Q4 2024 Intapp Inc Earnings Call
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I would now like to turn the call over to David Trone Senior Vice President Investor Relations. Please go ahead.
Speaker Change: Thank you welcome to <unk> fiscal fourth quarter and year end 2024 financial results.
Speaker Change: On the call with me today are John Hall, Chairman and CEO of <unk>, and David Morton Chief Financial Officer during.
Speaker Change: During the course of this conference call. We may make forward looking statements regarding trends strategies and anticipated performance of our business.
Speaker Change: <unk> guidance provided for our fiscal first quarter and full year 2025.
Speaker Change: These forward looking statements are based on management's current views and expectations.
Speaker Change: Certain assumptions made as of today's date and are.
Speaker Change: Subject to various risks and uncertainties, including those described in our SEC filings and other publicly available documents.
Speaker Change: That are difficult to predict and could cause actual results to differ materially from those expressed or implied by such forward looking statements.
Speaker Change: <unk> disclaims any obligation to update or revise any forward looking statements, except as required by law.
Speaker Change: Further on todays call. We will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results, including non-GAAP gross margin.
Speaker Change: GAAP operating expenses non-GAAP operating income non-GAAP diluted earnings per share.
Speaker Change: And free cash flow.
Speaker Change: As a reminder, all of our financial figures, we will discuss today are non-GAAP, except for revenue and revenue growth.
In total remaining performance obligations.
Speaker Change: Our GAAP financial results, along with reconciliations of GAAP to non-GAAP financial measures can be found in today's earnings release and in supplemental financial tables.
Speaker Change: Which is available on our website and as an exhibit to the form 8-K furnished with the SEC prior to this call.
A supplemental financial presentation, which is available on our website.
Speaker Change: With that I'll hand, the conversation over to John.
John Hall: Thank you David.
John Hall: Good afternoon, everyone.
John Hall: Thank you for joining us.
John Hall: We're pleased to be here with you to share the results of our fiscal fourth quarter.
And full year fiscal 2024.
Speaker Change: I am pleased to share that we had another great year with strong results across the business, including cloud.
Speaker Change: Our growth of 33% year over year.
Speaker Change: We added new logos.
Speaker Change: Consistently grew existing accounts via cross sell and up sell.
Speaker Change: And deepened and expanded our international footprint.
Speaker Change: We released a new set of generative AI capabilities.
Speaker Change: Signed for the specialized needs of our target markets.
Speaker Change: And we expanded our product portfolio and R&D capability prove strategic acquisitions.
Speaker Change: And we continue to evolve our partner ecosystem with significant wins related to our strategic partnership with Microsoft.
Speaker Change: I'll share details on how each of these growth drivers impacted our performance throughout this call.
Speaker Change: As I noted earlier in Q4, our cloud <unk> grew 33% year over year to $297 million.
Speaker Change: Cloud now represents 73% of our total <unk> of $404 million.
Speaker Change: In the quarter, we arent SaaS and support revenue of $85 million.
Speaker Change: Up 25% year over year.
Speaker Change: Total revenue of $114 million up 21% year over year.
Speaker Change: Additionally.
Speaker Change: We now have 73 accounts with <unk> of more than $1 million.
Speaker Change: Our year over year increase of 38%.
Speaker Change: Notably this number was partially driven by an uptick in large enterprise investment banking deals in our fiscal third and fourth quarters.
Speaker Change: And we continue to increase our profitability and free cash flow this year.
Speaker Change: We enter fiscal year, 2025, with optimism and confidence that our vertical SaaS platform applied AI strategy and strong competitive position are a strong foundation for sustained growth and execution in this large addressable.
Speaker Change: Market.
Speaker Change: Now I will share some highlights from <unk> fiscal year 2024.
Speaker Change: I'll start with product innovation.
Speaker Change: Which continued to drive our growth in fiscal 'twenty four.
Speaker Change: As I've previously shared in taps intelligent cloud is specifically designed for the unique needs of the firms we serve.
Speaker Change: The same is true for the robust set of applied AI capabilities that we released this year, where our deep understanding of the applications of AI for our professionals in our markets are creating the most effective and high value outcomes for our clients.
Speaker Change: With each consecutive quarter of fiscal 'twenty, four we made advancements to our applied AI portfolio and roadmap.
Speaker Change: Including in tap assist for deal cloud.
Speaker Change: It integrates AI into everyday workflows to save professionals time by generating deal company and meeting summaries and creating personalized targeted relationship outreach.
Speaker Change: The capability has already been adopted by clients, including law firm Anl Goodbody.
Speaker Change: The investment team at U S Realty advisors, and private equity firm and venture.
Speaker Change: We also launched in tap walls for co pilot.
Speaker Change: As exciting as new generative AI is in so many areas of the market. It also brings with it a risk of over sharing.
Speaker Change: Sensitive information.
Speaker Change: In our market firms are particularly vulnerable to this.
Speaker Change: Our new offering is designed to help address the over sharing risk.
Speaker Change: AI rolls out in the market.
and Relationship Outreach.
Speaker Change: And as uniquely tuned to the confidentiality and security requirements, our end market faces.
The capability has already been adopted by clients, including law firm A&L Goodbody, the investment team at U.S. Realty Advisors, and private equity firm InVenture.
Speaker Change: Recently, the CIO of an am law 50 law firm.
Speaker Change: Told us quote without intact walls, providing the confidentiality and security policies to teams and sharepoint.
We also launched InTap walls for co-pilot.
As exciting as new generative AI is in so many areas of the market, it also brings with it a risk of oversharing sensitive information.
Speaker Change: We would not have been able to rollout Microsoft co pilot.
Speaker Change: Knowing we could be at risk of over sharing data with unauthorized users.
In our market, firms are particularly vulnerable to this.
Our new offering is designed to help address the oversharing risk as AI rolls out in the market and is uniquely tuned to the confidentiality and security requirements our end market faces.
Speaker Change: Other AI features that we announced include in tap data.
Speaker Change: Our core capability available to all deal cloud clients that augments firms internal intelligence with information on more than 85 million companies and 200 million contacts in our markets.
Speaker Change: recently the CIO of an AmLaw50 law firm.
Speaker Change: And deal clouds activator experience.
Speaker Change: told us, quote, without intact walls providing the confidentiality and security policies to Teams and SharePoint.
Speaker Change: Which helps facilitate professional successful business development behaviors and habits using intest AI powered signals.
Speaker Change: We would not have been able to roll out Microsoft Copilot knowing we could be at risk of oversharing data with unauthorized users.
Speaker Change: Private equity focused financial and consulting firm accordingly.
Speaker Change: Recently selected deal cloud to help its professionals adopt activator behaviors, giving them a competitive edge.
Speaker Change: Other AI features that we announced include in-tap data.
Speaker Change: In managing client relationships and growing their business.
Speaker Change: A core capability available to all DealCloud clients that augments firms' internal intelligence with information on more than 85 million companies and 200 million contacts in our markets.
Speaker Change: Their CEO told us that.
Speaker Change: But the way we've infused our platform's core functionality with an understanding of what it takes for firms like this to win new business.
Speaker Change: and FieldCloud's Activator Experience, which helps facilitate professional successful business development behaviors and habits using Intap's AI-powered signals.
Speaker Change: With a key factor in their decision to purchase deal cloud.
Speaker Change: Our applied AI strategy is winning.
Speaker Change: And helping to deepen client confidence, especially among larger firms.
Accordion: private equity focused financial and consulting firm, Accordion.
Speaker Change: In fact, the investment banking arm.
Speaker Change: recently selected D.O. Cloud to help its professionals adopt activator behaviors, giving them a competitive edge in managing client relationships and growing their business.
Speaker Change: One of the largest global financial services groups.
Speaker Change: Selected deal cloud.
Speaker Change: And recognize the value of including in tap assist.
Speaker Change: their CEO told us that the way we've infused our platform's core functionality with an understanding of what it takes for firms like this to win new business.
Speaker Change: To support a set of aggressive near term financial goals.
Speaker Change: Their decision to replace their legacy CRM was based in part on the strength of our applied AI strategy and product roadmap.
Speaker Change: was a key factor in their decision to purchase DealCloud.
Speaker Change: We also continue to invest in our industry solution strategy, which.
Speaker Change: Our applied AI strategy is winning.
Speaker Change: Which incorporates built in configurations to enable best practices for the various markets, we serve via close to a dozen pre populated industry blueprints.
Speaker Change: and helping to deepen client confidence, especially among larger firms.
Speaker Change: In fact, the investment banking arm of one of the largest global financial services groups
Speaker Change: Our deal cloud adoption rates and accelerated deployments.
Speaker Change: Selected D.O. Cloud
Speaker Change: and recognize the value of including InTapAssist.
Speaker Change: Emmons straight that our blueprint strategy is gaining traction.
Speaker Change: to support a set of aggressive near-term financial goals.
Speaker Change: In Q1 store Skagen Stockholm.
Speaker Change: Stockholm based international group of businesses across trade industry and services chose our blueprint for corporate development.
Speaker Change: Their decision to replace their legacy CRM was based in part on the strength of our applied AI strategy and product roadmap.
Speaker Change: In Q2, Trans Atlantic Middle market for Rone group chose to leverage our private equity blueprint.
Speaker Change: We also continue to invest in our industry solution strategy, which incorporates built-in configurations to enable best practices for the various markets we serve.
Speaker Change: And in Q4, a global consulting firm.
Speaker Change: Chose our advisory industry blueprint pre configured specifically for consulting firms.
Speaker Change: via close to a dozen pre-populated industry blueprints.
Speaker Change: Now I would like to continue the conversation on innovation, but.
Speaker Change: our Deal Cloud adoption rates.
Speaker Change: and accelerated deployments demonstrate that our blueprint strategy is gaining traction.
Speaker Change: But focus on our M&A activity.
Speaker Change: During the second half of fiscal year 'twenty four we continued to add important technology capabilities to our cloud portfolio through acquisition.
Speaker Change: In Q1, Storskoggen, a Stockholm-based international group of businesses across trade, industry, and services, chose our blueprint for corporate development.
Speaker Change: In February we announced our acquisition of Delphi.
Speaker Change: Our cutting edge organization that applies AI across public data, helping to ensure that firm a graphic data is collected structured and presented to professionals with critical provenance.
Speaker Change: In Q2, transatlantic middle market firm Roam Group chose to leverage our private equity blueprint.
Speaker Change: and in Q4, a global consulting firm.
Speaker Change: chose our advisory industry blueprint pre-configured specifically for consulting firms.
Speaker Change: This acquisition is a further step forward for <unk> AI strategy and augments, our already rich AI talent.
Speaker Change: Now I'd like to continue the conversation on innovation, but focus on our M&A activity.
Speaker Change: The integrated team has been highly productive since the acquisition.
Speaker Change: During the second half of fiscal year 24, we continued to add important technology capabilities to our cloud portfolio through acquisition.
Speaker Change: Enriching, our internet data offering with more than $15 million.
Speaker Change: <unk> driven data points.
Speaker Change: That equip our firms with information on companies deals and opportunities.
