed for in our in the projections, but also a little bit in health care.
Speaker Change: In education with your attitude vertical.
Speaker Change: Degree of seasonality.
Speaker Change: Yeah, I would just add Michael that.
Speaker Change: We talk to our customers, we definitely talk to our seasonal customers and while they cite kind of.
Speaker Change: The economic conditions.
Speaker Change: They usually stop short of predicting recession versus.
Speaker Change: Something less than that so but again, we look at the comments in those discussions with all of our seasonal customers and we've talked to all of them and.
Speaker Change: They're obviously, citing just this uncertainty out there.
Speaker Change: Our customers the comments on things like.
Speaker Change: Ongoing choppiness.
Speaker Change: Retailer cautiousness.
Speaker Change: Challenges from global macro and geopolitical I don't know.
509: 509 speaking this is our customer.
Speaker Change:
Speaker Change: Macro headwinds to continue throughout this year et cetera et cetera.
Speaker Change: But if your view of the customer is projecting a recession before wall street protecting a recession.
Speaker Change: I know wall Street is probably more soft landing a recession. It sounds like your customers now are gearing up for spending like it is going to be a recessionary in a recession, that's where like a quasi government that may well be and we could maybe do an ADP and started sideline business with an index or something like that.
Speaker Change: But they're.
Speaker Change: They're not they're not being very key.
Speaker Change: But they also growing a little bit, but just not as fast one thing to remember that's not them, making those comments about them not spending money or not.
Speaker Change: Purchasing software, it's about them not getting more volume into their contact center, so theyre talking about hey, our volumes coming into our contact centers are.
Speaker Change: Our growing but they're not growing at the rates they did last year.
Speaker Change: So that's what that is it's not to say that they're suffering or they're thinking recession or they're thinking things are slow.
Speaker Change: Lowing down its just not speeding up in.
Speaker Change: Theyre not inflicting.
Speaker Change: Seasonally like they did last year.
Speaker Change: Understood. Thank you. Thank you.
Speaker Change: Our last question today comes from Catherine truck Nick from Rosenblatt.
Speaker Change: Yeah.
Catherine Trunick: Hi, Thank you for taking the question.
Speaker Change: On your $1 million deals typically.
Speaker Change: That's where you really have your bread and butter during the quarter. So can you talk a little bit more is that a lot of very competitive area now with more players more pricing or is it just delayed because it seems like you're saying the funnel is healthy and the pipeline's healthy. So I'm just trying to reconcile that thank you.
Speaker Change: It's a delay in timing and our deal sizes were smaller this quarter.
Speaker Change: Yeah, I can't put my finger on a precise reason, but I think when you look back and we take a look at the overall health of the health of the pipeline.
Speaker Change: Yeah. It just was a lull for us are not concerned about it.
Speaker Change: We're taking action to go make sure we can make up for it and get back on the track that we love being on.
Speaker Change: To execute at a very high level and so we're taking actions to go do that we set a high standard for ourselves and we like to always live up to it and we didn't do that in Q2.
Speaker Change: But rest assured we feel very good about our long term prospects.
Speaker Change: All the way back to the beginning on the top of the funnel our partner community.
Speaker Change: Customer sentiment.
Speaker Change: You know there there's a across the board we feel very good about the long term.
Speaker Change: So.
Speaker Change: Thank you for taking my question I appreciate it you bet. Thanks Catherine.
Speaker Change: That concludes the Q&A portion of our call Mike I'll turn it over to you for closing comments yeah. Thank you all I just want to say a quick.
Mike Burkland: Heartfelt. Thank you to our five niners our team for your passion and your commitment.
Mike Burkland: To helping our customers achieve elevated CX, especially AI powered elevated CX. So thank you to the entire $5 19 for all you do we remain very very excited about the future in this market. So we'll keep you posted as the.
Mike Burkland: The next couple of quarters unfold.
Speaker Change: Thanks for joining us.