Q2 2025 Smartsheet Inc Earnings Call

There's a slide presentation that accompanies Pete's preferred remarks, which can be viewed in the event section of our Investor Relations website.

Operator: Section of our Investor Relations website. During this call, we will make forward-looking statements within the meaning of the Federal Securities Laws. We have faced these forward-looking statements largely on our current expectations and projections about future events and financial trends. These forward-looking statements are subject to a number of risks and other factors, including, but not limited to, those described in our SEC filings available on our Investor Relations website. And on the SEC website at www.sec.gov. Although we believe that the expectations reflected in the forward-looking statements are reasonable, our actual results may differ materially and/or adversely. All forward-looking statements made during this call are based on information available to us as of today.

Pete: During this call, we will make forward-looking statements within the meaning of the federal securities laws. We have faced these forward-looking statements largely on our current expectations and projections about future events in financial trends.

Operator: Section of our Investor Relations website. During this call, we will make forward-looking statements within the meaning of the federal securities laws. We have faced these forward-looking statements largely on our current expectations and projections about future events and financial trends. These forward-looking statements are subject to a number of risks and other factors including, but not limited to, those described in our SEC filings available on our Investor Relations website. And on the SEC website at www.sec.gov.

Pete: These forward-looking statements are subject to a number of risks and other factors, including but not limited to, those described in our SEC filings available on our Investor Relations website and on the SEC website at www.scc.gov.

Pete: Although we believe that the expectations reflected in the forward-looking statements are reasonable, our actual results may differ materially and or adversely.

Operator: Although we believe that the expectations reflected in the forward-looking statements are reasonable, our actual results may differ materially and or adversely. All forward-looking statements made during this call are based on information available to us as of today. We do not assume any obligation to update these statements as a result of new information or future events, except as required by law. In addition to the U.S, gap financials, we will discuss certain non-gap financial measures. A reconciliation to the most directly comparable U.S, gap measures is available in the presentation that accompanies this call, which can be found on our Investor Relations website.

Pete: All-forward-looking statements made during this call are based on information available to us as of today. We do not assume any obligation to update these statements as a result of new information or future events except as required by law.

Operator: We do not assume any obligation to update these statements as a result of new information or future events, except as required by law.

Operator: In addition to the U.S. gap financials; we will discuss certain non-gap financial measures. A reconciliation of the most directly comparable U.S. gap measures is available in the presentation that accompanies this call, which can be found on our Investor Relations website.

Pete: In addition to the U.S. gap financials, we will just go certain non-gap financial measures.

Mark: A reconciliation to the most directly comparable US gap measures is available in the presentation that a company is this call, which can be found on our investor relations website. With that, let me turn the call over to Mark. Thank you, Aaron. And good afternoon, everyone. Welcome to our second quarter earnings call for fiscal year 2025.

Operator: With that, let me turn the call over to Mark.

Mark Mader: Thank you, Earn, and good afternoon, everyone. Welcome to our second quarter earnings call for fiscal year 2025. Q2 was a strong quarter that further demonstrated our momentum in the enterprise. 75 customers expanded their smart sheet ARR by more than $100,000, and we had three transactions over $1,000,000, one of which was over $4,000,000. We now have 77 customers with ARR over $1,000,000, of 50% from Q2 last year, and of those 77 customers, five of them are government agencies. We ended the quarter with annualized recurring revenue of $1.093 billion and more than $15.3 million Smartsheet users. In Q2, we expanded with customers including Intuit, Skechers, and City National Bank, among others.

Mark Mader: With that, let me turn the call over to Mark. Thank you, Earn, and good afternoon everyone. Welcome to our second quarter earnings call for fiscal year 2025. Q2 was a strong quarter that further demonstrated our momentum in the enterprise. 75 customers expanded their smart sheet ARR by more than $100,000, and we had three transactions over $1,000,000, one of which was over $4,000,000. We now have 77 customers with ARR over a million dollars of 50% from Q2 last year, and of those 77 customers, five of them are government agencies.

Mark: Q2 was a strong quarter that further demonstrated our momentum in the enterprise. 75 customers expanded their smart sheet ARR by more than $100,000. And we had three transactions over a million dollars, one of which was over $4 million.

Speaker Change: We now have 77 customers with ARR over $1,050 from Q2 last year and up those 77 customers five of them are government agencies.

Speaker Change: We ended the quarter with annualized recurring revenue of 1.093 billion dollars and more than 15.3 million smarture users.

Mark Mader: We ended the quarter with annualized recurring revenue of $1.093 billion and more than 15.3 million smart sheet users. In Q2, we expanded with customers including Intuit, Skechers, and City National Bank, among others. In June, we launched our new pricing and packaging model. Today, we've seen thousands of new customers transact on the model, which is leading to high engagement and the addition of many provisional members across these plans. While only a small number of our customers have reached their first true up period, we are encouraged by the positive early results.

Speaker Change: In Q2, we expanded with customers and including into it, sketches, and city national bank among others.

Mark Mader: In June, we launched our new pricing and packaging model. Today, we've seen thousands of new customers transact on the model, which is leading to high engagement and the addition of many provisional members across these plans. While only a small number of our customers have reached their first true-up period, we are encouraged by the positive early results. Building on the success with global system integrators mentioned on our last call in Q2, we signed a large expansion with another big four consulting firm where Smartsheet is being used to streamline client engagement. Smart sheet enabled them to automate their processes through a standardized project delivery framework, which improved the quality of their work and led to significant savings.

Speaker Change: In June, we launched our new pricing and packaging model. Today, we've seen thousands of new customers transact on the model, which is leading to high engagement and the addition of many provisional members across these plans. While only a small number of our customers have reached their first two-up period, we are encouraged by the positive, early results.

Speaker Change: Building on the success with global system integrators mentioned on our last call, in Q2, we signed a large expansion with another big 4 consulting firm, where SmartTube is being used to streamline clients engagement.

Mark Mader: Building on the success with global system integrators mentioned on our last call in Q2, we signed a large expansion with another big four consulting firm, where smart sheet is being used to streamline client engagement. Smart sheet enabled them to automate their processes through a standardized project delivery framework, which improved the quality of their work and led to significant savings. This customer was an early adopter of our new pricing model, and they estimate that deploying smart sheet at scale saved the team 39,000 working hours in the last year, reducing their project delivery cost by nearly 12%.

Speaker Change: Smart should enable them to automate their processes through a standardized project delivery framework, which improved the quality of their work and led to significant savings.

Mark Mader: This customer was an early adopter of our new pricing model, and they estimate that deploying Smart Sheet at scale saved the team 39,000 working hours in the last year, reducing their project delivery cost by nearly 12%. Demand for smart sheet is growing across the organization, with users at the company increasing by 120% year over year. They are now expanding their smart sheet project delivery solution to support customers in the EU and US federal government. They are also building new solutions to streamline other aspects of their client engagement life cycle. We also had a seven-figure expansion with one of our largest enterprise customers during their annual renewal, with a total SmartSheet user population of over 150,000 users.

Speaker Change: This customer was an early adopter of our new pricing model, and they estimate that the employee's smartsheet at scale saved the team 39,000 working hours in the last year, reducing their project delivery cost by nearly 12%.

Speaker Change: The man for smart sheet is growing across the organization with users at the company increasing by 120% year over year. They are now expanding their smart sheet project delivery solution to support customers in the EU and US federal government.

Mark Mader: Demand for smart sheet is growing across the organization with users at the company increasing by 120% year over year. They are now expanding their smart sheet project delivery solution to support customers in the EU and US federal government. They are also building new solutions to streamline other aspects of their client engagement life cycle. We also had a seven figure expansion with one of our largest enterprise customers during their annual renewal with a total smart sheet user population of over 150,000 users.

Speaker Change: They are also building new solutions to streamline other aspects of their client engagement life cycle.

Speaker Change: We also had a seven-figure expansion with one of our largest enterprise customers during their annual renewal. With a total smartly user population of over 150,000 users, our success in this account has been driven in part by our differentiator feature set and our enterprise grade security and administration.

Mark Mader: Our success in this account has been driven in part by our differentiator feature set and our enterprise-grade security and administration. Smartsheet has corporate level IT and security approval, enabling any team across the company to adopt Smartsheet. As a result of increased self-discovery, we have seen a boost in demand of our premium capabilities and growth in this account. This has resulted in data shuttle workflows increasing nearly 200% in dynamic view configurations growing by 450% over the past year. Also in Q2, we closed a competitive deal with a prominent financial services company following an RP process that included other CWM vendors.

Mark Mader: Our success in this account has been driven in part by our differentiated feature set and our enterprise grade security and administration. Smartsheet has corporate level IT and security approval, enabling any team across the company to adopt Smartsheet. As a result of increased self-discovery, we have seen a boost in demand of our premium capabilities and growth in this account. This has resulted in data shuttle workflows increasing nearly 200% in dynamic view configurations growing by 450% over the past year.

Smartchine: Smartchine has corporate level IT and security approval, enabling any team across the company to adopt Smartchine.

Smartchine: As a result of increase self-discovery, we have seen a boost in demand of our premium capabilities and growth in this account. This is resulted in data shuttle work flows increasingly 200% and dynamic view configurations growing by 450% over the past year.

Speaker Change: Also in Q2, we close the competitive deal with the prominent financial services company following in our P-Prosis that included other CWM vendors.

Mark Mader: This new customer onboards thousands of clients a year, and they're executing increasingly complex projects. In order to scale with their customers, they needed to replace their in-house solution with a more robust work management platform, and they chose Smartsheet because of our enterprise readiness and scale. We're partnering with them to develop an integrated project delivery solution that will streamline their processes, improve collaboration with clients, and establish unified reporting. They expect a solution to increase customer satisfaction while saving their employees thousands of hours per year, unlocking the capacity to work on additional projects and ultimately grow revenue.

Mark Mader: Also in Q2, we closed a competitive deal with a prominent financial services company following an RP process that included other CWM vendors. This new customer onboards thousands of clients a year and they're executing increasingly complex projects. In order to scale with their customers, they needed to replace their in-house solution with a more robust work management platform and they chose Smartsheet because of our enterprise readiness and scale. We're partnering with them to develop an integrated project delivery solution that will streamline their processes, improve collaboration with clients and establish unified reporting. They expect a solution to increase customer satisfaction while saving their employees thousands of hours per year, unlocking the capacity to work on additional projects and ultimately grow revenue.

Speaker Change: This new customer onboard thousands of clients a year, and they're executing increasingly complex projects. In order to scale with their customers, they needed to replace their in-house solution with a more robust work management platform, and they chose SmartTee because of our enterprise readiness and scale.