Speaker Change: In February, we announced our acquisition of Delphi, a cutting-edge organization that applies AI across public data, helping to ensure that firmographic data is collected, structured, and presented to professionals with critical provenance.
While creating more proprietary training opportunities for our in house AI models.
Speaker Change: And in May we acquired transform data international.
Speaker Change: A longtime partner that builds and implements enterprise collaboration technology for our markets.
Speaker Change: This acquisition is a further step forward for Intep's AI strategy and augments our already rich AI talent.
We believe the combination of <unk> solutions and TDI is domain expertise will further optimize our clients work within Microsoft applications.
Speaker Change: The integrated team has been highly productive since the acquisition, enriching our intact data offering with more than 15 million Delphi driven data points.
Speaker Change: Together will facilitate better collaboration.
Speaker Change: And lay the groundwork for more successful vertical lives applications of AI tools like co pilot.
Speaker Change: that equip our firms with information on companies, deals, and opportunities, while creating more proprietary training opportunities for our in-house AI models.
Speaker Change: Plans to integrate TDI is advanced search capability into our collaboration solutions are already helping to influence deals and strengthening our ability to help firms derive more value from their Microsoft investments.
Speaker Change: And in May, we acquired Transform Data International, a long-time Intap partner that builds and implements enterprise collaboration technology for our markets.
Speaker Change: On that note I'll turn now to our partner ecosystem.
Speaker Change: We've also made significant progress throughout the fiscal year.
Speaker Change: We believe the combination of InTap solutions and TDI's domain expertise will further optimize our clients work within Microsoft applications.
Speaker Change: Our strategic partnership with Microsoft continues to support our global growth.
Speaker Change: Together, we'll facilitate better collaboration and lay the groundwork for more successful verticalized applications of AI tools like Copilot.
Speaker Change: Having its app solutions available on the Microsoft Azure marketplace positioned us well for Microsoft Q1 rollout a seller incentives tied to sales on the marketplace.
Speaker Change: Plans to integrate TDI's advanced search capability into our collaboration solutions are already helping to influence deals and strengthening our ability to help firms derive more value from their Microsoft investments.
Speaker Change: This has helped garner additional interest and support from Microsoft field team and further accelerate the growth of our business.
Speaker Change: One notable example is KPMG.
Speaker Change: KPMG has an intent partner and we work together in the field.
Speaker Change: On that note, I'll turn now to our partner ecosystem, where we've also made significant progress throughout the fiscal year.
And now internally to KPMG, they have separately chosen to implement in tap collaboration solutions across their global network of firms.
Speaker Change: Our strategic partnership with Microsoft continues to support our global growth.
Speaker Change: And completed their purchase through the Microsoft Azure marketplace.
Speaker Change: Having InTap solutions available on the Microsoft Azure Marketplace positioned us well for Microsoft's Q1 rollout of seller incentives tied to sales on the Marketplace.
Speaker Change: In tap collaborations solutions will support Kpmg's Command Center initiative.
Speaker Change: <unk>, forming it's Microsoft 365 platform into an engagement centric collaboration solution and further unlocking the firm's potential to benefit from Microsoft co pilot.
Speaker Change: This has helped garner additional interest and support from Microsoft's field team and further accelerate the growth of our business.
This comprehensive solution for KPMG exemplifies how the Intel Microsoft strategic partnership is meeting the complex needs of professionals at the world's most prestigious firms.
Speaker Change: One notable example is KPMG.
Speaker Change: KPMG is an InTap partner and we work together in the field.
Speaker Change: And now internally to KPMG, they have separately chosen to implement in-tap collaboration solutions across their global network of firms and completed their purchase through the Microsoft Azure Marketplace.
Speaker Change: Additionally, in Q4, our partner ecosystem and offerings continue to grow.
Speaker Change: We added five new partnerships, bringing us to 130 data technology and services partners.
Speaker Change: InTap collaboration solutions will support KPMG's command center initiative, transforming its Microsoft 365 platform into an engagement centric collaboration solution and further unlocking the firm's potential to benefit from Microsoft CoPilot.
Speaker Change: Notably in Q4, we announced a partnership with <unk> investments.
Speaker Change: Who will help us deliver specific value for alternative asset managers and field cloud two.
Speaker Change: Through an integration with their fundraising and Investor lifecycle management platform.
Speaker Change: This comprehensive solution for KPMG exemplifies how the intact Microsoft strategic partnership is meeting the complex needs of professionals at the world's most prestigious firms.
Speaker Change: Okay, I'll turn now to key deals.
Speaker Change: We've continued to steadily grow our client base.
Speaker Change: Through cross sell up sell and the acquisition of new logos, including large enterprise clients.
Speaker Change: Additionally, in Q4, our partner ecosystem and offerings continue to grow.
Speaker Change: We added five new partnerships, bringing us to 130 data, technology, and services partners.
Speaker Change: We ended the year, serving more than two <unk>.
Speaker Change: 550 premier firms across our target verticals.
Speaker Change: Notably, in Q4, we announced a partnership with Byte Investments.
Speaker Change: I'm happy to share just a few of the new logos, we added in Q4.
Speaker Change: who will help us deliver specific value for alternative asset managers in VeoCloud through an integration with their fundraising and investor lifecycle management platform.
Speaker Change: First.
<unk>: Global independent investment banking advisory firm <unk>.
Speaker Change: <unk> cloud to replace its large legacy CRM.
Speaker Change: Okay I'll turn now to key deals.
Speaker Change: We've continued to steadily grow our client base.
Speaker Change: Their incoming COO recognize the need for a deal management platform that informs decisions at a strategic level and selected deal cloud to manage the firm's private capital advisory and fundraising business.
Speaker Change: through cross-sell, up-sell, and the acquisition of new logos.
Speaker Change: including large enterprise clients.
Speaker Change: We ended the year serving more than 2,550
Speaker Change: Next.
Speaker Change: premier firms across our target verticals.
Speaker Change: One of the largest players in the private credit space.
Speaker Change: I'm happy to share just a few of the new logos we added in Q4.
Speaker Change: Also chose deal cloud to replace its existing legacy CRM.
Speaker Change: First.
Which despite years of customization still had poor adoption.
Speaker Change: a global independent investment banking advisory firm
Speaker Change: chose DL Cloud to replace its large legacy CRM.
Speaker Change: Next.
Speaker Change: We added clients in new international markets.
Speaker Change: First try legal one of India's largest law firms.
Speaker Change: Their incoming COO recognized the need for a deal management platform.
Speaker Change: that informs decisions at a strategic level and selected DealCloud to manage the firm's private capital advisory and fundraising business.
Speaker Change: Chose <unk> time to reduce the administrative burden of its professionals increased accuracy and accelerate going.
Speaker Change: And <unk>.
Speaker Change: Next.
Speaker Change: Old mutual alternative investments.
Speaker Change: one of the largest players in the private credit space.
Speaker Change: One of Africa's leading private investment managers selected deal cloud because they believe it offers the quickest route to value best fit and lowest implementation risk.
Speaker Change: also chose DealCloud to replace its existing legacy CRM.
Speaker Change: which despite years of customization
Speaker Change: still had poor adoption.
Speaker Change: And <unk>.
Speaker Change: Next.
Speaker Change: A top 20 U S accounting firm.
Speaker Change: We added clients in new international markets.
Speaker Change: First, TriLegal, one of India's largest law firms.
Speaker Change: <unk> in tap intake and conflicts to better understand their conflicts of interest.
Speaker Change: chose NTAP Time to reduce the administrative burden on its professionals, increase accuracy, and accelerate billing.
Speaker Change: Streamline manual processes across disparate systems and improve adherence to PC regulations.
Speaker Change: and Old Mutual Alternative Investments.
Speaker Change: Additionally, in Q4, our cross selling and up selling success to existing clients.
Speaker Change: one of Africa's leading private investment managers selected DealCloud because they believe it offers the quickest route to value, best fit, and lowest implementation risk.
Speaker Change: Continued to drive strong net revenue retention.
Speaker Change: Some examples.
Speaker Change: First.
Speaker Change: And am law 100 law firm.
Speaker Change: Currently using our conflicts terms and wall solutions.
Speaker Change: And...
Speaker Change: a top 20
Speaker Change: U.S. accounting firm.
Speaker Change: Also selected deal cloud.
Speaker Change: chose NTAP Intake and Conflicts to better understand their conflicts of interest
Speaker Change: Its client relationship management platform.
Speaker Change: The firm believes deal cloud will empower professionals to better leverage the firm's relationships.
Speaker Change: streamline manual processes across disparate systems, and improve adherence to PCAOB regulations.
Speaker Change: They also see our applied AI strategy.
Speaker Change: It's helping to set them on the path to leveraging AI for growth.
Speaker Change: Additionally in Q4, our cross-selling and up-selling success to existing clients.
Speaker Change: Next.
Speaker Change: continue to drive strong net revenue retention.
Speaker Change: Deal cloud client Argonaut private equity.
Speaker Change: Some examples.
Speaker Change: Selected in tap employee compliance.
Speaker Change: First,
To monitor identify and manage employee adherence to the firm's code of ethics and conflicts of interest policies.
Speaker Change: and AmLaw 100 Law Firm.
Speaker Change: currently using our conflicts, terms, and walls solutions.
Speaker Change: Next is the <unk>.
Speaker Change: also selected DealCloud as its client relationship management platform.
Speaker Change: European arm of one of the world's largest accounting firms.
Speaker Change: Significantly expanded licenses of our collaboration solution.
Speaker Change: The firm believes DealCloud will empower its professionals to better leverage the firm's relationships.
Speaker Change: As they seek to modernize the document management experience for their legal and tax professionals.
Speaker Change: They also see our applied AI strategy.
Speaker Change: It's helping to set them on the path to leveraging AI for growth.
Speaker Change: Next the UK arm of another of the world's largest accounting firms added hundreds of deal cloud seats.
Speaker Change: Next.
Speaker Change: DealCloud Client, Argonaut Private Equity
Speaker Change: As they work to modernize their deal flow work streams to better serve their private equity clients.
Speaker Change: selected in TAP Employee Compliance.
Speaker Change: to monitor, identify, and manage employee adherence to the firm's Code of Ethics and Conflicts of Interest policies.
Speaker Change: And we also saw a healthy uplift.
Speaker Change: And increasing license counts.
Speaker Change: Next.
Speaker Change: Among our legal clients as larger firms expand practice groups and geographies.
Speaker Change: The European arm of one of the world's largest accounting firms.
Speaker Change: Significantly expanded licenses of our collaboration solution as they seek to modernize the document management experience for their legal and tax professionals.
Speaker Change: For example, as lawyer accounts grew in Q4.
Speaker Change: Top 15 firm.
Speaker Change: And and <unk> 100 firm.
Speaker Change: Each expanded capacity across all of their <unk> solutions.
Speaker Change: Next.
Speaker Change: The UK arm of another of the world's largest accounting firms added hundreds of deal cloud fees.
Speaker Change: In conclusion, we are proud of our strong performance in fiscal year 'twenty four and we are well positioned for continued growth in fiscal year 'twenty five.
Speaker Change: as they work to modernize their deal flow work streams to better serve their private equity clients.
Speaker Change: We are serving a durable end market.
