Q3 2024 Amplitude Inc Earnings Call
We'll keep you posted.
Product and behavioral data is important to everyone in an organization.
We extended our partnership with HubSpot this quarter, allowing teams to combine the power of HubSpot with Amplitude's customer behavior data. With this latest integration, go-to-market teams can easily track product usage alongside traditional CRM data.
Customers can see amplitude charts in their HubSpot dashboards and target customer cohorts based on product usage or other key buying signals.
Teams can also bring HubSpot data into Amplitude to understand marketing campaign performance. Our own product-qualified leads at Amplitude convert better than the average, and we're excited to bring that power into hundreds of joint customers.
Go to Beadaholique.com for all of your beading supplies needs!
Lastly, we continue to grow our platform with the launch of web experimentation.
AB testing tools are often difficult to use in scale requiring engineering resources. They lack flexibility and introduce page slowness, which impacts conversion rates.
With web experimentation, Amplitude now offers a self-serve way to easily run A-B tests across product features and websites. Visual editing and point-and-click interaction reduces the need for engineering support.
We are making it easy for product managers, marketers, and growth leaders to A-B test and personalize web experiences.
Subs by www.zeoranger.co.uk
Turning to Customers.
In Q3, we landed and grew with customers like Realtor.com.
Playrix, DigitalOcean, Fanatics Commerce, Traveloka, ONAG, Philips
Radio France, Joe and the Juice, and Thomson Reuters. We saw continued success this quarter, displacing multiple point solutions as customers looked to us to drive vendor consolidation.
Realtor.com helps millions of home shoppers find their dream home. They provide a comprehensive list of for sale properties nationwide, as well as information and tools to make informed real estate decisions. Amplitude began working with the Realtor.com product team three quarters ago. We delivered fast value by unlocking behavioral insights, democratizing data access, and helping the team ship the right experiences faster.
Our initial success helped raise awareness that we could solve larger problems across the organization.
Realtor.com was looking to streamline access to data with a single unified view of the customer journey to generate actionable insights and better meet consumer needs.
By supporting a simplification of Realtor's digital tech stack, we are reducing friction and increasing trust between the marketing, analytics, and product organization.
Speaker Change: This win speaks strongly to the opportunity head for Amplitude. Our growing platform breadth combined with an increasing pull outside of our core product persona shows that Amplitude can be the single pane of glass for our customers' digital needs.
Speaker Change: We also grew an ongoing partnership with a major global sports organization this quarter. They say that personalized fan experiences are a priority advancing them towards their goal of 100 million paying subscribers, which in turn drive billions of dollars in broadcast rights.
Speaker Change: Over six years, Amplitude has grown steadily from powering their direct-to-consumer arm to a far more strategic deployment across the organization. Usability, scalability, and cost frustrations with their legacy MarTech providers had reached a breaking point.
Speaker Change: In contrast, Amplitude gave their marketing and product teams a shared and unified view of the customer journey to test strategies, target audiences, and tailor content.
Speaker Change: This quarter, they are going all-in with every part of our digital analytics platform as part of a three-year agreement. Our footprint across their organization continues to grow as we are being implemented across dozens of teams and subsidiary leagues.
Speaker Change: We believe this marks the start of a larger shift in workflows off their legacy MarTech providers towards Amplitude.
Speaker Change: Their forward-thinking approach is great validation of our platform vision. We see many similar situations out there and think this can open more opportunities for MarTech replacements with other enterprise clients.
Go to Beadaholique.com for all of your beading supply needs!
Speaker Change: DigitalOcean, a leader in cloud services, has partnered with Amplitude to revolutionize their marketing and product-led growth strategies. DigitalOcean is looking to build an entirely new muscle in product-led growth.
Speaker Change: Previously, DigitalOcean relied on a just-jointed toolkit. Looker for reporting on Snowflake and Pendo for user insights.
Speaker Change: This required data analyst work, which limited both broader team accessibility and the ability to take action. By consolidating onto Amplitude, DigitalOcean has been able to streamline their processes, eliminate fragmentation, and enable comprehensive data analysis.