Speaker Change: We're partnering with them to develop an integrated project delivery solution that will streamline their processes, improve collaboration with clients and establish unified reporting.

Speaker Change: They expect a solution to increase customer satisfaction while saving their employees thousands of hours per year, unlocking the capacity to work on additional projects and ultimately for a revenue.

Mark Mader: As we move into the second half of FY25, we are making good progress on the comprehensive modernization of the Smartsheet platform, a strategic investment that is ongoing. In just a few weeks, we'll be hosting our annual customer conference in Gage, Seattle. In this year's conference, we'll be showcasing the new Smartsheet, a new experience that is more beautiful, powerful, and more integrated than ever before. It will empower our customers to manage their projects, programs, and processes at even larger scale and sophistication. The new Smartsheet experience simplifies and streamlines getting started for users. It will be easier to create solutions and quickly initiate projects and processes with all the necessary tools for configuration and management, all accessible right from a highly visual AI-driven home experience.

Speaker Change: As we move into the second half of FY-25, we are making good progress on the comprehensive modernization of the smart sheet platform, a strategic investment that is ongoing.

Mark Mader: As we move into the second half of FY25, we are making good progress on the comprehensive modernization of the Smartsheet platform, a strategic investment that is ongoing. In just a few weeks, we'll be hosting our annual customer conference in Gage Seattle. In this year's conference, we'll be showcasing the new Smartsheet, a new experience that is more beautiful, powerful, and more integrated than ever before. It will empower our customers to manage their projects, programs, and processes at even larger scale and sophistication.

Speaker Change: In just a few weeks, we'll be hosting our annual customer conference in gauge Seattle.

Speaker Change: During this year's conference we'll be showcasing the new smart sheet, a new experience that is more beautiful, powerful and more integrated than ever before. It will empower our customers to manage their projects, programs and processes that even larger scale and sophistication.

Speaker Change: The news market experience simplifies and streamlines getting started for users. It will be easier to create solutions and quickly initiate projects and processes with all the necessary tools for configuration and management. All accessible right from a highly visual AI-driven home experience.

Mark Mader: The new Smartsheet experience simplifies and streamlines getting started for users. It will be easier to create solutions and quickly initiate projects and processes with all the necessary tools for configuration and management, all accessible right from a highly visual AI-driven home experience. We are also introducing significant enhancements in how users create, organize, and share whether they're building assets for marketing campaign or managing documentation for a service delivery program. One of the key improvements simplifies collaboration with stakeholders, making it easier to collect feedback and drive reviews on digital files, such as images, videos, and PDFs.

Mark Mader: We are also introducing significant enhancements in how users create, organize, and share whether they're building assets for a marketing campaign or managing documentation for a service delivery program. One of the key improvements simplifies collaboration with stakeholders, making it easier to collect feedback and drive reviews on digital files such as images, videos, and PDFs. Over the past few months, I've personally seen the benefits of more accurate, actionable feedback and the substantial time savings for our teams. I believe our customers are going to love this new collaboration experience. The new and improved Smartsheet features, along with our new user subscription model and self-service access to premium capabilities, enables more customers to solve their most common, as well as their more complex work management needs.

Speaker Change: We are also introducing significant enhancements in how users create, organize, and share whether they're building assets for marketing campaign or managing documentation for a service delivery program.

Speaker Change: One of the key improvements simplifies collaboration with stakeholders, making it easier to collect feedback and drive reviews on digital files such as images, videos and PDFs.

Speaker Change: Over the past few months, I've personally seen the benefits of more accurate, actionable feedback, and the substantial time savings for our teams. I believe our customers are going to love this new collaboration experience.

Mark Mader: Over the past few months, I've personally seen the benefits of more accurate, actionable feedback and the substantial time savings for our teams. I believe our customers are going to love this new collaboration experience. The new and improved Smartsheet features, along with our new user subscription model and self-service access to premium capabilities, enables more customers to solve their most common, as well as their more complex work management needs. Generative AI is proving to be a helpful differentiator for Smartsheet.

Speaker Change: The new and improved smart sheet features, along with our new user subscription model and self-service access to premium capabilities, enables more customers to solve their most common, as well as their more complex work management needs.

Mark Mader: Generative AI is proving to be a helpful differentiator for Smartsheet. Our AI-powered tools, like formula generation and tech summaries, are designed to simplify complex tasks, saving time and reducing errors. We're committed to expanding these capabilities to help our customers work more efficiently. In Q2, we saw nearly 50% sequential growth in the number of users utilizing our AI tools. Adoptions are very showing significant benefits to our customers, with approximately 47,000 users having already saved an estimated 1 million hours from AI automations and performance improvements. We also saw positive early results suggesting that AI-generated formulas and conversational support are effectively acting as a first point of contact for customer support, reducing friction with the platform and lowering our customer support costs.

Speaker Change: Generative AI is proving to be a helpful differentiator for smart sheep. Our AI powered tools like formula generation and tech summaries are designed to simplify complex tasks, saving time and reducing errors, or committed to expanding these capabilities to help our customers work more efficiently.

Mark Mader: Our AI-powered tools like formula generation and tech summaries are designed to simplify complex tasks, saving time, and reducing errors. We're committed to expanding these capabilities to help our customers work more efficiently. In Q2, we saw nearly 50 percent sequential growth in the number of users utilizing our AI tools. Adoptions are very showing significant benefits to our customers with approximately 47,000 users having already saved an estimated 1 million hours from AI automations and performance improvement.

Speaker Change: In Q2, we saw nearly 50% sequential growth in the number of users utilizing RAI tools. Adoptions are very showing significant benefits to our customers with approximately 47,000 users, having already saved the estimated 1 million hours from AI automations and performance improvements.

Speaker Change: We also saw positive early results suggesting that AI-generated formulas and conversational support are effectively acting as a first point of contact for customer support, reducing friction with the platform and lowering our customer support costs.

Mark Mader: We also saw positive early results suggesting that AI generated formulas and conversational support are effectively acting as a first point of contact for customer support, reducing friction with the platform and lowering our customer support costs. We expect to see the customer impact of AI tools grow meaningfully as we expand them to support cross sheet formulas, provide portfolio insights, and co-build solutions with users. Starting mid-September, in a push to enable customers to feel the impact of AI and to experience one benefit of our enterprise plan, Smartsheet will grant limited time access to our AI tools to all users through December 31, 2024.

Mark Mader: We expect to see the customer impact of AI tools grow meaningfully as we expand them to support cross-sheet formulas, provide portfolio insights, and co-build solutions with users. Starting mid-September, in a push to enable customers to feel the impact of AI and to experience one benefit of our enterprise plan, Smartsheet will grant limited-time access to our AI tools to all users through December 31, 2024.

Speaker Change: We expect to see the customer impact of AI tools grow meaningfully as we expand them to support cross-sheet formulas, provide portfolio insights and co-build solutions with users.

Speaker Change: Starting mid-September, in a push to enable customers to feel the impact of AI and to experience one benefit of our enterprise plan, smartsheep will grant limited time access to our AI tools to all users through December 31, 2024.

Mark Mader: In closing, nearly two quarters since the hiring of Max Long and the appointment of Prayer Guard to their respective roles, investments in our do-it-a-market and deployment of our next-gen product experiences are well underway. Through a combination of a use case oriented value framework, the simplified licensing model, new user experiences, and class leading scale, FY25 will be a transformative year for our customers, our company, and the Smartsheet platform. We are laying the foundation for the years ahead.

Speaker Change: In closing, nearly two quarters since the hiring of Max Long and the appointment of prayer guard to their respective rules. Investments in our daughter market and deployment of our next gen product experiences are well underway.

Mark Mader: In closing, nearly two quarters since the hiring of Max Long and the appointment of Prayer Guard to their respective roles, investments in our go-to-market and deployment of our next-gen product experiences are well underway. Through a combination of a use case oriented value framework, the simplified licensing model, new user experiences and class-leading scale, FY25 will be a transformative year for our customers, our company, and the Smartsheet platform. We are laying the foundation for the years ahead.

Speaker Change: Through a combination of a use case-oriented value framework, exemplified licensing model, new user experiences, and class leading scale, FY25 will be a transformative year for our customers, our company, and the SmartTee platform. We are laying the foundation for the years ahead.

Pete Godbole: Now let me turn the call over to Pete.

Pete Godbole: Thank you, Mark. As Mark mentioned, we continue to see considerable strength in our enterprise segment, highlighted by large deals, our largest quarterly expansion in our company's history, and an enterprise NDRR that remains at 120%. Additionally, in Q2, we launched our share buyback program and repurchased 918,000 shares for a total of $40 million in the quarter. We have $110 million remaining on our existing share buyback authorization as of July 31st.

Speaker Change: Now let me turn the call over to Pete.

Pete: Thank you, Mark. As Mark mentioned, we continue to see considerable strength in our enterprise segment, highlighted by large deals, our largest quarterly expansion in our company's history, and enterprise in the RR that remains at 120%.

Pete Godbole: Now let me turn the call over to Pete. Thank you, Mark. As Mark mentioned, we continue to see considerable strength in our enterprise segment highlighted by large deals, our largest quarterly expansion in our company's history, and an enterprise NDRR that remains at 120%.

Speaker Change: Additionally, in Q2 we launched our shared buyback program and repurchased 918,000 shares for total of $40 million in the quarter.

Pete Godbole: Additionally in Q2, we launched our share buyback program and repurchased 918,000 shares for a total of $40 million in the quarter. We have $110 million remaining on our existing share buyback authorization as of July 31st.

Speaker Change: We have 110 million dollars remaining on our existing shared buyback authorization as of July 31st.

Pete Godbole: I will now go through our financial results for the second quarter. Unless otherwise stated, all references to our expenses in operating results are on a non-GAAP basis and are reconciled to our GAAP results in the earnings release and presentation that was posted before the call. Turning now to our quarterly results. Second quarter revenue came in at $276.4 million, up 17% year over year. Subscription revenue was $263.5 million, representing year-over-year growth of 19%. Services revenue was $12.9 million. Revenue from capabilities made up 35% of subscription revenue. Annualized recurring revenue or ARR grew 17% year over year in the second quarter to $1.093 billion.

Speaker Change: I will now go through our financial results for the second quarter unless otherwise stated all references to our expenses in operating results are in a non-gab basis and I reconcile to our gap results in the earnings of these presentations that were posted before the call.

Pete Godbole: I will now go through our financial results for the second quarter. Unless otherwise stated, all references to our expenses in operating results are on a non-gap basis, and are reconciled to our gap results in the earnings release and presentation that was posted before the call.