Speaker Change: and we also saw healthy uplift
Speaker Change: With our deeply differentiated intelligent cloud platform.
Speaker Change: and increasing license counts.
Speaker Change: among our legal clients as larger firms expand practice groups and geographies.
Speaker Change: Our vertical AI approach and our applied AI strategy.
Speaker Change: For example, as lawyer counts grew in Q4, a top 15 firm.
Speaker Change: We see continued opportunity both to add new clients across a broad Tam.
Speaker Change: and an AMLA 100 firm.
Speaker Change: And to expand significantly within our existing client base.
Speaker Change: each expanded capacity across all of their InTap solutions.
Speaker Change: We have a great growth opportunity to drive cloud and vertical AI adoption.
Speaker Change: In conclusion, we are proud of our strong performance in FY24.
Speaker Change: And we're well positioned for continued growth in fiscal year 25.
And digitalization across this unique and highly valuable and market.
Speaker Change: We are serving a durable end market.
Speaker Change: As always I'd like to thank our clients our partners our investors our board and our global intact team whose.
Speaker Change: with our deeply differentiated intelligent cloud platform
Speaker Change: our vertical AI approach, and our applied AI strategy.
Speaker Change: Whose teamwork and dedication led to such a successful year.
Speaker Change: We see continued opportunity, both to add new clients across a broad TAM
Speaker Change: Thank you all very much.
Speaker Change: Okay, now I'll turn things over to our CFO David Morton.
Speaker Change: and to expand significantly within our existing client base.
Thanks, John and thanks, everyone for joining us today.
Speaker Change: We have a great growth opportunity.
David Morton: I am pleased to report a strong fourth quarter performance, which capped off a year of resilient cloud <unk> growth.
Speaker Change: to drive cloud and vertical AI adoption and digitalization across this unique and highly valuable end market.
David Morton: <unk>, new logo wins across markets and geographies and increase wallet share with our largest clients all while enhancing operational efficiency to scale profitability.
Speaker Change: As always, I'd like to thank our clients, our partners, our investors, our board, and our global Intact team, whose teamwork and dedication led to such a successful year.
David Morton: These results underscore our consistent execution and position us with multiple growth levers for fiscal 2025 and beyond.
Speaker Change: Let's begin with our Q4 results.
Speaker Change: Thank you all very much.
Speaker Change: SaaS and support revenue was $85 million of 25% year over year, reflecting sales to new clients and expansion of existing clients from both cross selling and Upselling sales motions.
Speaker Change: Okay, now I'll turn things over to our CFO, David Morton.
David Morton: Thanks, John. And thanks, everyone, for joining us today. I am pleased to report our strong fourth quarter performance, which capped off a year of resilient cloud ARR growth.
Beginning this quarter SaaS revenue will be reported separately from on premise support to better highlight our growth trajectory and net new sales activities for fiscal Q4, SaaS revenue was $78 million up 31% year over year, driven by new client acquisitions.
David Morton: significant new logo wins across markets and geographies and increased wallet share with our largest clients, all while enhancing operational efficiency to scale profitability.
David Morton: These results underscore consistent execution and position us with multiple growth levers for fiscal 2025 and beyond.
Speaker Change: Contract expansions and the migration of an on premise products to the cloud.
David Morton: Let's begin with our Q4 results.
Subscription license revenue was $16 1 million up 32% year over year, largely due to one large client opting for multiyear on premise renewals as we navigate them to the cloud.
David Morton: Fastened support revenue was $85 million, up 25% year-over-year, reflecting sales to new clients and expansion of existing clients from both cross-selling and up-selling sales motions.
Speaker Change: That said, 92% of our clients have at least one cloud module.
David Morton: Beginning this quarter, SAS revenue will be reported separately from on-premise support to better highlight our growth trajectory and net new sales activities.
Speaker Change: Professional services revenue was $13 3 million, marking a 9% year over year decrease reflecting our strategy to deemphasize services revenue and focus on customer satisfaction.
David Morton: For Fiscal Q4, SAS revenue was $70.8 million, up 31% year-over-year driven by new client acquisitions, contract expansions, and the migration of on-premise products to the cloud.
Speaker Change: Total revenue was $114 4 million up 21% year over year, driven primarily by sales of our cloud solutions and growth of subscription and license revenue.
David Morton: Subscription license revenue was $16.1 million, up 32% year-over-year, largely due to one large client opting for multi-year on-premise renewals as we navigate them to the cloud.
Speaker Change: Our international business continues to pursue growth opportunities to expand and invest in the utilization of our platform beyond the U S revenue generated from our international operations remained robust accounting for approximately 34% of total revenue for fiscal Q4.
David Morton: With that said, 92% of our clients have at least one cloud module.
David Morton: Professional services revenue was $13.3 million, marking a 9% year-over-year decrease, reflecting our strategy to de-emphasize services revenue and focus on customer satisfaction.
Speaker Change: Our partner co sell motion continues to gain traction we have added another five partnerships, bringing us to 130 data technology and service partners.
Speaker Change: This past quarter, we launched that in half partner University to strengthen our partner knowledge and skill development around our products and their implementation. We are particularly excited to see an increase in co selling motions with many of our partners taking place earlier and more strategically at our client lifecycle and sales funnel.
David Morton: Total revenue was $114.4 million, up 21% year-over-year, driven primarily by sales of our cloud solutions and growth of subscription license revenue.
David Morton: Our international business continues to present a growth opportunity to expand and invest in the utilization of our platform beyond the U.S. Revenue generated from our international operations remained robust accounting for approximately 34% of total revenue for fiscal Q4.
Speaker Change: And taps new vertical SaaS AI offerings assist in walls for co pilot contributed approximately 4% of our net new ACD this quarter.
Speaker Change: While it is still very early in our product rollout pipeline generation and client provisioning. We are excited about the prospects as we look forward to fiscal 2025.
David Morton: Our partner, CoSell Motion, continues to gain traction. We have added another five partnerships, bringing us to 130 data, technology, and service partners.
Speaker Change: Q4, non-GAAP gross margin was 76, 1% as compared to 69, 9% in the prior year period.
David Morton: This past quarter, we launched the NCAP Partner University to strengthen our partner knowledge and skill development around our products and their implementation.
Speaker Change: non-GAAP operating expenses were $73 6 million or 10 4 million increase in year over year as we continue to invest in product development and go to market to support our growth.
David Morton: We are particularly excited to see an increase in co-selling motions with many of our partners taking place earlier and more strategically in our client lifecycle and sales funnel.
Speaker Change: As we continue to focus on our operational efficiency non-GAAP operating income was $13 5 million as compared to $3 million in the prior year period.
Speaker Change: NTAP's new vertical SAS AI offerings, ASSIST and WALS for Copilot, contributed approximately 4% of our net new ACV this quarter.
Speaker Change: While it is still very early in our product rollout, pipeline generation, and client provisioning, we are excited about the prospects as we look forward to fiscal 2025.
Speaker Change: non-GAAP diluted EPS was <unk> 15 in the fourth quarter of fiscal 2024 as compared to <unk> in the prior year period.
Speaker Change: Q4 non-GAAP gross margin was 76.1% as compared to 69.9% in the prior year period.
Free cash flow, which is defined as our cash flow from operations less capital expenditures was $26 4 million for the fourth quarter or 23 plan of total revenue.
Speaker Change: Non-GAAP operating expenses were $73.6 million, a $10.4 million increase year-over-year as we continue to invest in product development and go-to-market to support our growth.
Speaker Change: We exited the quarter with $208 4 million of cash and cash equivalents.
Speaker Change: Turning to our key metrics cloud <unk> was up 33% year over year and total IRR was up 22% year over year.
Speaker Change: As we continue to focus on our operational efficiency, non-GAAP operating income was $13.5 million, as compared to $3 million in the prior year period.
Speaker Change: Total remaining performance obligations were $566 5 million up 40% year over year.
Speaker Change: Non-GAAP diluted EPS was $0.15 in the fourth quarter of fiscal 2024 as compared to $0.04 in the prior year period.
Speaker Change: Overall, we remain committed to executing our land and expand model concluding the fiscal year with over 2550 clients. Among those 73 had air or at least $1 million up from 53 in the previous year.
Speaker Change: Free cash flow, which is defined as our cash flow from operations less capital expenditures, was $26.4 million for the fourth quarter or 23% of total revenue.
At the end of fiscal 2024, we had 698 clients with IRR of at least 100000 up from 603 in the previous year.
Speaker Change: We exited the quarter with $208.4 million of cash and cash equivalents.
Speaker Change: Turning to our key metrics, cloud ARR was up 33% year-over-year and total ARR was up 22% year-over-year.
Speaker Change: Our net revenue retention rate underscores our ability to retain and steadily expand business with our existing customers.
Speaker Change: Total remaining performance obligations were $566.5 million, up 40% year-over-year.
Speaker Change: This key metric was 116%, which continues to track within our range of 113% to 117% our cloud NR in Q4, FY 'twenty four was 121%.
Speaker Change: Overall, we remain committed to executing our land and expand model, concluding the fiscal year with over 2,550 clients. Among those, 73 had ARR of at least $1 million, up from 53 in the previous year.
Speaker Change: Moving to our full year results for fiscal 2024.
Speaker Change: And support revenue was $316 million up 25% from $252 3 million in fiscal 2023, driven by growth in our SaaS revenue.
Speaker Change: At the end of fiscal 2024, we had 698 clients with ARR of at least 100,000, up from 603 in the previous year.
Speaker Change: SaaS revenue was $259 3 million up 32% from fiscal 2023, reflecting sales to new clients expansion of existing contracts and migration of an on premise products to the cloud.
Speaker Change: Our net revenue retention rate underscores our ability to retain and steadily expand business with our existing customers.
Speaker Change: This key metric was 116%, which continues to track within our range of 113% to 117%. Our cloud NRR in Q4 FY24 was 121%.
Speaker Change: Subscription license revenue was $60 7 million up 24% from $49 million in fiscal 2023, largely due to several large clients opting for multiyear on premise renewables, we have made significant progress and proactively working with our clients to transition for our cloud offering in the coming year.
Speaker Change: Moving to our full year results for fiscal 2024, SAS and support revenue was $316 million, up 25% from $252.3 million in fiscal 2023, driven by growth in our SAS revenue.
Speaker Change: Professional services revenue was $53 9 million up 9% from $49 6 million in fiscal 2023.
Speaker Change: SAS revenue was $259.3 million, up 32% from fiscal 2023, reflecting sales to new clients, expansion of existing contracts, and migration of an on-premise products to the cloud.
Speaker Change: Ongoing success of our industry solutions further contributes to clients realizing quicker time to value through an expedited implementation process.
Speaker Change: non-GAAP gross margin was 74, 2% as compared to 71, 1% in the prior year period.
Speaker Change: Subscription license revenue was $60.7 million, up 24% from $49 million in fiscal 2023, largely due to several large clients opting for multi-year on-premise renewals.
Speaker Change: non-GAAP operating expenses reached $280 6 million, reflecting a 17% year over year increase as we enhance operational efficiency and drive revenue growth.