Speaker Change: DigitalOcean aims to derive specific insights related to user onboarding, feature adoption, and engagement metrics. With Amplitude, they can more efficiently analyze user behavior on their cloud platform and pinpoint bottlenecks in onboarding flows to enhance the user experience.
I've been very intentional about repeating these three statements.
Speaker Change: First, our thesis is that analytics is the center of gravity for any workflow that touches customer and product data.
Speaker Change: Second, product and behavioral data is important to everyone in an organization.
Speaker Change: Third, product innovation is the biggest driver of long-term growth and shareholder value for Amplitude.
Speaker Change: Nothing has changed about our long-term opportunity. We remained well positioned to win the category as the convergence of buyers and budgets across product, marketing, and experience continues.
Speaker Change: We have a unique position to be the platform leader that drives continued consolidation of fragmented tooling and legacy offerings.
Speaker Change: I've said before that we are going to drive re-accelerating growth for amplitude regardless of the macro environment. We are on that path and will keep executing with urgency.
We are not here to build a single-digit growth business.
Speaker Change: Thank you for your interest and amplitude. I'd now like to turn it over to Andrew to walk you through the financial results.
Thank you, Spencer, and thanks to everyone joining us today.
Andrew: I'm happy to report that we exceeded all guided metrics this quarter.
Andrew: Now that I've had some time to work with the team, I'm happy to share that many of my early instincts about the business have been proven right.
Andrew: Amplitude has the right product focus to meet critical business needs and a customer-obsessed culture focused on solving difficult problems.
Andrew: Our platform is uniquely set up to win against the market backdrop of vendor consolidation and the convergence of product, marketing, and experience analytics.
Andrew: We haven't quite turned the corner yet, but the signs are there. Cohort health continues to improve, and we are building a higher quality book of business, making progress on our efforts to win the enterprise.
Andrew: Our platform is growing with new product capabilities and our customer use cases, but there is more to do.
Speaker Change: As part of my first official earnings call with Amplitude, I'd like to share some overarching financial principles. As part of my first official earnings call with Amplitude, I'd like to share some overarching
Hopefully none of these come as a surprise.
First, we are not a growth-at-all-costs company.
Speaker Change: We are investing appropriately to drive accelerating growth, while generating positive free cash flow.
And we plan that our growth will come with leverage.
There are caveats.
Speaker Change: We deal with capital allocations decisions every day, and we may adapt this approach when we have attractive opportunities that drive long-term value at the expense of short-term results.
Now, turning to our third quarter results.
Speaker Change: As a reminder, all financial results that I will be discussing, with the exception of revenue, are non-GAAP.
Speaker Change: Our GAAP financial results, along with a reconciliation between our GAAP and non-GAAP results, can be found on our Earnings Press Release and Supplemental Financials on our IR website.
Speaker Change: Third quarter revenue was $75.2 million, up 6% year over year and 3% quarter over quarter.
Total ARR increased to 298 million exiting Q3.
An increase of 9% year-over-year and $8 million sequentially.
Speaker Change: and Matt McFarlane. Thank you for watching. If you liked this video, please click the like button, share it with your friends, and don't forget to subscribe to my YouTube channel. I'll see you in the next video.
Here are more details on key elements of the quarter.
Speaker Change: New ARR was largely expansion-driven this quarter. As Spencer mentioned, we had several expansions that exceeded seven figures.
Speaker Change: Linearity was more pronounced than normal in the quarter as our mix of enterprise business continues to grow.
Speaker Change: The number of customers representing 100,000 or more of ARR in Q3 grew to 567, an increase of 13% year-over-year.
Speaker Change: In-period NRR was 98%, and NRR on a trailing 12-month basis was 97%.
Large expansions contributed to the better-than-expected result.
Speaker Change: Gross margin was 77% for the third quarter, down 2 percentage points year over year, and up 1 percentage point quarter over quarter.
Speaker Change: The sequential margin increase was driven primarily by optimizations with our hosting services.
Sales and marketing expenses were 43% of revenue, flat year-over-year.
Speaker Change: Sales efficiency is not where we'd like it to be, and we are focusing on driving improvement. Investing against increasing proof points to better enable our enterprise success.