Speaker Change: Turning now to our core to be ready to go.

Speaker Change: 2nd quarter revenue came in a 276.4 million dollars, up 17% year over year. Subscription revenue was 263.5 million dollars, representing year over year growth of 19%.

Pete Godbole: Turning now to our quarterly results. Second quarter revenue came in at $276.4 million, up 17% year-over-year. Subscription revenue was $263.5 million, representing year-over-year growth of 19%. Services revenue was $12.9 million. Revenue from capabilities made up 35% of subscription revenue. Annualized recurring revenue or ARR grew 17% year-over-year in the second quarter to $1.093 billion.

Speaker Change: Services Revenue was $12.9 million.

Speaker Change: Revenue from capabilities made up 35% of subscription revenue.

Speaker Change: Anulized recurring revenue or ARR grew 17% year over year in the second quarter to 1.093 billion dollars.

Pete Godbole: Moving on to our reported metrics. The number of customers with ARR over $50,000 grew 17% year over year to $4,140. And the number of customers with ARR over $100,000 grew 23% year over year to $2,056. These customer segments now represent 69% and 55% respectively of total ARR. The percentage of our ARR coming from customers with ARR over $5,000 is at 92%. Next, our Domain Average ARR grew 16% year over year for $10,291. We ended the quarter with a dollar-based net retention rate, inclusive of all our customers, of 113%. The full-churn rate increased slightly due to elevated churn rates in our smaller customer segments and is now around 4.5%.

Speaker Change: Moving on to a reported metric.

Speaker Change: The number of customers with ARR over $50,000 grew 17% year over year to $4,140 and the number of customers with ARR over $100,000 to 23% year over year to $2,056.

Pete Godbole: Moving on to our reported metrics. The number of customers with ARR over $50,000 grew 17% year-over-year to $4,140. And the number of customers with ARR over $100,000 to $23% year-over-year to $2056. These customer segments now represent 69% and 55% respectively of total ARR. The percentage of our ARR coming from customers with ARR over $5,000 is at 92%. Next, our domain average ARR grew 16% year over year for $10,291. We ended the quarter with a dollar-based net retention rate, inclusive of all our customers of 113%.

Speaker Change: These customers segments now represent 69% and 55% respectively of total ARRs.

Speaker Change: The percentage of our ERR coming from customers with ERR over $5,000 is at 92%.

Speaker Change: Next, our domain average ARR, grew 16% year over year, for $10,291.

Speaker Change: We ended the quarter with a dollar-based net retention rate, inclusive all our customers of 113%.

Speaker Change: The full-churn rate increased slightly due to elevated churn rates in our smaller customer segments, and is now around 4.5 percent.

Pete Godbole: Now, turning back to the financials, our total gross margin was 84%. Our Q2 subscription gross margin was 87%. Overall, operating income in the quarter was $45.3 million, or 16% of revenue. Free cash flow in the quarter was $57.2 million.

Pete Godbole: The full churn rate increased slightly due to elevated churn rates in our smaller customer segments and is now around 4.5%. Now turning back to the financials, our total gross margin was 84%. Our Q2 subscription gross margin was 87%. Overall, operating income in the quarter was $45.3 million or 16% of revenue. Free cash flow in the quarter was $57.2 million.

Speaker Change: are turning back to the financials. Our total gross margin was 84%. Our Q2 subscription gross margin was 87%.

Speaker Change: Overall, operating income in the quarter was $45.3 million or 16% of revenue. Free cash flow in the quarter was $57.2 million.

Pete Godbole: On guidance, we are maintaining our previous FY25 revenue guidance of 16% to 17%. While we beat our Q2 revenue guidance, we have lowered our assumption for services revenue for the full year, 0 higher percentage of services delivered by partners. We now expect services revenue to be 4.5% of total revenue, down from 5% for FY25. Absent this shift, our full-year revenue guidance would have increased. Our Q3 revenue guidance also takes into account this change. For the third quarter of FY25, we expect revenue to be in the range of $282 million to $285 million and non-GAAP operating income to be in the range of $42 million to $44 million.

Speaker Change: On Guide.

Speaker Change: We are maintaining our previous FY-25 revenue guidance of 16% to 17%.

Pete Godbole: On guidance, we are maintaining our previous FY25 revenue guidance of 16% to 17%. While we beat our Q2 revenue guidance, we have lowered our assumption for services revenue for the full year due to a higher percentage of services delivered by partners. We now expect services revenue to be 4.5% of total revenue down from 5% for FY25. Absent the shift, our full year revenue guidance would have increased. Our Q3 revenue guidance also takes into account this change.

Speaker Change: While we beat our Q2 revenue guidance, we have lowered our assumption for services revenue for the full year due to a higher percentage of services delivered by partners.

Speaker Change: We now expect services revenue to be 4.5% of total revenue down from 5% for FY25.

Speaker Change: Absent the shift, or for you as you guidance would have increased.

Speaker Change: RQ3 revenue guidance also takes into account this change.

Speaker Change: For the third quarter of F525, we expect revenue to be in the range of 282 million, 285 million dollars, and non-gap operating income to be in the range of 42 million to 44 million dollars.

Pete Godbole: For the third quarter of FY25, we expect revenue to be in the range of $282 million to $285 million and non-gap operating income to be in the range of $42 million to $44 million. We expect non-gap net income per share to be 29 to 31 cents based on diluted weighted average shares outstanding of 142.5 million.

Pete Godbole: We expect non-GAAP net income per share to be 29 to 31 cents based on diluted weighted average shares outstanding of 142.5 million. For the full fiscal year 25, we expect revenue of 1.116 billion to 1.121 billion dollars, representing growth of 16 to 17%. We expect services revenue to be around 4.5% of total revenue. We are raising our non-GAAP operating income to be in the range of 177 million to 182 million dollars, representing an operating margin of 16%. And raising our non-GAAP net income per share to be $1.36 to $1.39 for the year based on 141.9 million diluted weighted average shares outstanding.

Speaker Change: We expect non-gap net-in-compressure to be 29-31 cents based on diluted weighted average shares outstanding of 142.5 million.

Speaker Change: For the full fiscal year 25, we expect revenue of $1.116 billion to $1.121 billion, representing growth of 16 to 17%.

Pete Godbole: For the full fiscal year 25, we expect revenue of 1.116 billion to 1.121 billion dollars representing growth of 16 to 17%. We expect services revenue to be around 4.5% of total revenue. We are raising our non-gap operating income to be in the range of $177 million to $182 million representing an operating margin of 16%. And raising our non-gap net income per share to be $1.36 to $1.39 for the year based on 141.9 million diluted weighted average shares outstanding.

Speaker Change: We expect services revenue to be around 4.5% of total revenue.

Speaker Change: We are raising our non-gap operating income to be in the range of 177 million to 182 million dollars representing an operating margin of 16%.

Speaker Change: and raising our non-gap net income per share to be $1.36 to $1.39 for the year based on 141.9 million diluted weighted average shares of standing.

Pete Godbole: We are updating our FY25 error guidance to be between $1.177 billion to $1.180 billion, representing growth between 14.2 to 14.5%. Regarding seasonality, we expect our Q3 error growth rate to be between our Q2 error growth rate and our full-year error growth rate guidance. We are raising our FY25 free cash flow to be $240 million, representing a free cash flow margin of 21%.

Speaker Change: We are updating our FY25 era guidance to be between $1.177 billion to $1.

Pete Godbole: We are updating our FY25 error guidance to be between $1.177 billion to $1.180 billion representing growth between 14.2 to 14.5%. Regarding seasonality, we expect our Q3-ARR growth rate to be between our Q2-ARR growth rate and our full year-ARR growth rate guidance.

Speaker Change: 1,8,0 billion dollars representing growth between 14.2 to 14.5%.

Speaker Change: Regarding seasonality, we expect our Q2, Q3 error, our growth rate to be between our Q2 error, growth rate and our full year error growth rate guides.

Speaker Change: We are raising our FY25 free cash flow to be 240 million dollars representing a free cash flow margin of 21%.

Pete Godbole: We are raising our FY25 free cash flow to be 240 million dollars representing a free cash flow margin of 21%.

Pete Godbole: to conclude, Q2 was highlighted by a continuation of our strong performance in the enterprise and progress on our key initiatives. We launched our new pricing and packaging model to new customers in June and are on track to migrate our existing customers over to the new model starting in January. We are looking forward to unveiling a comprehensive transformation of our platform at our upcoming Engage conference in October. We remain well-positioned to drive durable and profitable growth this year and beyond.

Speaker Change: To conclude, Q2 was highlighted by continuation of our strong performance in the enterprise and progress on our key initiatives.

Mark Mader: To conclude, Q2 was highlighted by a continuation of our strong performance in the enterprise and progress on our key initiatives. We launched our new pricing and packaging model to new customers in June and are on track to migrate our existing customers over to the new model starting in January. We are looking forward to unveiling a comprehensive transformation of our platform at our upcoming engaged conference in October. We remain well positioned to drive durable and profitable growth this year and beyond.

Speaker Change: We launched our new pricing and packaging model to new customers in June, and our attract and migrator existing customers over to the new model starting in January.

Speaker Change: We are looking forward to unveiling a comprehensive transformation of our platform at our upcoming engaged conference in October.

Speaker Change: We remain well positioned to drive durable and profitable growth this year and beyond. Now let me turn the call over to the operator. Operator?

Operator: Now let me turn the call over to the operator.

Operator: Operator? Thank you.

Operator: We will now open the line for questions. If you have dialed in and would like to ask a question, please press star followed by the number one on your telephone keypad to raise your hand and join the queue. To withdraw your question, please press star one a second time.

Speaker Change: Thank you. We will now open the line for questions. If you have dialed in and would like to ask a question, please press star, followed by the number one on your telephone keypad to raise your hand and join the queue.

Operator: Now let me turn the call over to the operator. Operator? Thank you.

Operator: We will now open the line for questions. If you have dialed in and would like to ask a question, please press star followed by the number one on your telephone keypad to raise your hand and join the queue. To withdraw your question, please press star one a second time. If you have dialed in, be a loudspeaker on your device. Please pick up your handset and ensure that your phone is not on mute when asking your question.

Operator: We kindly ask that you limit yourself to one question and one follow up.

Operator: If you have dialed in, be allowed speaker on your device. Please pick up your handset and ensure that your phone is not on mute when asking your question.

Speaker Change: 2. To withdraw your question, please press star 1 a second time.

Speaker Change: If you have dialed in via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Operator: We kindly ask that you limit yourself to one question and one follow-up.

Speaker Change: We kindly ask that you limit yourself to one question and one follow-up.