Speaker Change: We have made significant progress in proactively working with our clients to transition for a cloud offering in the coming year.
Speaker Change: non-GAAP diluted EPS was <unk> 45 for fiscal 2024 as compared to 11 in the prior year.
Speaker Change: Professional Services revenue was $53.9 million, up 9% from $49.6 million in fiscal 2023. The ongoing success of our industry solutions further contributes to clients realizing quicker time-to-value through an expedited implementation process.
Speaker Change: Free cash flow, which is defined as our cash flow from operations less capital expenditures was $64 8 million for fiscal 2024 or 15% of total revenue.
Speaker Change: Now turning to our outlook for the first quarter of fiscal 'twenty five we expect SaaS revenue of between $75 3 million and $76 3 million.
Speaker Change: Non-GAAP gross margin was 74.2%, as compared to 71.1% in the prior year period.
Speaker Change: Non-GAAP operating expenses reached $280.6 million, reflecting a 17% year-over-year increase as we enhance operational efficiency and drive revenue growth.
Speaker Change: These are newly providing revenue outlook metrics were also providing the implied year over year growth outlook of between 28% and 30%.
SaaS and support revenue of between 89, five and $90 5 million and total revenue in the range of $117 2 million to $118 2 million.
Speaker Change: Non-GAAP diluted EPS was $0.45 per fiscal 2024 as compared to $0.11 in the prior year.
Speaker Change: Free cash flow, which is defined as our cash flow from operations less capital expenditures, was $64.8 million per fiscal 2024, or 15% of total revenue.
Speaker Change: non-GAAP operating income in the range of 11 million to $12 million.
Speaker Change: And non-GAAP EPS results of 12 to 14.
Speaker Change: Now, turning to our outlook, for the first quarter of fiscal 25, we expect FAS revenue of between $75.3 million and $76.3 million.
Speaker Change: Using a diluted share count weighted for the quarter of approximately 81 million common shares outstanding.
Speaker Change: For the full fiscal year of 25, we expect SaaS revenue of between $326 7 million and $337 million.
Speaker Change: As these are newly provided revenue outlook metrics, we are also providing the implied year-over-year growth outlook of between 28% and 30%.
Speaker Change: Again as these are newly provided revenue outlook metrics were also providing the implied year over year growth outlook of between 26% and 28%.
Speaker Change: Fast and support revenue of between 89.5 and 90.5 million and total revenue in the range of 117.2 million to 118.2 million.
Speaker Change: SaaS and support revenue of between $385 million and $384 5 million.
Speaker Change: non-GAAP operating income in the range of $11 million to $12 million.
Speaker Change: In total revenue in the range of 493 million to $497 million. We also expect non-GAAP operating income to be in the range of $56 5 million to $65 million.
Speaker Change: and non-GAAP EPS results of $0.12 to $0.14 using a diluted share count weighted for the quarter of approximately 81 million common shares outstanding.
Speaker Change: And non-GAAP EPS in the range of 59 to 63.
Speaker Change: For the full fiscal year 25, we expect FAS revenue of between $326.7 million and $330.7 million.
Speaker Change: Using a diluted share count weighted for fiscal year 'twenty five of approximately 84 million common shares outstanding.
Speaker Change: Again, as these are newly provided revenue outlook metrics, we are also providing the implied year-over-year growth outlook of between 26% and 28%.
Speaker Change: Thank you and I will now turn the call back to the operator.
Speaker Change: As a reminder to ask a question you will need to press star one on your telephone to remove yourself from Mccue you May Press Star one Wyman again, please standby, while we compile the Q&A roster.
Speaker Change: Staffs and support revenue of between $380.5 million and $384.5 million.
Speaker Change: and total revenue in the range of $493 million to $497 million. We also expect non-GAAP operating income to be in the range of $56.5 million to $60.5 million.
Speaker Change: Our first question comes from the line of Kevin Mcveigh of UBS.
Great. Thank you so much and congratulations.
Speaker Change: and non-GAAP ETS in the range of 59 cents to 63 cents using a diluted share count weighted for fiscal year 25 of approximately 84 million common shares outstanding.
Speaker Change: Really really good results in.
A lot to like here.
Speaker Change: I guess, John maybe starting with.
John Hall: You know maybe.
John Hall: Reconciling the professional services with the larger client sizes.
Speaker Change: Thank you, and I will now turn the call back to the operator.
John Hall: This might be at multiple points.
Speaker Change: As a reminder, to ask a question, you will need to press star 1-1 on your telephone. To remove yourself from the queue, you may press star 1-1 again. Please stand by while we compile the Q&A roster.
Speaker Change: But is that work that's being done by <unk>.
Speaker Change: Like just trying to understand that dynamic because it seems like the clients you're clearly getting larger.
Speaker Change: We're doing less professional services and is that kind of the leverage that comes from KPMG with Microsoft or is there any way to just kind of dimensionalize that.
Speaker Change: Our first question comes from the line of Kevin McVeigh of UBS.
Kevin Mcveigh: Great, thank you so much and congratulations. Really, really good results.
Speaker Change: Okay.
Kevin Mcveigh: Thanks, Kevin.
Speaker Change: The business is growing.
Speaker Change: a lot to like here. I guess, John, maybe starting with...
Speaker Change: <unk> Sciences, certainly at the large firms.
Speaker Change: you know maybe reconciling
Speaker Change: We are continuing to grow in absolute numbers, our professional services business it's larger.
Kevin Mcveigh: The professional services with the larger client sizes, this might be a multiple point question, but is that work that's being done by KPMG on the implementation side? Like just trying to understand that dynamic because it seems like the clients are clearly getting larger.
Speaker Change: It's growing at a slower pace that's intentional.
Speaker Change: And yes, it's absolutely because we're serving some of the clients ourselves because we always will.
Speaker Change: But also we're getting meaningful leverage, particularly at the large end.
John: You're doing less professional services, and is that kind of the leverage that comes from KPMG with Microsoft, or is there any way to just kind of dimensionalize that?
Dave: <unk> is an excellent partner for us as you heard Dave mentioned, we've also grown our services ecosystem consistently each quarter, because we know as we get bigger we're going to need a strong ecosystem to serve all the demand.
Speaker Change: Thanks, Kevin.
Speaker Change: Yeah.
Speaker Change: The business is growing at all sizes, certainly at the large firms.
Speaker Change: That's helpful and just to follow up with that.
Speaker Change: I heard you right it sounds like you've got.
Speaker Change: We are continuing to grow in absolute numbers. Our professional services business, it's larger, but it's growing at a slower pace. That's intentional.
Speaker Change: <unk>.
Speaker Change: 130 data and tech ecosystem partners anyway to think about how much revenue was associated with that on the platform today and what that can become over time.
Speaker Change: And yes, it's absolutely because we're serving some of the clients ourselves, as we always will.
Speaker Change: Yeah.
Speaker Change: but also we are getting meaningful leverage.
Speaker Change: particularly at the large end. APMG is an excellent partner for us. As you heard Dave mention, we've also grown our services ecosystem consistently each quarter because we know as we get bigger, we're going to need a strong ecosystem to serve all the demand.
Speaker Change: Yeah.
Paul J.: Paul J.
Paul J.: Kevin It's Dave I had it on mute.
Speaker Change: We haven't necessarily gone into the depths of that.
Speaker Change: Detail and disclosure at that professional service level, but with respect to kind of where we're seeing both from a data technology as well as service partners as well as.
Speaker Change: Thank you.
Speaker Change: Just to follow up with that, if I heard you right, it sounds like you've got...
Speaker Change: 130 data and tech ecosystem partners. Any way to think about how much revenue is associated with that on the platform today and what what that can become over time?
Speaker Change: Those partners that bring a co sell or even the original sale.
Speaker Change: <unk> been growing and then also with our blueprints that we talked.
Speaker Change: In previous calls that time to value at the backend is making these a lot more beneficial across the board and so <unk>.
Speaker Change: Thank you very much for joining us today.
Speaker Change: Not only with our long term strategy, but also with the implementation and the time to value and obviously, which all translates into customer sat things even up until the right on that.
Speaker Change: Kevin, it's Dave. I had it on mute. We haven't necessarily gone into the depths of that.
Speaker Change: detail and disclosure at that professional service level. But.
Speaker Change: Thanks, so much.
Speaker Change: You know, with respect to kind of where we're seeing both from a data technology as well as service partners as well as
Speaker Change: Thank you. Our next question comes from the line of.
Speaker Change: Lexi Vogel at J P. Morgan.
Speaker Change: you know, those partners that are bringing CoSell or even the original sale.
Lexi Vogel: Hi, This is the least counter on for Alexia go go up on my first question is it appears that the shared fast enough.
Speaker Change: They've been growing. And then also with our blueprints that we talked in previous calls, you know, that time to value at the back end is making these a lot more beneficial across the board. And so.
Lexi Vogel: Hotline is growing from 84% and 185% for fiscal year 'twenty, five what's driving that increase and where do you see that number okay.
Speaker Change: not only with our long-term strategy, but also with the implementation, the time to value, and obviously, which all translates into customer sat, things have been up and to the right on that.
Dave: Hi, This is Dave.
Dave: Yeah, I mean, it's purposeful continue continuation right. Even if you go to our longer term model, we believe that over 90% will be facilitated vis vis the SaaS orientation.
Speaker Change: Thanks so much.
Speaker Change: Thank you. Our next question comes from the line of Alexei Gogolev of J.P. Morgan.
Dave: Which is by design and so as we not only continue all of our new products are cloud native and so as we continue to have our land and expand specifically in the cloud as well as transition our on Prem into the cloud that number will continue to increase accordingly.
Elise Kenner: Hi, this is Elise Kenner on for Alexei Gogolev. My first question is, it appears that the share of SAS in the SAS and support line is growing from 84% in 1Q to 85% for the fiscal year 25. What's driving that increase and where do you see that number longer term?
Speaker Change: Got it and then for my follow up you were the last company. Our universe. That's only just provided their outlook beyond June 2024 can you elaborate a bit more on what to expect in terms of total revenue growth in the first half of fiscal 2025, and what estimate you have for the second half of the year, which and for you guys and Jim.
Elise Kenner: [inaudible]
Speaker Change: Thank you very much for joining us today.
Dave: Hi, this is Dave. Yeah, I mean, it's purposeful to the continuation, right? And even if you go to our longer term model, we believe that over 90% will be facilitated vis-a-vis SAS orientation, which is by design. And so as we not only continue, all of our new products are cloud native. And so as we continue to have our land and expand specifically in the cloud, as well as transition our on-prem into the cloud, that number will continue to increase accordingly.
Speaker Change: Dan.
Speaker Change: Yeah, we provided our full year guide across all of our conventions right for fiscal 'twenty, five as well as SD Wan, which is traditionally what we've done in previous years.
Speaker Change: As well as previous experience.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line.
Speaker Change: Got it. And then for my follow-up, you're the last company in our universe that's only just provided their outlook beyond June 2024. Can you elaborate a bit more on what to expect in terms of total revenue growth in the first half of fiscal 2025, and what estimates you have for the second half of the year, which ends for you guys in June? Thank you.
Speaker Change: Of Koji Ikeda of Bank of America.