Speaker Change: G&A was 16% of revenue, up 2 percentage points year over year, reflecting increases in legal expenses and bad debt expenses related to new Russian sanctions.
Speaker Change: G&A also needs to improve as a percentage of revenue over time.
Total operating expenses were $56 million, up 7% year-on-year.
Speaker Change: We had previously estimated a negative impact to operating profit of $4 million due to new Russian sanctions. The actual net impact ended up being closer to a negative $3 million.
Speaker Change: Operating profit was $1.6 million, or 2% of revenue, which represents a 2 percentage point decline on a year-over-year basis.
Speaker Change: Net income per share was $0.03, based on 131.3 million diluted shares, compared to net income per share of $0.05, with 128.1 million diluted shares a year ago.
Speaker Change: Pre-cash flow in the quarter was positive $4.5 million, or 6% of revenue, compared to $7.5 million, or 11% of revenue a year ago.
Speaker Change: Now let me take a moment to talk about our philosophy as it relates to mergers and acquisitions.
Speaker Change: There are three questions we always ask ourselves for every opportunity we look at.
Speaker Change: First, can we accelerate our strategy through what we're buying and are we better together?
Speaker Change: Is there a strong, long-term cultural fit, and does this make financial sense?
Speaker Change: Elements of our product strategy always involve abide versus build decision, and we will continue to balance both, all in the service of building a more robust platform.
Speaker Change: Now, turning to Outlook. We are assuming that the macroeconomic environment continues to be challenging in the near future.
Speaker Change: Every new logo remains tough and buyer scrutiny remains high. We think caution continues to be warranted.
Speaker Change: Stabilization is simply not enough. We believe that every incremental point of market share in this stage of the cycle will be magnified on the recovery.
Speaker Change: We plan to reinvest appropriately against our platform opportunity, and we will not shy away from making big bets where we see favorable outcomes.
Speaker Change: We are reinvesting against increasing proof points to better enable enterprise success.
Speaker Change: On gross margin, we believe we have the ability to drive continued efficiencies with our hosting providers over the medium term.
Speaker Change: However, any material expansion will likely be offset with continuing investments we're making in professional services, especially for larger enterprise customers.
Speaker Change: All numbers and guidance include the impact of the Command-A-I acquisition and associated fees.
Speaker Change: For the fourth quarter of 2024, we expect revenue to be between $76 and $77 million, representing an annual growth rate of 7% at the midpoint.
Speaker Change: We expect non-gap operating loss to be between a negative 2.1 million and a negative 0.1 million.
Speaker Change: And we expect non-GAAP net income per share to be between 0 cents and 1 cent, assuming diluted shares outstanding of approximately $134.9 million.
Speaker Change: For the full year, we are raising our full-year revenue outlook to be between $297.1 and $298.1 million, an annual growth rate of 8% at the midpoint.
Speaker Change: We are reducing our outlook for non-GAAP operating loss to be between negative $6.3 million and negative $4.3 million.
Speaker Change: We expect non-GAAP net income per share to be between $0.04 and $0.06, assuming shares outstanding of approximately $131.7 million, as measured on a fully diluted basis.
Speaker Change: I'm confident in our ability to drive long-term growth to a level above where we are today. Our long-term opportunity remains incredibly compelling.
Speaker Change: With increased discipline and execution, I believe we'll be in a great position to capture it. With that, I'll open it up for Q&A. Over to you, Yao.
Yao: Great. Please turn on your microphone and camera, limit yourself to one question and one follow-up in the interest of time. Our first question comes from Koji Akeda from Bank of America, followed by Brent Braslin from Piper.
OG, go ahead please.
Yao: Hey, thanks guys. This is George McGreehan on for Koji. I wanted to start out with kind of a bigger picture question, just about, you know, with all this talk of AI agents.
and how they're becoming more powerful.
Yao: you know, maybe we'll see one day where they become so fully functioning that they can interact with apps on their own. I kind of wanted to ask, in a world like that, how does amplitude play in to kind of capture kind of the
the interactions that the AI apps or AI agents have.
with us.