Terry Tillman: Our first question comes from Terry Tillman with True Securities.

Speaker Change: Our first question comes from Terry Tillman with Truth Securities.

Terry Tillman: Yeah, hey Mark, Pete, and Aaron, it's good to see the ongoing progress on the enterprise side of the business. My first question just relates to, you know, I know that it's FY 26 when this is going to be instituted in terms of the new pricing and packaging for existing customers. But you've got a lot of new innovation. You've got a lot that you're going to announce and engage and experience, etc.

Terry Tillman: Yeah, hey Mark, Pete and Aaron, it's good to see the ongoing progress on the enterprise side of the business. My first question just relates to, you know, I know that it's FY26 when this is going to be instituted in terms of the new pricing and packaging for existing customers. But you've got a lot of new innovation, you've got a lot that you're going to announce that engage in the experience et cetera.

Terry Tillman: Our first question comes from Terry Tillman with Truth Securities. Yeah, hey Mark, Pete and Aaron, it's good to see the ongoing progress on the enterprise side of the business.

Mark Mader: My first question just relates to, you know, I know that it's FY 26 when this is going to be instituted in terms of the new pricing and packaging for existing customers. But you've got a lot of new innovation, you've got a lot that you're going to announce to engage, new experience, et cetera. Have you thought about potentially some of these existing enterprise customers going ahead and starting to leverage the new pricing ahead of time just given? You have a lot of reasons to be talking to them about capabilities and could that drive upside to ARR?

Mark Mader: Have you thought about potentially some of these existing enterprise customers going ahead and starting to leverage the new pricing ahead of time just given? You have a lot of reasons to be talking to them about capabilities, and could that drive upside to ARR?

Speaker Change: Have you thought about potentially some of these existing enterprise customers going ahead and starting to leverage the new pricing ahead of time just given you have a lot of reasons to be talking to them about capabilities and could that drive upside to ARR?

Mark Mader: And then the second question, and in less long-winded than the first one, is, you know, with this kind of new provisioning model for the administrators, do you potentially see some sales leverage as they can really kind of turn this on themselves?

Speaker Change: and then the second question and in less long-winded than the first one is, you know what this kind of new provisioning model for the administrators, do you potentially see some sales leverage as they can really kind of turn this on themselves? Thank you.

Mark Mader: And then the second question and in less long-winded than the first one is, you know, with this kind of new provisioning model for the administrators, do you potentially see some sales leverage as they can really kind of turn this on themselves? Thank you. So Terry, in terms of your first question, we do see some interest from our existing customers and that could translate into potential dollars for us this fiscal year. And as we've rolled it out to a larger majority of our customers, we expect that percent, that number could increase in terms of customers expressing an interest in moving early and that contributing to increased bookings to that extent.

Mark Mader: Thank you. So Terry, in terms of your first question, you know, we do see some interest from our existing customers, and that could translate into potential dollars for us; this is clear. And as we've rolled it out to a larger majority of our customers, we expect that percent that number could increase in terms of customers expressing an interest in moving early and that contributing to increased bookings to that extent.

Speaker Change: Oh, so dear you.

Speaker Change: in terms of your first question.

Speaker Change: Pinot.

Speaker Change: We do see expect some interest from our existing customers and that could translate into potential dollars for us this fiscal year.

Speaker Change: And as we've rolled it out to a larger majority of our customers, we expect that that number could increase in terms of customers expressing an interest in moving early and that contributing to increased bookings to that extent. So that's the first part of it.

Josh Baer: So that's the first part of it. The second part of your question was around, you know, capers' self-directed capabilities and improving the emotion and efficiency of the sales model. Clearly, as people discover those capabilities, there will be efficiency in the model because there isn't as much selling to be done, and that will be a part of our process as we think about FY26 going forward.

Speaker Change: The second part of your question was around.

Speaker Change: You know, keep yourself directed capabilities and improving.

Mark Mader: So that's the first part of it. The second part of your question was around, you know, capitals, self-directed capabilities and improving the emotion and efficiency of the sales model. Clearly, as people discover those capabilities, there will be efficiency in the model because there isn't as much selling to be done and that will be a part of our process as we think about FY26 going forward.

Speaker Change: The motion and efficiency of the sales model, clearly as people discovered those capabilities, there will be efficiency in the model because there isn't as much selling to be done, and that will be a part of our process as we think about FY26 going forward.

Josh Baer: Our next question comes from Josh Bear with Morgan Stanley.

Speaker Change: Our next question comes from Josh Bear with Morgan Stanley.

Josh Baer: Thanks.

Josh Baer: I wanted to stick on this topic of the new pricing model. Just hoping you could provide a little bit more context on the initial customer behavior around the new model.

Josh Bear: Thanks, um, wanted to stick on this topic of the new pricing model. Just hoping you could provide a little bit more context on the...

Joshua Baer: Our next question comes from Josh Bear with Morgan Stanley. Thanks. I wanted to stick on this topic of the new pricing model just hoping you could provide a little bit more context on the initial customer behavior around the new model.

Mark Mader: Any role of thumb for how much of what you typically expect would just be the free users are now monetized, any update on the assumptions around the benefit from pricing changes both this year or longer term from some of these initial usage here and just wondering how the price per paid seat is evolving under the Yes, new model. Thanks.

Speaker Change: The initial customer behavior around the new model

Speaker Change: Any role of thumb for how much of what you typically expect would just be free users are now monetized, any update.

Mark Mader: Any role of thumb for how much of what you typically expect would just be the free users are now monetized, any update on the assumptions around the benefit from pricing changes both this year or longer term from some of these initial usage here and just wondering how the price prepaid seat is evolving under this. Yes, new model. Thanks. Yeah, Josh. Last week was our first week where we saw those first of the thousands of customers who are on the new model, hit their true up period.

Speaker Change: On the assumptions around the benefit from pricing changes both this year or longer term from some of the initial usage here and just wondering how the price per paid seat is evolving under this new model. Thanks.

Mark Mader: Yeah, Josh. Last week was our first week where we saw those first of the thousands of customers who are on the new model, hit their true-up period. And, you know, we were all waiting with bated breath to see what would happen. We're really pleased to see, you know, confirming data come out of that. So high level, more users, more value being realized by greater number of people, these clients and more ARR. So that approach of lower P with a conforming queue or a higher queue, that is playing out to our expectations. And again, we have a whopping one week of data.

Speaker Change: And Josh, last week was our first week.

Josh Bear: where we saw those first of the thousands of customers around the new model, hit their two up period.

Speaker Change: and we were all waiting with baited breath to see what would happen. We're really pleased to see confirming data come out of that. So high level more users, more value being realized by greater number of people these clients and more ARR.

Mark Mader: And, you know, we were all waiting with baited breath to see what would happen. We're really pleased to see, you know, confirming data come out of that. So high level more users, more value being realized by greater number of people, these clients and more ARR. So that approach of low repeat with a conforming queue or a higher queue, that is playing out to our expectations. And, again, we have a whopping one week of data. So one week of data is not a durable trend make, but really pleased to see that first card out of the shoe. Look good. Got it. Thank you.

Speaker Change: So that approach of lower P with a conforming Q or a higher Q, that is playing out to our expectations. And again, we have a whopping one week of data. So one week of data is not a durable trend make, but really pleased to see that first card out of the shoe look good.

Mark Mader: So one week of data is not a durable trend make, but really pleased to see that first card out of the shoe. Look good. Got it.

Speaker Change: Thank you for watching!

Jackson Ader: Our next question comes from Jackson, Ada with KeyBank Capital Markets. Great. Thanks for taking our questions, guys. So some reports are out about the company possibly being in play for an acquisition. I'm just curious. We can get your thoughts on those reports first. Thanks.

Speaker Change: God, thank you.

Speaker Change: Our next question comes from Jacksonator with T-Bank Capital Markets.

Jacksonator: Great, thanks for checking our questions, guys.

Jackson Ada: Our next question comes from Jackson, Ada with Keybank Capital Markets. Great. Thanks for checking our questions guys.

Speaker Change: So some report out about the company possibly being in place for an acquisition on this career so we can get your thoughts on those reports first.

Mark Mader: So some reports out about the company possibly being in play for an acquisition. I'm just curious. We can get your thoughts on on those reports. First, thanks.

Mark Mader: Yeah, we're not going to comment on that today, but happy to take any of the questions on the quarter outlook. Yep, that's fair.

Speaker Change: Yeah, we're not going to comment on that today, but happy to take any other questions on the quarter outlook.

Mark Mader: I have to ask. Okay, so I guess follow the question. Our is that the share repurchase program, the company still in the market acquire it in repurchasing shares in the, I guess this is now the third fiscal quarter. We have, you know, the share repurchase program continues, and it continues all the way through the year. That's where the program has been set up for us to be purchased.

Speaker Change: Jeff, that's fair, have to ask. Okay, so I guess follow a question, are is it?

Mark Mader: Yeah, we're not going to comment on that today, but happy to take any other questions on the quarter outlook. Yep, that's fair. I have to ask. Okay, so I guess follow the question. Are is that the share repurchase program? There's a company still in the market acquire it in repurchasing shares in the, I guess this is now the third fiscal quarter. We have, you know, the share repurchase program continues and it continues all the way through the year. That's where the program has been set up for us to be purchased.

Speaker Change: The Share Repurchase Program, but the company is still in the market acquire it's re-purchasing shares in the, I guess this is now the third fiscal quarter.

Speaker Change: and I hope you enjoyed this video.

Speaker Change: We have, you know, the shared repurchase program continues and it continues all the way through the year. That's where the program has been set up for us to be purchased.

Mark Mader: Alrighty.

Mark Mader: And then I'm sorry if I can just squeeze one more in on the AI capabilities, like giving people access for the next couple of months. Will there be, will there be any like growth margin impact to that where you're providing these capabilities? I assume that, you know, going to draw on some compute resources, but not really recognizing any uplift and revenue. No, we don't really expect that to be a major, a major topic. You know, huge kudos to our product and engineering teams. They actually have moved a lot of that workload over to a new model, which is significantly more efficient.

Speaker Change: Alright, and then I'm sorry if I can just squeeze one more in on the AI capabilities, like giving people access.

Mark Mader: Alrighty, and then I'm sorry if I can just squeeze one more in on the AI capabilities, like giving people access. For the next couple of months, will there be, will there be any like gross margin impact to that where you're providing these capabilities? I assume that, you know, going to draw on some compute resources, but not really recognizing any uplift and revenue. No, we don't really expect that to be a major, a major topic, you know, huge kudos to our product and engineering teams.