Koji Ikeda: Yes can you guys hear me okay.
Yes got you.
Koji Ikeda: Hi, yes, thank you okay.
Koji Ikeda: Wanted to ask a question about the demand environment assumptions that is embedded into the 2025 guidance more.
Speaker Change: Yeah, we provided a full year guide across all of our dimensions, right, for Fiscal 25 as well as FD1, which is traditional of what we've done in previous years, as well as previous experience.
Speaker Change: More specifically between the two core verticals you know how how are you thinking about demand for professional services and financial services. It sounds like I'm in the prepared remarks, you had a pretty good financial services back half.
Speaker Change: David Trone, David Trone, David Trone, David Trone
Speaker Change: Some of the expectations that that good momentum there in financial services continue into 2025.
Speaker Change: [inaudible]
Speaker Change: Thank you.
Speaker Change: My next question comes from the line of Koji Akita of Bank of America.
Speaker Change: Yeah.
Speaker Change: I can do a little color on that.
Koji Akita: Yeah, can you guys hear me okay?
Speaker Change: We did have some good results in the second half.
Speaker Change: Yes, Koji. Oh, hi. Hi. Yes. Oh, thank you.
Speaker Change: I mentioned investment banks specifically.
Koji Akita: I wanted to ask a question about the demand environment assumptions that is embedded into the 2025
Speaker Change: As you'll recall, we mentioned those in the Q2 report and we were working on some large deals and we were able to bring those in in both Q3, and Q4, which was <unk>.
Speaker Change: guidance. More specifically, between the two core verticals, you know, how are you thinking about demand?
Speaker Change: Something that we thought would happen but of course encouraging for us what it did.
Speaker Change: from professional services and financial services. It sounds like in the prepared remarks you had a pretty good financial services back half. Are some of the expectations that that good momentum there in financial services continue into 2025?
I think generally we've had good support from <unk>.
Speaker Change: And market at a fundamental level because.
Speaker Change: They are.
Speaker Change: Behind institutionalization.
Speaker Change: Curve, they haven't adopted cloud as broadly as many of the other industries have right now and they need to do.
Speaker Change: I can do a little color on that.
Speaker Change: We did have some good results in the second half.
Speaker Change: <unk> been limited because they haven't had a vertical specific solution that really understands them and their data model in their process model in the way that our platform does and so we're bringing them on.
Speaker Change: I mentioned investment banks specifically. As you all recall, we mentioned those in the Q2 report, and we were working on some large deals, and we were able to bring those in in both Q3 and Q4, which was
Speaker Change: Our modern cloud solution that really fits with their underlying digitalization needs are and now we have even more vertical AI capability each quarter. We just had an announcement yesterday about expanding some of our.
Speaker Change: Something that we thought would happen, but of course encouraging for us what it did.
Speaker Change: I think generally, we've had good support from the end market at a fundamental level because they are
Speaker Change: Critically capabilities within <unk> assist to additional set of capabilities on the platform and we have a roadmap for that to continue so I think that the real answer is there is strong underlying demand for this industry to continue to go through the digitalization curve.
Speaker Change: behind in the digitalization.
Speaker Change: curve. They haven't adopted cloud as broadly as many of the other industries have by now and they need to.
Speaker Change: On top of that I think we've benefited from these firms being relatively resilient in good times and bad we bootstrap the company for many years, serving these firms and didn't have to raise new external money because we.
Speaker Change: They've been limited because they haven't had a vertical specific solution that really understands them and their data model and their process model in the way that our platform does. And so we're bringing them
Speaker Change: a modern cloud solution that really fits.
Speaker Change: Got paid by doing good things for them.
Speaker Change: what their underlying digitalization needs.
Speaker Change: are, and now we have even more vertical AI capability each quarter. We just did an announcement yesterday about expanding some of our.
Speaker Change: And so I think there's just a good <unk>.
Speaker Change: Vertical market here, if he liked vertical markets. This is a very resilient one to pick.
Speaker Change: And then we also said as things evolved in the macro economy. If there is a segment of our population that might be more sensitive it's probably the investment banks themselves and you saw a little bit of that but then we also saw a nice recovery.
Speaker Change: vertical AI capabilities with InTapAssist to an additional set of capabilities on the platform, and we have a roadmap for that to continue. So I think that the real answer is there's strong underlying demand for this industry to continue to go through the digitalization curve.
Speaker Change: Sure.
Speaker Change: Got it thank you for that John and maybe a follow up here.
Speaker Change: On top of that, I think we've benefited from these firms being relatively resilient in good times and bad. We bootstrapped the company for many years serving these firms and didn't have to raise any external money because we
Speaker Change: Wanted to ask a question about the guidance methodology.
Speaker Change: Last year it was really the first time.
Speaker Change: Martin you gave guidance. So this is the second time, you gave guidance, but just kind of understanding that you've been here for a little bit longer than a year now trying to understand how youre thinking about potential upside embedded in the guide if I look at last year's guidance of where it started and where it ended up both on total revenue in SaaS and support revenue and I look.
Speaker Change: got paid by doing good things for them.
Speaker Change: And so I think there's just a good vertical market here. If you like vertical markets, this is a very resilient one to pick.
Speaker Change: And then we also said, as things evolved in the macroeconomy, if there's a segment of our population that might be more sensitive, it's probably the investment banks themselves. And we saw a little bit of that, but then we also saw a nice recovery.
At the guidance you've given today for fiscal 'twenty. Five is is that kind of the right way to think about how youre thinking about where revenue could end up or is there any other considerations, we should be thinking about.
Speaker Change: Got it. Thank you for that, John. And maybe a follow-up here.
Speaker Change: Yeah.
Speaker Change: I wanted to ask a question about the guidance methodology.
Speaker Change: So this company has been consistently very prudent with respect to our guides, while their pets current quarter or annual.
Speaker Change: last year was really the first time, Mr. Morton, that you gave guidance, so this is the second time you've gave guidance, but just kind of understanding that you've been here for a little bit longer than a year now.
Speaker Change: So that methodology hasn't hasn't changed.
Speaker Change: The only thing that really is changing here is that providing further.
Speaker Change: trying to understand how you're thinking about potential upside embedded in the guide.
Speaker Change: Visibility on just the SaaS line itself as we all know and acknowledge that we've had some revenue mix as we continue to enter into this.
Speaker Change: You know, I look at last year's guidance of where it started and where it ended up, both on total revenue and SAS and support revenue, and I look at the guidance you've given today for Fiscal 25. Is that kind of the right way to think about how you're thinking about where revenue could end up, or is there any other considerations we should be thinking about?
Speaker Change: Pace in time fiscal 'twenty, five moving more proactively from on Prem subscription more too.
Speaker Change: And the cloud and SaaS. This is probably the only change in the methodology going forward and so that's.
Speaker Change: [inaudible]
Speaker Change: So this company has been consistently very prudent with respect to our guides whether if it's current quarter or or annual so that methodology hasn't hasn't changed.
Speaker Change: That's what I would take from these conversations.
Speaker Change: Got it. Thank you thanks for taking the questions.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Steve Enders of Citi.
Speaker Change: The only thing that really is changing here is that providing further visibility on just the SAS line itself. As we all know and acknowledge, we've had some revenue mix as we continue to enter into this
Steve Enders: Okay, great. Thanks for thanks for taking the questions I guess, maybe just to start I wanted to dig in a little bit more on <unk>.
Steve Enders: The AI side and the solid early success here, you're saying and I think it's about a million dollars in <unk> that if I'm doing my math right here, but I guess is there a way to think about like which went to products in the portfolio, you're beginning to see the most traction with to help kind of buildup that number and I guess secondarily when do you think about.
Speaker Change: pace and time Fiscal 25 moving more proactively from on-prem subscription more to in the cloud and SaaS this is probably the only change in the methodology going forward and so that's
Speaker Change: That's what I would take from these conversations.
Speaker Change: The annual outlook here, you know kind of what contribution you're embedding into the guide from from AI for this year.
Speaker Change: Got it. Thank you. Thanks for taking the questions.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Steve Enders of Citi.
Steve Enders: Thanks, Steve.
Speaker Change: We're very excited about the progress.
Speaker Change: The new offerings that we launched in February.
Steve Enders: Okay, great. Thanks for thanks for any questions. I guess maybe just to start, I want to dig in a little bit more on.
Speaker Change: We've made already.
Speaker Change #100: We talked on the last call that we do expect that all of the new offerings will have to go through the normal product market lifecycle, and so too early adopters and get references and then scale up from there we've had that experience many times since we've grown the company with different parts of the platform in this market and we don't think that these will be different than that.
Steve Enders: the AI side and the solid early success that you're seeing. I think it's about a million in AR, so I'm doing my math right here, but
Speaker Change: I guess, is there a way to think about, like, which products in the portfolio you're beginning to see?
Speaker Change: The most traction with to help kind of build up that number. And I guess secondarily, as we do think about the the annual outlook here, you know, kind of what contribution you're embedding into the guide from from AI for this year.
Speaker Change #100: Regarding.
Speaker Change #100: That being said, there's a lot of intrinsic interests in this population the professionals the business services teams in these firms to figure out what are the vertical AI applications that really will make a business difference to folks.
Speaker Change: Thanks, Steve. We're very excited about the progress that the new offerings that we launched in February.
Speaker Change #100: And we're sort of believers that the places where AI is going to get the first traction across the broader economy is in the vertical applications, where you really know the process cold you know the user's cold and you can figure out where the value creation really is and so the whole <unk> strategy is designed direct.
Speaker Change: have made already.
Speaker Change: We talked on the last call that we do expect that all of the new offerings will have to go through the normal
Speaker Change: product market life cycle and go through early adopters and get references and then scale up from there. We've had that experience many times as we've grown the company with different parts of the platform in this market and we don't think that these will be different in that regard.
Speaker Change #100: For that its about looking into the industry solutions in the blueprint that we've developed for our clients looking at specific business processes for specific user types, and personas and bringing out real value, creating applications of AI in ways that people can take advantage of that.
Speaker Change: That being said, there's a lot of intrinsic interest.
Speaker Change: in this population, the professionals, the business services teams in these firms to figure out what are the vertical AI applications that really will make a business difference to folks.
Speaker Change #100: And tap assist for terms announcement that we made yesterday is a perfect example of that it feels a little specific if you look at it on one hand, because what are we doing we're helping the clients our clients. The professionals in these firms ask the system Hey, what are the rules and obligations that I have been working with this client how do I know what I am.
Speaker Change: Ben
Speaker Change: We're sort of believers that the places where AI is going to get the first traction
Speaker Change: across the broader economy is in the vertical applications where you really know the process cold, you know the users cold, you can figure out where the value creation really is.
Speaker Change: And so the whole InTapAssist strategy is designed directly for that. It's about looking into the industry solutions and the blueprints that we've developed for our clients, looking at specific business processes for specific...
Speaker Change #100: Allowed to charge them what people I'm allowed to put on this.
Speaker Change #100: Projects how.
Speaker Change #100: What kind of promises have been made by others of my partners around the world for this client, but it's a very common question that really helps the firms do a better job serving their clients better and not making mistakes in the way that they engage and it's instantly recognizable and valuable to the professionals. So thats just one specific example across the.
Speaker Change: User types and personas and bringing out real value creating applications of AI in ways that people can take advantage of that the
Speaker Change: in tap assist for terms announcement that we made yesterday. It's a perfect example of this. It feels a little specific if you look at it on one hand because what are we doing? We're helping the clients.
Speaker Change #100: Wide portfolio of vertical AI applications inside the <unk> strategy. So we have a whole set in the market already and then we have a roadmap that we talked about in February as you roll it through the rest of our.
Speaker Change: Our clients, the professionals in these firms, ask the system, Hey, what are the rules and obligations that I have when working with this client? How do I know what I'm allowed to charge them, what people I'm allowed to put on this?
Speaker Change #101: Platform and I'm very encouraged by the positive response that we're getting from people, saying, Oh, you're the folks who really understand us and can bring us AI that we can do something with and that's the philosophy there.
Speaker Change: projects.
Speaker Change: How, what kind of promises have been made by others of my partners around the world for this client, but it's a very common question.
Okay, great great to hear and then.
Speaker Change: that really helps the firms do a better job serving their clients better and not making mistakes in the way that they engage. And it's instantly recognizable and valuable to the professionals. So that's just one specific example across the wide portfolio of
Speaker Change #102: I guess, maybe then just on the confirmation for for this year since it does seem like it's beginning to have actual.
Speaker Change #103: Model impact, but yes, how should we be thinking about the actual contribution that won't see it come through or for fiscal 'twenty five.
Speaker Change: vertical AI applications inside the Antathesis strategy. So we have a whole set in the market already, and then we have a roadmap that we talked about in February to roll it through the rest of our.
Speaker Change #103: Hi.
Speaker Change #103: Barry.
Barry: Minimal contribution at this point in time.
Speaker Change: platform. And I'm very encouraged by the positive response that we're getting from people saying, oh, you are the folks who really understand us and can bring us AI that we can do something with.
Barry: As John said, we're still in very very early stages, but we do have revenue skus out there today.
Speaker Change #105: And so thats part and part of kind of the declaration that we.
Speaker Change: And that's the philosophy there.
Speaker Change #105: <unk> stated.
Speaker Change #105: It's also got a broader halo effect.
Speaker Change: Okay, great to hear.
Speaker Change #106: A lot of interest a lot of pipe generation funnel conversation points and.
Speaker Change: I guess maybe then just on the like contribution for this year, since it does seem like it's beginning to have an actual, you know, model impact. But yeah, how should we think about the actual contribution that we'll see come through for fiscal 25?
Speaker Change #107: Or do you think it gets back to an elongated conversation of our client base, meaning from okay. Pre Covid post COVID-19 moving folks in the cloud and now we're having real live conversations have even broader of AI application of usage and so yeah.
Speaker Change: Hi, we've assumed very...
Speaker Change #107: It's one of those where you can just see huge a waterfall of adoption.
Speaker Change: minimal contribution at this point in time. You know, as John had said, we're still in very, very early stages, but we do have revenue skews out there today. And so that's part and part of
Speaker Change #107: By trying to time that rate of pace is something that would be very difficult to all of this fiscal year and so that's why we've kind of.
Speaker Change: kind of the declaration that we
Speaker Change #107: Kept it as a minimal impact heading into FY 'twenty one.
Speaker Change: stated. You know, it's also got a broader halo effect.
Speaker Change #108: Okay perfect. Thanks for taking the questions here.
John: A lot of interest, a lot of pipe generation, funnel, conversation points.
Speaker Change #108: Yeah.
Speaker Change #109: Thank you.
John: You know, it even gets back to
Speaker Change #109: Our next question comes from the line of Alex Sklar.
John: an elongated conversation of our client base, meaning from, okay, you know, pre-COVID, post-COVID, moving folks, you know, in the cloud. And now we're having real-life conversations of even broader of AI application and usage. And so
James: And James.
Alex Sklar: Great. Thank you John first one for you just in terms of go to market investments relative to what sounded like an improving demand backdrop, you got a lot of leverage out of the sales and marketing line as 'twenty 'twenty corporate growth I'm, just curious how you're thinking about sales hiring going into fiscal 'twenty five within the new outlook in particular.
Speaker Change: You know, it's one of those where you could just see a huge waterfall of adoption. But trying to time that rate of pace is something that would be very difficult over this fiscal year. And so that's why we've kind of kept it as a minimal impact heading into FY25.
Speaker Change #112: Given what sounded like a growing international opportunity. Thanks.
Alex Sklar: Thanks, Alex.
Speaker Change #113: We are continuing to invest in growing our sales and marketing capability. The company. There is definitely a large tam to sell into and we're still making investments in many areas International is one of them as you heard me explain some of the places that we're winning clients, which we're very excited about.
Speaker Change: Okay, perfect. Thanks for taking the questions here.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Alex Sklar of Raymond James.
Speaker Change #113: So we're going to need to grow that group that being said I think there is a strong thesis that the vertical.
Alex Sklar: Great. Thank you, John.
Alex Sklar: First one for you, just in terms of go-to-market investments relative to what sounded like an improving demand backdrop, you got a lot of leverage out of the sales and marketing line as 2024 progressed. I'm just curious how you think about sales hiring going into fiscal 25 within the new outlook and particularly given what sounded like a growing international opportunity. Thanks.
Speaker Change #113: Industry cloud vertical AI go to market models should start to get leverage as the business scales and as the brand becomes better understood and as the referenced in his build inside this very self referencing market. So it's part of the model that we should be able to get some leverage there well growing at the same time.
Alex Sklar: Thanks, Alex.
Speaker Change: We are continuing to invest in growing the sales and marketing capability of the company. There is definitely a large TAM to sell into, and we're still making investments in many areas. International is one of them. As you heard me explain, some of the places that we're winning clients, which we're very excited about.
Speaker Change #114: Okay, Great color, Dave maybe just a follow up for you and this is kind of following up on <unk> question on the outlook and your decision to split out SaaS from support is there anything to flag in terms of changing expectations for migration activity. This coming year or just a move away from multiyear license deals or anything else.
Speaker Change: So we're going to continue to grow that group. That being said, I think there is a strong thesis that the vertical
Speaker Change #115: Kind of behind the change in SaaS versus support in terms of the outlook. Thanks.
Speaker Change: industry, cloud, vertical, AI, go-to-market model should start to get leverage.
Speaker Change #115: No.
Speaker Change: as the business scales and as the brand becomes.
Speaker Change #115: Nothing.
Speaker Change #116: <unk> per se I mean, we have multiple clients in flight today that are making that progress.
Speaker Change: better understood and as the references build inside this very self-referencing market. So it's part of the model that we should be able to get some leverage there while growing at the same time.
But getting that specific quarter by date correct at this point in time, it's a little a little more difficult as things get a little elongated with the transition overall upwards of nine to 12 months, but there are several underway and we'll declare them when we're able to convert the material ones and so the point is is we wanted to.
Dave: Okay, great color. Dave, maybe just a follow-up for you, and this is kind of following up on Koji's question on the outlook and your decision to split out SAFT from support.
Dave: Is there anything to flag in terms of changing expectations for migration activity this coming year, or just a move away from multi-year license deals, or anything else kind of behind the change in SAS versus support in terms of the outlook? Thanks.
Speaker Change #116: Abide a prudent guidance that wouldnt put us over the skis.
Speaker Change #116: From SaaS and support traditional such as SaaS, and then Conversely professional services as well and so that's why we started this declaration as well as continuing to narrate our cloud <unk> as well as our total IRR as well for the longer term durability of our business and true projection of our revenue growth.
Dave: No.
Dave: nothing
Speaker Change: pending per se. I mean, we have multiple clients in flight today that are making that progress.
Speaker Change: Thank you.
Speaker Change: But getting that specific quarter by date correct at this point in time is a little more difficult.
Speaker Change #116: Yeah.
Speaker Change #117: Okay. That's great color. Thank you both.
Speaker Change #116: Okay.
Speaker Change: As these get a little elongated with the transition overall, you know, upwards of 9 to 12 months, but there's several underway and we'll declare them when we're able to convert the material once. And so, you know, the point is, is we want to provide a prudent guidance that wouldn't put us over the skis.
Speaker Change #116: Thank you.
Speaker Change #118: Our next question comes from the line of.
Speaker Change #118: Terry Tillman of choice Securities.
Terry Tillman: Yeah, Hey, there John David David can you all hear me okay.
Terry Tillman: Yes Terry.
Terry Tillman: Great Hi, there. So first congrats from me and also great to see the breakout of past I really appreciate that the first question is a long winded question, then I had a follow up the long winded question relates to if we look at a little bit of a trend Q over Q. There is an improvement in net IRR and then cloud IRR you're sitting on all this new innovation. It seems like there could be some upward pressure potentially.
Speaker Change: You know, from SAS and support traditional to just SAS and then conversely professional services as well. And so that's why we started this declaration as well as continue to narrate our cloud ARR as well as our total ARR as well for the longer term durability of our business and true projection of our revenue growth.
Speaker Change #120: And then there are our upward movement I should say and so any color on that and are you doing anything different in FY 'twenty five go to market to really even.
Speaker Change: Okay, that's great. Thank you both.
Speaker Change: Thank you.
Speaker Change: My next question comes from the line of Terry Tillman of Truist Securities.
Speaker Change #121: More purposely drive out those add on back to the installed base and then I had a follow up.
Speaker Change: Yeah, hey there, John, David, David, can you all hear me okay?
Terry Tillman: Thanks Terry.
Terry Tillman: <unk>.
Speaker Change #122: We talked about at the beginning of fiscal 'twenty for <unk>.
David Morton: Yeah, hi Terry.
Terry Tillman: Great. Hi there. So first, congrats for me and also great to see the breakout of PASA. I really appreciate that.
Speaker Change #123: Setting up.
Speaker Change #123: Our group specifically for the enterprise firms.
Terry Tillman: The first question is a long-winded question, then I had a follow-up. The long-winded question relates to, you know, if we look at a little bit of a trend Q over Q, there is an improvement in Net ARR and in Cloud ARR. You're sitting on all this new innovation. It seems like there could be some upward pressure potentially on NRR.
Speaker Change #124: I think we saw some good results there both in new logo acquisition and in cross selling upsell within that size segment. We also had talks about we've done some.
Speaker Change #124: R&D investment over the past 18 months or so on a whole series of capabilities from full Azure support snowflake capabilities. Some security things that we did to make sure that we could meet the requirements as we get bigger and there's a broader whole product story, there with the ecosystem of suppliers like him to continue to help us.
Speaker Change: or upward movement, I should say. And so any color on that, and are you doing anything different in FY25 go-to-market to really even more purposely drive out those add-ons back to the install base and then how to follow up?
Speaker Change: Thanks, Terry.
Speaker Change: We talked about, at the beginning of Fiscal 24,
Speaker Change #125: So I think if you look at the 73 firms over the $1 billion of AAR statistic, which we're very excited about you can see some of that cross selling upsell happening in that largest segment of the market, where there is so much upsell and cross sell activity. We've shared some statistics about what it would look.