Speaker Change: for the next couple of months. Will there be any like gross margin impact to that where you're providing these capabilities, I assume, that's going to draw on some compute resources, but not really recognizing any uplift and revenue.

Speaker Change: Now we don't expect that to be a major topic, you know, huge kudos to our product and engineering teams, they actually have moved a lot of that workload over to a new model which is significantly more efficient.

Mark Mader: They actually have moved a lot of that workload over to a new model, which is significantly more efficient. So we feel very confident our ability to solve serve a much larger population with really the minimum impact on the cost change side.

Mark Mader: So we feel very confident in our ability to solve serve a much larger population with really the minimum impact on the cost change side.

Speaker Change: So we feel very confident our ability to solve a much larger population with really diminimous impact on the cost change that.

Mark Mader: Alright, thank you very much.

Alex Zukin: Our next question comes from Alex Zuchen with Wolf Research. Hey guys, thanks for taking the question, and congrats on a solid quarter here. Maybe just the two for me. I wanted to ask about just bookings linearity trends in the quarter and how it progressed, how it kind of ended up, and how that compares to the prior quarter. And then just any thoughts about NRR friends through the second half in any comments about a couple of competition comments, winning some big ups against other work managers vendors. a little deeper there as well.

Speaker Change: Alright, thank you very much.

Speaker Change: Our next question comes from Alex Zugen with Wolf Research.

Mark Mader: All right, thank you very much.

Alex Zugen: Hey guys, thanks for taking the question and congrats on a solid coordinator. Maybe just the two for me, I wanted to ask about just bookings, linearity trends in the quarter of how it progressed, how it kind of ended up and how that compares to

Alex Zukin: Our next question comes from Alex Zuchen with Wolf Research. Hey guys, thanks for taking the question and congrats on a solid quarter. Maybe just the two for me, I wanted to ask about just bookings linearity trends in the quarter how it progressed, how it kind of ended up and how that compares to the prior quarter. And then just any thoughts about NRR friends through the second half in any comments about a couple of competition comments, winning some big ups against other work manages vendors, curious if you could better.

Speaker Change: the prior quarterly. And then just any thoughts about NRR trends through the second half in any comments about, you may, a couple of competition comments, winning some vacups against other workmanages vendors, curious if you can have a little deeper there as well.

Mark Mader: Yeah, so the your first question was on implied booking dialect. So the implied bookings and sort of how they came out for the quarter. Very similar between quarters. There was not a big difference in how this quarter looked versus the previous quarter. So that was your first question.

Speaker Change: Yes, so the first question was on implied booking dialect. So the implied bookings in sort of how they came out for the quarter. Very similar between quarters. There was not a big difference in how this quarter looked.

Alex Zukin: The first question was on implied bookings, Alex. The implied bookings and how they came out for the quarter. Very similar between quarters. There was not a big difference in how this quarter looked versus the previous quarter. That was your first question. Your second question, can you repeat what your second question was? Just NRR trends for the second half. Do you expect it to be stable or further decline expanding? So what we said before has been that we expect NRR to track down, consistent with our overall ARR guidance.

Speaker Change: versus the previous quarter. So, that was your first question.

Mark Mader: Your second question. Can you repeat what your second question was? Just retention and our trends for the second half. Do you expect it to be stable, or do you know further decline expanding? So the what we said before has been that we expect NRR to track down consistent with our overall ARR guidance. So that will follow in suit, if you will. There's no change in how we think about that in that respect.

Speaker Change: Your second question, can you repeat what your second question was?

Speaker Change: Just retention in our trends for the second half, do you expect it to be stable or for the decline expanding?

Speaker Change: So what we said before has been that we expect NRR to track down, consistent with our overall ARR guidance, so that will follow in the suit, if you will. There's no change in how we think about that in that respect.

Mark Mader: Okay, and then you had a competition. Yeah, just a competition question. Double putting out of that a little bit where you saw in the quarter, but in the higher end of the market and in the lower end. Yeah, we really haven't seen any meaningful change, Alex. I mean, we continue to crank along in terms of new opportunities that we're winning. We had our largest ever expansion at one of our million dollar plus accounts. So that continues to go. I think what I'm really looking forward to as we hit the second half is as our experiences change slash improve, and with paired with our new pricing model, I think that's going to resonate quite well with the people who are starting out.

Alex Zukin: So that will follow in suit, if you will. There's no change in how we think about that in that respect. Okay, and then you had a competition. Yeah, just a competition question. Double quick name of that a little bit where you saw in the quarter, but in the higher end of the market and in the lower end. Yeah, we really haven't seen any meaningful change Alex. I mean, we continue to crank along in terms of new opportunities that we're winning.

Speaker Change: Thank you for watching!

Speaker Change: Okay, and then you are going to go to the public session.

Speaker Change: Yeah, just the competition question, double-click down on that little bit, what you saw in the quarter but in the higher end of the market in the lower end.

Speaker Change: Yeah, we really haven't seen any meaningful change Alex. I mean, we continue to.

Speaker Change: Crank along in terms of new opportunities that were winning. We had our largest ever expansion.

Speaker Change: at one of our a million dollar plastic accounts.

Speaker Change: So that continues to go. I think what I'm really looking forward to as we hit the second half is as our experiences change slash improved.

Alex Zukin: We had our largest ever expansion at one of our million dollar plus accounts. So that continues to go. I think what I'm really looking forward to as we hit the second half is as our experiences change slash improve. And with paired with our new pricing model, I think that's going to resonate quite well with the people who are starting out. So I should see I should expect a little bit better conversion at that entry point. But again, at the at the high end of the enterprise, we continue to the team continues to perform really nicely. Perfect. Thank you. Yes, I'm proud.

Speaker Change: and with compared with our new pricing model, I think it's going to resonate quite well with the people who are starting out.

Mark Mader: So I should see I should expect a little bit better conversion at that entry point. But again, at the high end, the enterprise, we continue to the team continues to perform really nicely.

Speaker Change: So I should expect a little bit better conversion at that entry point, but again, at the high end, the enterprise we continue to, the team continues to perform really nicely.

Mark Mader: Perfect. Thank you.

John DiFucci: Our next question comes from John DeFucci with Guggenheim Securities.

Speaker Change: Perfect. Thank you. Yes. Congrats.

Speaker Change: Now our next question comes from John D'Hoochi with Guggenheim Securities.

John DiFucci: Thank you. I have a question also on the new pricing, and in the P times Q math works really nicely. But Mark, I think like we do expect the number of paid users increased, which is logical. And I think you said they could double.

John DiFucci: Our next question comes from John DeFucci with Guggenheim Securities. Thank you. I have a question also on the new pricing and in the P times Q math works really nicely. But Mark, I think like we do expect the number of paid users to increase, which is logical. And I think you said they could double.

John D'Hoochi: Thank you. I have a question also on the new pricing and the P times Q math works really nicely, but Mark, I think we do expect.

John D'Hoochi: The number of paid users and priests, which is logical, and I think you said they could double.

John DiFucci: Well, first of all, is that true? And then Mark or P, or both of you, I get that you're moving to industry standards for pricing. But if this math all works out, like at least a simple math in my head, customers would be paying more. And I'm not sure why they'd be eager to switch. And frankly, not maybe even resisted, and perhaps even threatened to leave. So it's just sort of a logical question.

Speaker Change: Well, first of all, is that true and then...

Speaker Change: Mark Orpe, or both of you, I get it.

Mark Mader: Well, first of all, is that true? And then Mark or P or both of you, I get that you're moving to industry standards for pricing. But if this math all works out like at least a simple math in my head, customers would be paying more. And I'm not sure why they'd be eager to switch. And frankly, not maybe even resisted and perhaps even threatened to leave. So it's just sort of a logical question.

Speaker Change: that you're moving to industry standards for pricing. But if this math all works out, like at least the simple math in my head, customers would be paying more.

Speaker Change: and I'm not sure why they'd be eager to switch and frankly, not maybe even resisted and perhaps even threaten to leave. So it's just a sort of logical question and I just wonder, you know, how I should be thinking about this.

Mark Mader: And I just wonder, you know, how I should be thinking we should be thinking about this. Yes, I still feel very confident, John, in our ability to double our paid user base. I think when prices change and when models change, I think customers' expectation that value has to change too. So if you can clearly demonstrate more value, people are actually open to listening. People do not like it when prices change, and value doesn't change. And that's part of what, as we're working with our clients now, we're enrolling on enrolling them on who gets to participate.

Speaker Change: Yes, I still feel a very confident John in our ability to double our paid user base.

Mark Mader: And I just wonder, you know, how I should be thinking we should be thinking about this. Yes, I still feel very confident, John, in our ability to double our paid user base. I think when when prices change and when models change, I think customers expectation that value has to change too. So if you can clearly demonstrate more value, people are actually open to listening. People do not like it when prices change and value doesn't change.

Speaker Change: I think when crisis change and when models change, I think customers' expectations that value has to change too. So if you can clearly demonstrate more value, people actually open to listening. People do not like it when prices change and value doesn't change.

Speaker Change: and that's part of what as we're working with our clients now, we're enrolling them on who gets to participate.

Mark Mader: They absolutely have a choice. The good news is we're moving to a model which is conforming to how other software is charged for. So there really aren't a lot of column sanctuary cities that you can go to where you can get the free opportunity. So we're confident that the value we're layering into the platform does resonate with people. The early metrics and thousands of customers who have signed on, I think, was indicative of how the existing base will respond to. And you know, we've had not only example with the people starting out, as we mentioned in our remarks, the largest one of our largest global size is on the new model.

Mark Mader: And that's part of what, as we're working with our clients now, we're enrolling on enrolling them on who gets to participate. They absolutely have a choice. The good news is we're moving to a model which is conforming to how other software is charged for. So there really aren't a lot of column sanctuary cities that you can go to where you can get the free opportunity. So we're confident that the value we're layering into the platform does resonate with people.

Speaker Change: They absolutely have a choice. The good news is we're moving to a model which is conforming to how other software is charged for. So, there really aren't a lot of, we'll call them, sanctuary cities that you can go to, where you can get the free opportunity.

Speaker Change: So, we're confident that the value we're layering into the platform does resonate with people. The early metrics and the thousands of customers who have signed on, I think was indicative of how the existing dates will respond to.

Mark Mader: The early metrics and thousands of customers who have signed on. I think we're indicative of how the existing base will respond to. And you know, we've had we've had not only example with the people starting out as we mentioned in our remarks, the largest one of our largest global size is on the new model. They're standing very rapidly. They're doing so with this new backdrop. And they're again seeing the value being, they're experiencing that value being realized. So again, it's very early, but we're really pleased with the indications we're seeing so far.

Speaker Change: and we've had not only example with the people starting out as we mentioned in our remarks.

Speaker Change: The largest, one of our largest, global SIs, is on the new model. They're spending very rapidly, they're doing so with this new backdrop and they're, again, seeing the value being, but they're experiencing that value being realized.

Mark Mader: They're standing very rapidly. They're doing so with this new backdrop, and they're again seeing the value being, but they're experiencing that value being realized.

Mark Mader: So again, it's very early, but we're really pleased with the indications we're seeing so far.

Speaker Change: So again, it's very early, but we're really pleased with the indications we're seeing so far.

Mark Mader: And that makes sense, Mark, but what exactly is that value? Are there new features and functionality? Are these things on the come relative to the old pricing? Or it means not just the pricing model, right? Yeah, in the old world, in the old world, John, all you could do as a free collaborator is like comment on something and edit on something. You couldn't use AI; you couldn't construct anything; you couldn't create a dashboard; you couldn't do any reporting. So you're pretty handcuffed. So what we heard from a lot of our customers was they didn't like that friction of the haves and the have knives.

Speaker Change: And that makes sense Mark, but what exactly is that value? Are there new features and functionality, or these things on the come? Related to the old pricing, or it means not just the pricing model, right?

Mark Mader: And that makes sense, Mark, but what exactly is that value? Are there new features and functionality? Are these things on the come relative to the old pricing? Or it means not just the pricing model, right? Yeah, in the old world, in the old world, John, all you could do is a free collaborator is comment on something and edit on something. You couldn't use AI, you couldn't construct anything, you couldn't create a dashboard, you couldn't do any reporting.

Speaker Change: Yeah, in the old world, in the old world, John, all you could do is a free collaborator, is like comment on something and edit on something. You couldn't use AI, you couldn't construct anything, you couldn't create a dashboard, you couldn't do any reporting, so that you're pretty handcuffed.

Speaker Change: So, what we heard from a lot of our customers was they didn't like that friction of the have and the have noise. So, this is a huge unlock for these populations. In some cases, 100,000 plus people where they no longer need to navigate this uncomfortable difference.

Mark Mader: So this is a huge unlock for these populations. In some cases, 100,000 plus people where they no longer need to navigate this uncomfortable difference.

Mark Mader: So, you're pretty handcuffed. So, what we heard from a lot of our customers was they didn't like that friction of the haves and the have-nies. So, this is a huge unlock for these populations. In some cases, 100,000 plus people where they no longer need to navigate this uncomfortable difference. And yeah, it's, again, fortunately, the early reaction to this has been net positive. Got it.

Mark Mader: And yeah, it's again, fortunately, the early reaction to this has been that positive. Got it. Okay, so the actual level of usage has gone up. And in a more sophisticated way. Got it. Okay. Thank you. Yeah, you're welcome. Thanks.

Speaker Change: and, yeah, it's, unfortunately, that the early reaction to this has been that positive.

Speaker Change: Got it. Okay, so the actual level of usage has gone up and in a more sophisticated way. Got it. Okay, thank you. Yeah, you're welcome. Thanks, John.

Michael Berg: Our next question comes from Michael Berg with Wells Fargo Securities.

Mark Mader: Okay, so the actual level of usage has gone up. And in a more sophisticated way. Got it. Okay, thank you. Yeah, you're welcome. Thanks.

Speaker Change: Our next question comes from Michael Berg with Wells Fargo Securities.

Michael Berg: Hi, thanks for taking my question. I said a quick one on the increase in charity mentions from smaller customers, but want to get some clarity. If there's any other dynamics to point to in other segments of the market, whether it's bid markets, enterprise, or any. Verticals in particular. Thank you.

Speaker Change: All the...

Michael Berg: and the company is a recognition that you're a student. All right, thanks for taking my question.

Michael Berg: Our next question comes from Michael Berg with Wells Fargo Securities. Hi, thanks for taking my question. I said a quick one on the increase in turn. You mentioned from smaller customers, but want to get some clarity if there's any other dynamics to point to in other segments of the market, whether it's bid markets enterprise or any. Any verticals in particular. Thank you. You know, we didn't see anything particular. It's exactly as we said in our smaller segments. We saw some slight pick up in turn. That's what we called out. Thank you.

Michael Berg: I said a quick one on the increase in attorney. You mentioned from smart customers, but want to get some clarity if there's any other dynamics to point to in other segments of the market whether it's mid-market enterprise or any verticals in particular. Thank you.

Pete Godbole: You know, we didn't see anything particular. It's exactly as we said in our smaller segments; we saw some slight pick up in turn. That's what we called out. Thank you.

Speaker Change: You know we didn't see anything particulars exactly as we said in our smaller segments we saw some slight hiccup in Sharon, that's what we called out.

Pete Godbole: And then one quick follow up. Anything new to point you in terms of paid users on the P times Q math with a new pricing model. No further details of this time again. We're a week through, one week past our first group screwing up. Please to see, but we're not reporting out on any on any a dip between the old model and the new. Thank you. Yeah.

Speaker Change: Thank you, and then one quick follow up.

Speaker Change: Anything new to point to in terms of paid users on the P-Temps Q-Maf with a new pricing model?

Mark Mader: And then one quick follow up. Anything new to point you in terms of paid users on the p times q math with a new pricing model. No further details of this time again. We're a week through one week past our first group screwing up. Please to see, but we're not reporting out on any on any a dip between the old model and the new. Thank you. Yeah.

Speaker Change: No further details of this time again were a week through one week past our first group crewing up. Please to see if we're not reporting at any on any a diff between the old model and the new.

Pinjalim Bora: Our next question comes from Pindralin Bora with JP Morgan.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Punjallan Borra with JP Morgan.

Pinjalim Bora: Great. This is Jaden on Provincial. Thanks for the question.

Pinjalim Bora: Are you getting customers the ability to renew earlier than 2025 to lock in the prior pricing model, you know, one last time? What are your partners noted something similar, and we're wondering if this is a broad base thing or maybe limited to a small subset of customers. Thanks.

Jade Nun: Great, this is Jade Nun for Pensional. Thanks for the question. Are you getting customers the ability to renew earlier than 2025 to lock in the prior price model, you know, one last time. What are your partners noticing similar and we're wondering if this is a broad-based thing or maybe limited to a small subset of customers? Thanks.

Pinjalim Bora: Our next question comes from Pindralin Bora with JP Morgan. Great. This is JD non provincial. Thanks for the question.

JB: Are you getting customers the ability to renew earlier than 2025 to lock in the prior pricing model, you know, one last time? What are your partners noted something similar and we're wondering if this is a broad base thing or maybe limited to a small subset of customers. Thanks. JB, you know, the what we're finding in conversations with customers is we're not giving them an option to renew under the old model for long durations.

Mark Mader: Jamie, you know, what we're finding in conversations with customers is we're not giving them an option to renew under the old model for long durations. The preference is to convert them to the new model early, with an ability to sort of experience the value the new model provides. So that's been the trend. We're not on the early renewal of the old model approach.

Jade Nun: Jimmy, what we are finding in conversations with customers is we're not giving them an option to renew one to the old model

Jimmy: Pralonguration, the preferences to convert them to the new model early with an ability to develop experience the value the new model provides. So, that's then the trend we're not on the early renewal of the old model approach.

JB: The preference is to convert them to the new model early with an ability to sort of experience the value the new model provides. So that's been the trend. We're not on the early renewal model of the old model approach. Great. Thanks.

Michael Funk: Great. Thanks.

Michael Funk: Our next question comes from Michael Funk with Bank of America.

Jimmy: Great, thanks.

Jimmy: Our next question comes from Michael Funk with Bank of America.

Michael Funk: Yeah, thank you for the questions tonight.

Pete Godbole: I think you mentioned earlier, but can you reiterate what you're seeing like for like, you know, customer spend on the new model versus the previous model? Hi, we're not giving specifics that. I will say that the, as we look at the P and the Q, we are seeing higher error contributions from people who have reached that first step of that first phase of maturity, that first true-up motion. So that the thesis, which was bring down the P, have people connect more people connect to value, resulting in that benefit. The early indications, one week in, are positive and confirmatory.

Michael Funk: Thank you for the question tonight. I think you mentioned earlier, but Pete reiterate what you're seeing like, like, you know, customer spend on the new model versus the previous model.

Michael Funk: Our next question comes from Michael funk with Bank of America. Yeah, thank you for the question tonight. I think you mentioned earlier, but can you reiterate what you're seeing like for like, you know, customer spend on the new model versus the previous model?

Speaker Change: We're not giving specifics that I will say that as we look at the P and the Q, we are seeing higher ARR contributions from people who have reached that first step of first phase of maturity, that first true up motion, so that the thesis which was bring down the P.

Mark Mader: We're not giving specifics that. I will say that as we look at the P and the Q, we are seeing higher-error contributions from people who have reached that first phase of maturity, that first true-up motion, so that the thesis which was bring down the P, have people connect more people connect the value, resulting in that benefit. The early indications, one week in, are positive and confirmatory.

Speaker Change: Have people connect more people connect to value resulting in an end benefit. The early indications, one weekend, are positive and confirmatory.

Mark Mader: Okay.

Mark Mader: Very, very helpful.

Mark Mader: And then the, you know, the free trial, if you will, of AI through the end of December. What is the plan after that? How do you plan to engage with customer to, to move them forward with AI functionality, the monetization plan there? Yeah, our engineering team is doing a great job of getting more of our capabilities into people's hands on a trial basis. So I do expect a future in which all of our capabilities, including AI, would be discoverable and something that you could trial. We, we don't have that wired up yet for AI. So we decided to do a full activation for the entire population for these number of months, but I would expect that to be part of some of trial experience in the future.

Speaker Change: Okay, very, very helpful. And then the, you know, the three trial, if you will, of a I through the.

Mark Mader: Okay, very helpful. And then the three trial, if you will, of AI through the end of December, what is the plan after that? How do you plan to engage with customer to move them forward with AI functionality, the monetization plan there? Our engineering team's been a great job of getting more of our capabilities into people's hands in the trial basis. So I do expect a future in which all of our capabilities, including AI, would be discoverable and something that you could trial.

Andy: Andy, Indive December, what is the plan after that? How do you plan to engage with customer to move and forward with AI functionality, the monetization plan there?

Speaker Change: Our engineering team has been a great job of getting more of our capabilities into people's hands in the trial basis.

Speaker Change: So I do expect a future in which all of our capabilities, including AI, would be discoverable and something that you could trial. We don't have that wired up yet for AI, so we decided to do a full activation for the entire population for these number of months.