Speaker Change: setting up.
Speaker Change: a group specifically for the enterprise firms.
Speaker Change: I think we saw some good results there, both in new logo acquisition and in cross-sell and upsell within that size segment.
Speaker Change: We also had talked about we've done some
Speaker Change #125: Like if we just expanded inside.
Speaker Change: R&D investment over the past 18 months or so.
Speaker Change #125: Firms that we already have so we can get to $1 billion just doing that.
Speaker Change: on a whole series of capabilities from full Azure support, Snowflake capabilities, some security things that we did to make sure that we could meet the requirements as we get bigger. And, you know, there's a broader whole product story there with the ecosystem suppliers like KPMG to help us meet the needs.
Speaker Change #125: So I think that absolutely.
Speaker Change #125: Being said, we're also doing similar cross sell and up sell opportunity in the mid size firms and even the smaller ones. So the NR <unk>.
Speaker Change #125: We're very proud of and I think it also reflects the breadth of the.
Speaker Change: So, I think if you look at the 73 firms over a billion dollars of ARR statistic, which we're very excited about, you can see some of that cross-selling upsell happening in that largest...
Speaker Change #125: The intelligent cloud offering how much we have to bring back to these clients.
Speaker Change #125: And we think that'll be consistent contributor to our growth.
Speaker Change #126: That's great. Thanks, John and just a follow up question Europe to 130 partners and I know there are all kinds of size.
Speaker Change: segment of the market where there's so much upsell and cross-sell activity. We've shared some statistics about what it would look like if we just expanded inside our top firms that we already have. So we could get to a billion dollars just doing that.
Speaker Change #127: And different stripes, there's data there's software there's professional services firms what are you, saying like for example, the last couple of quarters, you've added I think out of sync last quarter expanded with five this quarter five new win.
Speaker Change: So, I think that absolutely. Now, that being said, we're also doing similar cross-sell and up-sell opportunity in the mid-size firms and even the smaller ones. So, the NRR.
Speaker Change #128: What are you seeing them in terms of starting to get emotion, where they're actually driving new opportunities for you all beyond just servicing your customers. What do you think from that thank you.
Speaker Change: numbers we're very proud of, but I think it also reflects the breadth of
Speaker Change #127: Okay.
Speaker Change: The Intelligent Cloud offering how much we have to bring back to these clients, and we think that'll be a consistent contributor to our growth.
Speaker Change #129: That that's been increasing our year over year, we continued to mature that motion and.
Speaker Change #129: In several different ways across investment.
Speaker Change: That's great. Thanks, John. And just a follow-up question. You're up to 130 partners, and I know they're all kinds of size and different stripes. There's data, there's software, there's professional services firms. What do you think, like, for example, the last couple quarters you've added? I think you added six last quarter, expanded with five this quarter, five new ones.
Speaker Change #129: We talked about our partner program in.
Speaker Change #129: University, if you will and that's just one of the latest.
Speaker Change #129: <unk>.
Speaker Change #129: That's a reflection of the folks.
Speaker Change #129: And the talk track that we have coming on board as a result, and so well.
Speaker Change: What are you seeing them in terms of starting to get a motion where they're actually driving new opportunities for you all, beyond just, you know, servicing your customers? What do you think from that? Thank you.
Speaker Change #129: We will continue to moderate this appropriately as well as with our go to market motions.
Speaker Change #129: To continue to drive results with specifically within our funnel and Pi Chad.
Speaker Change #129: Thank you all.
Speaker Change: That's been increasing year over year. We continue to mature that motion in several different ways across investment.
Thank you.
Speaker Change #130: Our next question.
Comes from the line of Parker Lane Stifel.
Speaker Change: You know, we talked about our partner program and University if you will and that's just one of the latest to give you know a better reflection of the folks
Speaker Change #130: Hi, This is Matthew kicker for Parker, Thanks, a lot for taking my questions and congrats on the quarter.
Speaker Change #131: 25 guide, calling for very nice operating margin expansion next year.
Speaker Change: and the talk track that we have coming on board as a result and so you know we'll continue to moderate this appropriately as well as with our go to market motions to continue to drive results with specifically within our funnel and pipe gen.
Speaker Change #132: And you mentioned the vertical go to market motion contributing to some of that but maybe more broadly could you walk through some of the efficiencies contributing to leverage and anything that may have been incremental from last quarter.
Speaker Change: Thank you all.
Speaker Change #133: So we will continue to drive leverage in our model.
Speaker Change: Thank you.
Speaker Change #134: From a productivity perspective.
Speaker Change: My next question comes from the line of Parker Lane of Stifel.
Speaker Change #135: I still believe that there is opportunities there from an absolute costs. If you think about.
Speaker Change: Hi, this is Matthew Kickert for Parker. Thanks a lot for taking my questions and congrats on the quarter.
Speaker Change #135: Where we're at from a stage appropriate NES, just specifically in G&A, there's opportunity there.
Speaker Change: The 2025 guide calling for very nice operating margin expansion.
Speaker Change #135: But even if you go back and reflect on some of our previous Investor day slides from February 22nd there are also opportunities within our gross margin and sales and marketing as well and so those still hold true.
Speaker Change #100: next year. And you mentioned the vertical AI go to market motion, you know, contributing to some of that. But maybe more broadly, could you walk through some of the efficiencies contributing to leverage and anything that may have been incremental from last quarter?
Speaker Change #135: And we're just continuing to operationalize those respective.
Speaker Change #135: Cost opportunities as we think about FY 'twenty five and beyond.
Speaker Change #101: We'll continue to drive leverage on our model.
Speaker Change #136: Okay makes sense, and then going back to the 25 guidance.
Speaker Change #102: You know, from a productivity perspective, you know, I still believe that there's opportunities there from an absolute cost. If you think about.
Speaker Change #137: How are you thinking about the split of net new customers versus migrations and expansion next year and how would you expect that to impact the cloud are trends versus total there. Thank you.
Speaker Change #102: you know, where we're at from a stage appropriateness, just specifically in J&A. There's opportunity there. But even if you go back and reflect on some of our previous Investor Day slides from February 22nd, there were also opportunities within our gross margin.
Speaker Change #138: Well I think what we've experienced from our net new we've seen more from upsell and cross sell.
Speaker Change #103: and sales and marketing as well and so those still hold true and we're just continuing to operationalize those respective cost opportunities as we think about FY25 and and beyond.
Speaker Change #138:
Speaker Change #139: And then obviously, we've had a continued duration and cadence of met new logo, but if you think about just the absolute contribution outside of migration. It's been about a 60 40, 60 began upsell and cross sell and that can flex upwards.
Speaker Change #104: Okay, makes sense. And then going back to the 25 guidance, how are you thinking about the split of net new customers versus
Speaker Change #139: To 75% in the quarter, and then down to 50% in a quarter, depending on the rate of pace and the size of those lands.
Speaker Change #139: With respect to.
Speaker Change #139: Migrations those haven't really happened in a meaningful manner and youll continue to see that tracks.
Speaker Change #105: I think what we've experienced from our net new, we've seen more from upsell and cross-sell.
Speaker Change #139: From total IRR to cloud.
Speaker Change #139: But I would expect those cloud migrations.
Speaker Change #106: You know, and then obviously we've had a continued duration and cadence of met new logo, but if you think about
Speaker Change #139: More targeted to our back half of the year.
Speaker Change #139: When we worked through some key clients and get them.
Speaker Change #107: just the absolute contribution outside of migrations, it's been about a 60-40, 60 being upsell and cross-sell, and that can flex upwards to 75% in a quarter and then down to 50% in a quarter.
Speaker Change #139: And the cloud.
Speaker Change #140: Okay. Thank you very much and congrats again.
Speaker Change #141: Thank you. Our next question comes from the line of Matt Van Blair upbeat T I G.
Speaker Change #107: depending on the rate of pace and the size of those lands.
Speaker Change #141: Okay.
Speaker Change #108: with respect to
Speaker Change #142: Hey, good afternoon. Thanks for taking my question I wanted to circle back on the comment you made earlier about some of the applied AI functionality now being sort of revenue skus.
Speaker Change #108: cloud migrations, you know, those haven't really happened in a meaningful manner, and you'll continue to see that track from total ARR to cloud ARR. But I would expect, you know, those cloud migrations
Speaker Change #143: So kind of two part here.
Speaker Change #144: I guess what mix of the current functionality. That's available today is already being monetize directly in overtime and how do you envision either charging directly or using it as kind of an up sell cross sell functionality within some of these other modules.
Speaker Change #109: more targeted to our back half of the year of when we work through some key clients and get them in the cloud.
Speaker Change #110: Okay, thank you very much and congrats again.
Speaker Change #144: To give them more value.
Speaker Change #111: Thank you. Our next question comes from the line of Matt VanBlier of BTIG.
Matt: Thanks, Matt.
Yeah.
Speaker Change #146: So we're bringing out and.
Matt VanBlier: Hey, good afternoon. Thanks for taking the question. I wanted to circle back on the comment you made earlier about some of the applied AI functionality now being sort of revenue skews.
Speaker Change #146: An extended set of applied AI.
Speaker Change #146: Functionality across the whole intelligent cloud.
Speaker Change #146: Platform.
Speaker Change #146: We have a roadmap for the difference.
Matt VanBlier: So kind of two-part here, what, I guess, what mix of the current functionality that's available today is already being monetized directly and over time, you know, how do you envision
Speaker Change #146: Solutions within that platform to bring.
Speaker Change #146: Applied AI features out.
Speaker Change #146: Over time.
Speaker Change #146: We started in February.
Speaker Change #147: We announced with him to emphasis for deal cloud.
Matt VanBlier: either charging directly or using it as kind of an upsell cross-sell functionality within some of these other modules to give them more value
Speaker Change #146: Our brand name for the.
Speaker Change #146: Vertical AI applied AI regenerative AI journey.
Speaker Change #146: Generation of our offering.
Speaker Change #146: And that is monetize.
Matt VanBlier: Thanks, Matt.
Speaker Change #146: No.
Speaker Change #146: Existing clients.
Speaker Change #113: So, we're bringing out.
Can buy that for a price with a SKU.
Speaker Change #113: and extended set of applied AI functionality across the whole intelligent cloud.
Speaker Change #146: For new clients.
Speaker Change #146: We have an opportunity to charge for that.
Speaker Change #113: platform.
Speaker Change #146: And you'll see that same model.
Speaker Change #113: We have a road map for the different
Speaker Change #113: solutions within that platform to bring
Speaker Change #146: As we rollout the interfaces offering across the rest of the platform.
Speaker Change #113: applied AI features out over time.
Speaker Change #146: In parallel we also announced some capabilities like in tap data.
Speaker Change #113: We started in February with the announcement of Entapasys for DL Cloud. That's our brand name for the
Speaker Change #146: Which we talked a little bit about.
Speaker Change #148: <unk> remarks.
Speaker Change #148: That is embedded in.
Speaker Change #113: Vertical AI, applied AI, generative AI.
Speaker Change #148: The platform and deal side itself to help all of our clients have a better data foundation to run a lot of the AI on.
Speaker Change #113: generation of our offering, and that is monetize.