Mark Mader: We don't have that wired up yet for AI, so we decided to do a full activation for the entire population for these number of months. But I would expect that to be part of some of the trial experience in the future.

Mark Mader: Okay.

Mark Mader: Great. Thank you so much.

Speaker Change: I would expect that to be a part of some of the trial experience in the future.

Steve Enders: Our next question comes from Steve Enders with City.

Speaker Change: Okay, great, thank you so much.

Mark Mader: Okay, great. Thank you so much.

Speaker Change: Our next question comes from Steve Enders with City.

Steve Enders: Hi. Thanks for taking the question.

Steve Enders: This is George on first Steve. First one on the, the revenue guidance beat. You gave some helpful color in the, you know, the services, shooting over to partners about a half a point of revenue change there, which by my quick math is like a five to six million dollar headwind. So is it right to think about your revenue guide, excluding that would have been up somewhere in that ballpark? A revenue guide would have been up by some part of it for what we've done. So I would describe it as it's probably would have been up for the whole amount.

Speaker Change: Hi, thanks for taking the questions. This is George on For Steve.

Steve Enders: Our next question comes from Steve Enders with City. Hi, thanks for taking the question.

George: First one on the revenue guidance, Pete, you gave some helpful color in the search, you know, the search is interesting over to partners about a half a point of revenue change there.

George Iwanyc: This is George on first Steve. First one on the revenue guidance, you gave some helpful color in the services, you know, being over to partners about a half a point of revenue change there, which by my quick math is like a five to six million dollar headwind. So is there right to think about your revenue guide, excluding that would have been up somewhere in that ballpark? Our revenue guide would have been up by some part of it for what we've done.

Speaker Change: which by my quick math is like a five to six million dollar headwind so is it right to think about your revenue guy excluding that would have been up somewhere in that ballpark?

Speaker Change: Revenue guide would have been up by some part of it for what we've done. So I would describe it as it's probably going to be up for the whole amount. There will be up by some amount for what we've booked to date. And in the rest of it implies our confidence in the business that we raised by.

Pete Godbole: There have been up by some amount for what we booked to date. And then the rest of it implies our confidence in the business that we raised by.

George Iwanyc: So I would describe it as it's probably would have been up for the whole amount, there have been up by some amount for what we booked to date. And then the rest of it implies our confidence in the business that we raised by.

Pete Godbole: Okay. That's helpful.

Pete Godbole: And then, you know, you guys continue to find really great leverage in the middle and cash generation. Maybe just a little more color on kind of like where you're finding those efficiencies. Are there any object areas you're pulling back from, and how should we think about margin going forward? Thank you.

Speaker Change: Okay, that's helpful. And then you guys continue to find really great leverage in the middle and cash generation. Maybe just a little more color on where you're finding those efficiencies, other any objects that you're pulling back from and how we should think about margin going forward. Thank you.

Pete Godbole: Okay, that's helpful. And then, you know, you guys continue to find really great leverage in the middle and cash generation. Maybe just a little more color on kind of like where you're finding those efficiencies. Are there any optics areas you're pulling back from and how we should think about margin going forward.

Pete Godbole: Yeah. I think our plan has always been to continue to invest in high growth areas, prepare that with absolute focus, and driving operational efficiency. And that starts with reducing spans and layers in the organization, scrutinizing headcount additions, leveraging near shore locations, streamlining processes; all of those are a part of it. And the place we found it has been in sort of many functions. We found it in not quarter carrying roles, but in functions that support sales, the sales support functions. We found it in GNA. We found it in real estate. So we've hit all those areas, and finding it in the last part of your question is, you know, I don't view this as a destination.

Speaker Change: Yeah, I think your plan has always been to continue to invest in high growth areas, prepare that with absolute focus and driving operational efficiency.

Pete Godbole: Thank you. Yeah, I think, you know, our plan is always been to continue to invest in high growth areas, prepare that with absolute focus and driving operational efficiency. And that starts with reducing spans and layers in the organization, scrutinizing headcount additions, leveraging near-shore locations, streamlining processes, all of those are a part of it. And the place we found it has been in sort of many functions. We found it in not quoted caring roles, but in functions that support sales, the sales support functions. We found it in GNA. We found it in real estate. So we've hit all those areas and finding it.

Speaker Change: and that starts with reducing spans and layers in the organization, scrutinizing head count additions, leveraging near shore locations, streamlining processes, all of those are a part of it.

Speaker Change: and the place we found it has been in sort of many functions. We found it in not photocaring rows, but in.

Speaker Change: functions that support sales, the sales support functions. We found it in GNA, we found it in real estate. So we've hit all those areas in finding it.

Pete Godbole: I view this as a journey. So you should think of operational efficiencies continuing as we continue to strive to be more and more efficient. It could be in future years finding ways to do sales and marketing more efficiently by self-discovery and those sorts of elements, which are completely different than what we've done today.

Speaker Change: In the last part of your question is, you know, I don't do this as a destination as you this is a journey. So you should think of operational efficiencies continuing as we continue to strive to be more and more efficient. It could be in future years finding.

Pete Godbole: And the last part of your question is, you know, I don't view this as a destination. I view this as a journey. So you should think of operational efficiencies continuing as we continue to strive to be more and more efficient. It could be in future years finding ways to do sales in marketing more efficiently by self-discovery and those sorts of elements which are completely different than what we've done today.

Speaker Change: We used to do sales in marketing more efficiently by self-discovery and those sorts of elements which are completely different than what we've done today.

Scott Berg: Our next question comes from Scott Berg with Needham and Company.

Speaker Change: Thank you for taking the questions.

Speaker Change: Good morning.

Speaker Change: Our next question comes from Scott Berg with Needem and Company.

Scott Berg: Hi, this is Ramour Elianz, Scott Berg. Thanks for taking the question, and congrats on the quarter. You know, it feels as though the outlook on the economy has dampened a bit over the past couple of months. Did you notice any sort of change in buying behaviors throughout the quarter, with things pretty linear and stable throughout? I think our buying behavior, as we went through the quarter, we saw essentially a good progression through the quarter. We saw momentum build up as we went through the first month, to the second, and the third. So we saw that build happened quite nicely for us.

Mark Mader: Thank you for taking the questions.

Scott Berg: Our next question comes from Scott Berg with Needham & Company. Hi, this is Rahm Raleon from Scott Berg. Thanks for taking the question and congrats on the quarter. You know, it feels as though the outlook on the economy has dampened a bit over the past couple of months. Did you notice any sort of change in buying behaviors throughout the quarter with things pretty linear and stable throughout? I think our buying behavior as we went through the quarter, we saw essentially a good progression through the quarter.

Ron Morale: Hi, this is Ron Morale, I'm Friskopper, I've introduced him a question and congrats on the quarter. You know, it feels as though the outlook on the economy is dampened a bit over the past couple months. Did you notice any sort of change in buying behavior throughout the quarter or things pretty linear and stable throughout?

Speaker Change: I think our buying behavior as we went through the quarter, we saw essentially a good progression through the quarter, we saw momentum build up as we went through the first month to the second and the third, so we saw that bills happen quite nicely for us. That was the only trend we saw in the behavior.

Mark Mader: That was the only trend we saw in the behavior.

Scott Berg: We saw momentum build up as we went through the first month to the second and the third. So we saw that build happened quite nicely for us. That was the only trend we saw in the behavior.

Mark Mader: Thanks for the color. And then excited to get more updates on the new views and customer experiences at the conference. I believe board view was released in mid July, so a bit early, but any sort of insight you've got from customers, any feedbacks or anecdotes will be helpful. Thanks. Yeah, you know, customers are giving overwhelming, overwhelming feedback that they are excited to see the new experiences coming in. And it's beyond the views. I think a few days ago, we just shifted our new home experience. It's much more visual; just easier. And you know, what I love about what I love about customers and software is that with every release, there's a fresh batch of new feedback, right?

Speaker Change: Thanks for the color. And then excited to get more updates on the new views and customer experiences of the conference. I believe board view was released in mid July, so a bit early, but any sort of event that you've got from customers in the feedbacks or anecdotes will be helpful.

Mark Mader: Thanks for the color. And then excited to get more updates on the new views and customer experiences at the conference. I believe board view was released in mid July. So a bit early, but any sort of insight you've got from customers, any feedbacks or anecdotes will be helpful. Thanks. Yeah, you know, customers are giving overwhelming, overwhelming feedback that they are excited to see the new experiences coming in. And it's beyond the views.

Speaker Change: Yeah, customers are even overwhelmingly overwhelming feedback that they are.

Speaker Change: Excited to see the new experiences coming in and it's beyond the views, I think a few days ago we just shipped.

Speaker Change: our new home experience, it's much more visual, just easier.

Speaker Change: and what I love about customers and softwares that with every release.

Mark Mader: I think a few days ago, we just shift our new home experience. It's much more visual, just easier. And you know, what I love about what I love about customers and softwares that with every release. There's a fresh batch of new feedback, right? So we made the home experience much more visual, visual, moved away from more of a traditional list oriented view. And people have ideas. And we welcome those ideas. And I think it's a software company.

Mark Mader: So we made the home experience much more visual, visual, moved away from more of a traditional list-oriented view. And people have ideas, and we welcome those ideas. And I think it was a software company. You never want to shut the door on that. And much like we had with our old interfaces, the new ones are prompting just as much curiosity and feedback. I think people will be very pleased to see what we show and engage next month. Some really neat stuff coming out.

Speaker Change: There's a fresh patch of new feedback, right? So we made the home experience much more visual, visual moved away from more of a traditional list-oriented view and people have ideas and we welcome those ideas and I think it's a software company you never want to shut the door on that.

Speaker Change: and much like we had with our old interfaces, the new ones are prompting just as much curiosity and feedback. I think people will be very pleased to see what we show at engage next month. Some really neat stuff coming out.

Mark Mader: You never want to shut the door on that. And much like we had with our old interfaces, the new ones are prompting just as much curiosity and feedback. I think people will be very pleased to see what we show and engage next month. Some really neat stuff coming out.

Mark Mader: Also looking forward to answering questions.

Mark Mader: Awesome. Looking forward to your questions. Yeah.

Brent Thill: Our next question comes from Brentville with Jeffries.

James: Also, what have our great names, James Questions?

Speaker Change: O our next question comes from Brentville with Jeffries.

Brent Thill: Thanks. Mark, there's been a lot of questions about the health of the enterprise spend environment. I'm curious if you could give us, you know, your view.

Brentville: Thanks, Mark, there's been a lot of questions about that, the health of the enterprise spend environment. I'm curious if you could...

Operator: Our next question comes from Brentville with Jeffries. Thanks, Mark. There's been a lot of questions about the health of the enterprise spend environment. I'm curious if you could give us, you know, your view. I know growth is, you know, slowly decelerating. It doesn't look like there's a massive reflection, but what you're seeing between enterprise SMB anything notable that that you could highlight from 40,000 foot view. I think what's consistent is people want to understand what they're getting for their investment.

Mark Mader: I know growth is, you know, slowly decelerating. Doesn't look like there's a massive reflection, but what you're seeing between enterprise, SMB, anything notable that that you could highlight from 40,000 foot view. I think what's consistent is people want to understand what they're getting for their investment. And the difference at the enterprise is the scale is simply much larger. So when you're talking about a multi-million dollar investment, whether you're doing that at a mega lift or you're working in serving an SMB customer, everyone wants to know what that return is. So, you know, starting years ago, we started talking about that expectation growing.

Speaker Change: Give us, you know, your view, I know growth is, you know, slowly desolverating, it doesn't look like there's a maximum flexion, but what you're seeing between enterprise SMB and anything notable that you could highlight from 40,000 foot view.

Speaker Change: I think what's consisting front is people want to understand what they're getting for their investment.

Speaker Change: And the difference in the enterprise is the scale of simply much larger. So when you're talking about a multi-million dollar investment.

Operator: And the difference that the enterprise is the scale is simply much larger. So when you're talking about a multi-million dollar investment, whether you're doing that at a mega lift, or you're working in serving an SMB customer. Everyone wants to know what that return is. So, you know, starting years ago, we started talking about that expectation growing. And one of the things that they're really helping us perform well there is this use case oriented framework where we have a number of really key plays that are really getting dialed in where we can articulate this value.

Speaker Change: Whether you're doing that at a megalith or you're working in serving an SMB customer, everyone wants to know what that return is.

Speaker Change: So, you know, starting years ago, we started talking about that expectation growing.

Mark Mader: And one of the things that they're really helping us perform well there is this use case oriented framework, where we have a number of really key plays that are really getting dialed in, where we can articulate this value. And I think the degree to which a company can present its software offerings in that light enables you to transact. I think if you struggle in that articulation, people are less willing to sort of invest on hope. So really pleased with how the team has progressed in that camp, but I think that pressure will continue to remain very high, Brent.

Speaker Change: And one of the things that's really helping us perform well there is this.

Speaker Change: Use Case Orient and Framework.

Speaker Change: where we have a number of really key plays that are really getting dialed in where we can articulate this value.

Speaker Change: and I think the degree to which a company can present is a software offering in that light, enables you to transact. I think if you struggle in that articulation.

Operator: And I think the degree to which a company can present is a software offering in that light enables you to transact. I think if you struggle in that articulation, people are less willing to sort of invest on hope. So really pleased with how the team has progressed in that camp, but I think that pressure will continue to remain very high Brent. Did you have any differences between S&B and Enterprise? Was there a difference in growth or adoption or what was the sense downstream versus upstream?

Speaker Change: People are less willing to sort of invest on hope, so really pleased we have a team has progressed in that camp, but I think that pressure will continue to remain very vibrant.

Mark Mader: Did you have any differences between S&B and Enterprise? Was there a difference in growth or adoption? What was the sense downstream versus upstream? Well, Enterprise continues to be a huge strength of the business, and I think as we offer some of that down at the lower end of the market, I think there's probably more performance coming out of packaging and interfaces and experience. So while when you do engage with a customer whose S&B does engage, I think you need to articulate value, but I think there's a higher there's a higher number of deals that get done at the low end that are not grounded in that, and I think that's where the product and the packaging can can be more of a lead shooter.

Speaker Change: And did you have any differences between S&B and Enterprise was there a difference in growth or adoption or what was a sense downstream versus upstream?

Speaker Change: Well, Enterprise continues to be a huge strength at the business, and as we offer some of that down at the lower end of the market, I think there's more probably more performance coming out of packaging and interfaces and experience. So while when you do engage, if a customer who's SMB does engage.

Operator: Well Enterprise continues to be a huge strength of the business and I think as we as we offer some of that down at the lower end of the market, I think there's more probably more performance coming out of packaging and interfaces and experience. So while when you do engage if a customer who's S&B does engage, I think you need to articulate value but I think there's a higher there's a higher number of deals that get done at the low end that are not grounded in that and I think that's where the product and the packaging can be more of a lead shooter.

Speaker Change: I think you need to articulate value, but I think there's a higher number of deals that get done at the low end.

Speaker Change: that are not grounded in that. And I think that's where the product and the packaging can be more of a lead suitor.

Mark Mader: So take away, there is almost every deal at the high end involves this, and as you go down, I would say it's not not a hundred percent.

Speaker Change: So take away there is almost every deal at the high-end involves this and as you go down I would say it's not 100%.

Mark Mader: Great thanks.

Operator: So take a way there is almost every deal at the high end involves this and as you go down, I would say it's it's not not a hundred percent. Great thanks. Again, if you would like to ask a question, please press star one.

Operator: Again, if you would like to ask a question, please press star one.

Speaker Change: Great thanks.

Speaker Change: Aaron?

Speaker Change: Again, if you would like to ask a question, please press star 1.

Keith Bachman: Our next question comes from Keith Bachman with Bimo Capital Markets.

Speaker Change #100: Our next question comes from Keith Bachman with female capital markets.

Keith Bachman: Hi, thank you. Mark and the introductory remarks you commented that you thought next year would be a transformative year and really focusing on the word transformative, but maybe you want to talk a little bit about what you mean there and we as shareholders, how do you think we'll note it? Well, we've been on a really, I think, good progression over the last couple of years around becoming your company with margin extension while still growing. And I think what, where you have these transformative opportunities, is when you have a number of things converge. I seem maturity in our model, I seem mature in our go-to-market motion, I seem maturity in our product offerings, and you just don't get that many opportunities in your career or your company's life where those things converge.

Keith Bachman: Hi, thank you. Mark is the introductory remarks you commented that you thought next year would be a transformative year and I'm really focusing on the word transformative. Maybe you want to talk a little bit about what you mean there and we as shareholders, how do you think we'll notice?

Keith Bachman: Our next question comes from Keith Bachman with Bimo Capital Markets. Hi, thank you.

Mark Mader: Mark and the introductory remarks you commented that you thought next year would be a transformative year and really focusing on the word transformative but maybe you want to talk a little bit about what you mean there and we as shareholders, how do you think we'll note it? Well, we've been on a really, I think, good progression over the last couple of years around becoming your company with margin expansion while still growing and I think what where you have these transformative opportunities is when you have a number of things converge.

Speaker Change #102: Well, we've been on a really, I think, good progression over the last couple of years, around becoming your company with Martian expansion.

Speaker Change #103: Oh well still growing and I think what you have these transformative opportunities is when you have a number of things converged.

Speaker Change #103: I've seen maturity in our model, I've seen maturity in our go-to-market motion, I've seen maturity in our product offerings, and you just don't get that many opportunities in your career or your company's life where those things converge. A lot of that work is being laid this year.

Mark Mader: I seem maturity in our model, I seem maturity in our go to market motion, I seem maturity in our product offerings and you just don't get that many opportunities in your career or your company's life where those things converge. A lot of that work is being laid this year. It's never perfect in the conversions, but I think it's it's really good as it's as it's approaching next year. So I think it'll manifest itself in growth, in profitability, in cash flow, customer sat, and we'll do our best to report out on those different dimensions. Right, right, interesting.

Mark Mader: A lot of that work is being laid this year. It's never perfect in the conversions, but I think it's really good as it's approaching next year.

Speaker Change #103: It's never perfected in the conversions, but I think it's really good as it's approaching extra. So I think it'll manifest itself in growth, in profitability, in cash flow, customer and we'll do our best to report out on those different dimensions.

Keith Bachman: So I think it'll manifest itself in growth, in profitability, in cash flow, customer sat, and we'll do our best to report out on those different dimensions. Right, right, interesting. Okay, my follow-up question, one of the previous questions was asking you about a press release or, you know, rumors in the market, and I understand you can't answer that question.

Speaker Change #104: Right, right, interesting. Okay, my follow-up question. One of the previous questions was asking you about a press release. You are now, you know, rumors in the market and I understand you can't answer that question.

Mark Mader: What I want to pose is a more philosophical question. You're a member, you are on the board and use the word transformative transformative next year, but how would you sort of as a board member to pick the pros and cons or the friction. If you will on, you know, selling the company at this juncture. Yeah, I think that questions are close cousins to the first one that was asked, and we're not in a position to comment on that today.

Mark Mader: OK, my follow up question, one of the previous questions was asking you about a press release or you know rumors in the market and I understand you can't answer that question. What I want to pose is more philosophical question. You remember you are on the board and use the word transform, you know, transformative next year, but how would you sort of as a board member depict pros and cons or the friction, if you will on, you know, selling the company at this juncture. Yeah, I think that questions are close cousin to the first one that was asked and we're not in a position to comment on that today.

Speaker Change #105: What I want to pose is more philosophical question, you're a member, you are on the board, and you use the word transformate, transformative next year, but how would you sort of as a board member depict the pros and cons or the friction if you will on selling the company at this juncture?

Speaker Change #105: to

Speaker Change #105: Thank you for listening.

Speaker Change #106: Yeah, I think it's that question to close cousin to the first one that was asked and we're not in a position to comment on that today.

Operator: Okay, I will see the floor. I'm looking forward to engage in a month or so. Thank you.

Speaker Change #107: Okay, I will see the floor I'm looking forward to engage in a month or so. Thank you.

Operator: There are no further questions at this time.

Speaker Change #107: Thank you.

Aaron Turner: I will now turn a call back over to Aaron Turner for closing remarks. Great, thank you all for joining us today, and we'll speak with you again soon.

Speaker Change #107: There are no further questions at this time. I will now turn a call back over to Aaron Turner for closing remarks.

Operator: OK, I will see the floor. I'm looking forward to engage in a month or so. Thank you.

Aaron Turner: Great, thank you all for joining us today and we'll speak with you again soon.

Aaron Turner: There are no further questions at this time. I will now turn a call back over to Aaron Turner for closing remarks. Great. Thank you all for joining us today and we'll speak with you again soon.

Operator: This concludes today's conference call. Thank you all for your participation. You may now.

Speaker Change #109: This concludes today's conference call. Thank you all for your participation. You may now disconnect.

Operator: This concludes today's conference call. Thank you all for your participation. You may not.

Speaker Change #110: I'm not going to do that.

Speaker Change #110: I'm not going to do that.