Speaker Change #114: So, existing clients.
So in that case, we're becoming more and more specific and purpose built for the end market they see more differentiating value overall.
Speaker Change #114: can buy that for a price with a SKU.
Speaker Change #114: for New Clients.
Speaker Change #148: And.
Speaker Change #114: We have an opportunity to charge for that.
Speaker Change #148: You might say the value of that is in the price or embedded in the annual price increase so we're using different approaches strategically considered for how we're going to monetize this but the reaction from the market has been tremendous.
Speaker Change #114: and you'll see that same model.
Speaker Change #114: as we roll out the InTapAssist offering across the rest of the platform.
Speaker Change #114: In parallel, we also announced some capabilities like InTapData.
Speaker Change #148: The interim data capability was the number one requested capability, leading up to that launch and we put a huge response and a huge competitive.
Speaker Change #114: which we talked a little bit about in the prepared remarks.
Speaker Change #114: that is embedded in.
Speaker Change #114: the platform and DealCloud itself to help all of our clients have a better data foundation to run a lot of the AI on.
Speaker Change #148: <unk> and a bunch of areas in the market because of what we're doing there very excited about what the team has done.
Speaker Change #149: And then on the Intown Francis side really fantastic value stories coming back from our clients.
Speaker Change #115: So in that case, we're becoming more and more specific and purpose-built for the end market. They see more differentiating value overall, and you might say the value of that is in the price or embedded in the annual price increase. So we're using different approaches.
Speaker Change #149: And similarly, or even quoted one in the script around in tap walls for co pilot incredible stories coming back about these are the things that people have been looking for in this whole generative AI conversation that the world has been having over the past year.
Speaker Change #115: strategically considered for how we're going to monetize this.
Speaker Change #115: But the reaction from the market has been tremendous.
Speaker Change #115: The Intent Data Capability was the number one requested capability leading up to that launch and we've had a huge response and a huge competitive strengthening in a bunch of areas in the market because of what we're doing there. Very excited about what the team has done.
Speaker Change #149: How do we really get the value for our professionals and floor term to drive revenue to improve risk and compliance drive profitability and efficiency to drive user satisfaction partner satisfaction and so.
Speaker Change #149: I think this is increasingly a central.
Speaker Change #115: and then on the InTapAssist side, really fantastic value stories coming back from our clients.
Speaker Change #149: The story in plank of our differentiation purpose built.
Speaker Change #149: Story going into these very specific markets for the end users there and helping them feel like we are the people who are going to help them take advantage of a degenerative AI era.
Speaker Change #115: And similarly, I even quoted one in the script around intap walls for co-pilot. Incredible stories coming back.
Speaker Change #150: Okay very helpful. Thank you and then as you look at the partner ecosystem and a number of good.
Speaker Change #115: about these are the things that people have been looking for.
Speaker Change #115: in this whole generative AI conversation that the world has been having over the past year is how do we really get the value for our professionals and for our firm to drive revenue, to improve risk and compliance, to drive profitability and efficiency, to drive user satisfaction, partner satisfaction.
Speaker Change #150: And we'll go from there.
Speaker Change #151: You know you were at 130 now what is the appropriate pace of sort of additional partners in there versus focusing on the ones you have and really driving the value for those that.
Committed early and are already a big part of the ecosystem. So how should we think about that sort of growing versus focusing overtime.
Speaker Change #115: And so, I think this is increasingly a central...
Speaker Change #115: story and plank of our differentiation purpose-built story going into these very specific markets for the end-users there and helping them feel like we're the people who are going to help them take advantage of the generative AI era.
Speaker Change #152: I think a lot of it is client driven we've always had a client driven culture from the beginning and we look at the places that we can create meaningful business value for our clients together with one of the partners you'll see the people that are joining us we typically have.
Speaker Change #116: Okay, very helpful. Thank you. And then as you look at the partner ecosystem, you know number of
Client stories to go with them from the beginning because he'd been referred to us if somebody who can really help us build out a more whole solution for the for the firms. So we're going to move at the pace of the market. It is interesting. It is a very rich underserved space. There's a lot of opportunity for a lot of companies to partner with us because we are now.
Speaker Change #117: You're at 130 now. What is the appropriate pace of sort of additional partners in there versus focusing on the ones you have and really driving the value for those that, you know, committed early and are already a big part of the ecosystem? So how should we think about that sort of growing versus focusing over time?
Speaker Change #152: Increasingly viewed as the cloud platform. That's built purpose built for this marketplace. So we have a lot of inbound interest from the partner community, which we're very excited about and grateful for we also are pretty conscious of which folks we want to build a relationship with and grow our partnership with because we do it.
Speaker Change #118: I think a lot of it is client-driven. We've always had a client-driven culture from the beginning and we look at the places that we can create meaningful business value for our clients together with one of the partners.
Speaker Change #118: You'll see the people that are joining us, we typically have
Speaker Change #152: Best with them to make sure that we can make those clients successful together and we want to make sure that we're building up a rich ecosystem that really works for the client side. So I think youll see a consistent growth pace. There. It's a core part of our overall strategy to get the ecosystem economy going to leverage that accrues to the company as we scale and it's one of the things we said is.
Speaker Change #118: Client stories to go with them from the beginning because they've been referred to us
Speaker Change #118: and somebody who can really help us build out a more whole solution for the firm. So we're gonna move it to pay for the market. It is interesting. It is a very rich, underserved space.
Speaker Change #118: There's a lot of opportunity for a lot of companies.
Speaker Change #118: to partner with us because we're now increasingly viewed as the cloud platform that's purpose-built for this marketplace. So we have a lot of inbound interest from the partner community, which we're very excited about and grateful for. We also are pretty conscious.
Speaker Change #152: We were coming public that's one of the signs of the leader in the marketplace and the industry is when you start to get a really rich ecosystem and everybody wants to integrate with you. It shows the position that you have and the opportunity that you have to really grow and discover value in the marketplace. So we're very excited about how that's going.
Speaker Change #118: of which folks we want to build a relationship with and grow our partnership with, because we do invest with them to make sure that we go make those clients successful together. And we want to make sure that we're building up a rich ecosystem that really works.
Speaker Change #153: Okay very helpful. Thank you.
Speaker Change #153: Thank you. Our next question comes from Brian Schwartz of Oppenheimer and company.
Brian Schwartz: Hi, This is Brian Schwartz from Oppenheimer. Thanks for taking my questions. This afternoon, John I wanted to ask you what you're saying in terms of sales cycles on your bigger deals clearly the activity has picked up in the second half of your fiscal year end and the macro did not.
Speaker Change #118: for the client side. So I think you'll see a consistent growth pace there. It's a core part of our overall strategy to get the ecosystem economy going, the leverage that accrues to the company as we scale. And it's one of the things we said as we were coming public, that's one of the signs of the leader in the marketplace in the industry is when you start to get a really rich ecosystem and everybody wants to integrate with you, it shows the
Speaker Change #155: So are you seeing any improvement in terms of the cycles or suggest good execution or seasonality and then I have a follow up for David.
Speaker Change #118: position that you have and the opportunity that you have to really grow and discover value in the marketplace. So we're very excited about how that's going.
Speaker Change #156: Yes, Thanks, Brian, Yes, actually the sales cycles in Q3 and Q4 did.
Speaker Change #119: Very helpful, thank you.
Speaker Change #119: Thank you. Our next question comes from Brian Schwartz of Oppenheimer & Company.
Speaker Change #157: <unk> for us a little bit and I was very excited to see that.
Speaker Change #157: <unk>.
Brian Schwartz: Hi, this is Brian Schwartz from Oppenheimer. Thanks for taking my questions this afternoon. John, I wanted to ask you what you're seeing in terms of sales cycles on your bigger deals. Clearly, the activity has picked up in the second half of your fiscal year, and the macro did not.
David: We watch all of those.
David: Metrics pretty carefully and we had some good signs this period.
David: Okay, and then a follow up question David I, just wanted to ask you about the components of that.
Speaker Change #159: Or are the expansion activities.
Speaker Change #121: So are you seeing any improvement in terms of the cycles or just good execution or seasonality? And then I have a follow-up for David.
Specifically clearly the cross selling Upselling activity is strong from your commentary you've got the pricing in there what are you seeing in terms of head count growth from your customers.
Speaker Change #122: Thanks, Brian. Yes, actually, the sales cycles in Q3 and Q4 did improve for us a little bit. I was very excited to see that.
Speaker Change #160: Is that meeting your expectations as you came into the.
Speaker Change #160: The plan and thanks again for taking my questions.
David Morton: Yeah, we watch all those.
Speaker Change #160: Yes.
Speaker Change #160:
David Morton: metrics pretty carefully and we had some good signs this period.
Yeah head count it's just at times.
David Morton: And then the follow-up question, David, I just wanted to ask you about the components of the NRR, the expansion activities.
Speaker Change #160: And artifact that total opportunity ahead of us and so you know even.
Speaker Change #160: Even with our largest.
Speaker Change #160: Clients.
Speaker Change #123: Specifically, clearly the cross-selling, the up-selling activity is strong from your commentary. You've got the pricing in there. What are you seeing in terms of headcount growth from your customers?
Speaker Change #160: As we've noted back in February.
Speaker Change #160: Given our top two hotter <unk> there was still so much more room to expand and I believe that I believe that then and I believe that more than ever now and so for us to continue to go up sell cross sell.
Speaker Change #124: Is that meeting your expectations as you came into the plan? And thanks again for taking my questions.
Speaker Change #160: That opportunity is still very very true for us today, and we havent been limited our gapped out because of you know now.
Speaker Change #160: Not enough head count or anything of that narrative, so for finding those consumption rates high and the usage high across our.
David Morton: Thank you. Thank you.
Speaker Change #160: Clients.
Speaker Change #125: an artifact of the total opportunity ahead of us. And so, you know, even with our largest clients.
Speaker Change #160: You know with just an ever improving six at a time to value and so that's.
Speaker Change #126: As we've noted back in February, even our top 200 ARR, there was still so much more room.
Speaker Change #161: Thank you.
Speaker Change #161: Okay.
Speaker Change #162: This concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change #126: to expand, and I believe that then, and I believe that more than ever now. And so, you know, for us to continue to go up-sell, cross-sell,
Speaker Change #126: You know, that opportunity is still very, very true for us today, and we haven't been limited or gapped out because of.
Speaker Change #126: you know, not enough head count or anything of that narrative. So we're finding those consumption rates high and the usage high across our clients you know, with just an ever improving CSAT, you know, time to value. And so that's.
Speaker Change #127: Thank you.
Speaker Change #128: Thank you very much for joining us today.
Speaker Change #129: all of them have been there for a long time , and they have been in the United States for 40 years , and they have been walking around the
Speaker Change #129: Okay.
Speaker Change #129: Order.
Speaker Change #130: This concludes today's conference call. Thank you for participating. You may now disconnect.
Speaker Change #130: [inaudible]
Speaker Change #130: [inaudible]
Speaker Change #130: [inaudible]
Speaker Change #131: and a lot of other people. I'm going to be talking about the the importance of the the importance of the of the of the of the of the of the of the of the of the of the of the [inaudible]