Speaker Change: Yeah, so we're talking a very different world from the one that we live in today. I'll give you kind of two different views as to how we plan. So I think first,
Speaker Change: is there's always some interface between the human world and the digital world. And our thing is how do we capture all those touch points and help companies make those experiences be the best
Speaker Change: They possibly can be so even with agents, you know, there's a point where you're asking them to go do something
Speaker Change: If you look at any of the trends for times humans spend interfacing with digital, the stuff is just, you know, continuing to go up and to the right.
Speaker Change: And so, you know, even if you're delegating more and more tasks to agents, you know, and in net, I expect humans will spend more time more and more time interfacing with the digital world. And so that's just a great thing for us.
Speaker Change: The second opportunity I'd like to call out with respect to AI agents is a little more, you know, and this is like, you know, exactly how is, how is it going to play out, but,
that
Speaker Change: One of the really exciting things about our position in that world is we have this enormous repository of data of customer behavior, one of the largest in the world.
and Sue.
If you think about, okay,
Speaker Change: we get to train that on not just humans but AI agents in that world and help figure out okay well how can you make an AI agent more successful on this digital experience or this digital interface versus one where you're not tracking that and so like we think of it as like
Speaker Change: Hey, we instrument a digital product journey, and whether it's a human using it or an AI using it, you know, you want to maximize that as a company no matter what.
Just in terms of
Speaker Change: Where are you guys, could you give a little bit more color perhaps on where you guys are seeing room for incremental investments, kind of what's giving confidence there, just kind of in regards to revenue guide going up and reform operating income guide going down a bit.
Speaker Change: Yeah, so obviously we did the command AI acquisition, which is driving the bulk of the change in.
Speaker Change: guidance on operating income side. As we go into next year, I'd say the biggest place we want to continue to invest is in product innovation.
Speaker Change: And so that means continuing to build the teams, continuing to, so that we can ship a lot of stuff and be on the bleeding edge there. There are tons of things customers are asking us for.
Speaker Change: That's why a big part of why we did the Command AI acquisition is because customers were asking us for this sort of functionality. We wanted to be able to deliver it. And so I expect us to continue to be very aggressive with getting new products and innovation out to market and we'll grow the team.
Speaker Change: commensurate with that. On the go-to-market side, we've made the investment that we need to make.
and so
Speaker Change: What we're going to be looking to do is drive reacceleration through Q4 and 2025 with roughly the level of investment and the headcount that we have. The places that will make adjustment is we'll continue refocusing that motion more and more upmarket to the enterprise side over time while automating the low end of the market with self-service and
you know, either fully or semi-automated ways.
Speaker Change: Great, thank you. Next question, Brent Braslin from Piper, followed by Matt Pryde from Citi. Brent, go ahead, please.
Brent Braslin: Thank you guys. Quick question here for me. First one is going to be around the Command AI.
Brent Braslin: Could you talk a little bit about, it sounds like you had an integration with them existing, how much overlap, customer overlap, was there with that platform? And could you just quantify the revenue opportunity there? Typical customer might spend $85,000 in amplitude.
Brent Braslin: Could it provide, if you bundle both, could it provide a 10%, 20%, 50% uplift? I'd love to better understand the overlap in economics and one quick follow-up for you, Andrew.
Yeah, so I think...
Command-A-I gives us two big new...
Brent Braslin: opportunities from a product standpoint. And then one additional thing on the AI front. So the first is guides and the second is surveys. And so doing those and
Brent Braslin: in the forms of interacting back with your customers is very valuable to tie with our analytics. And, you know, I think I expect
Brent Braslin: over the long term, yeah, majority of our accounts could use this sort of functionality with the analytics. Now, in terms of uplift, it's early to say, but you know, you could easily see 20%, 50%, potentially more depending on the criticality of that functionality to your business.
Brent Braslin: The other thing I'll call out on the Command AI side is actually their user assistant product, which we're really excited about, which is basically an end-user, like it's an agent that exists to help the end users of our customers.
Brent Braslin: to help you get things done on the product. And they've actually, so even though that's a new product for them in the last year, they've actually seen the most growth from that new product. So I expect this is going to be a big part of our offering in the same way.
Brent Braslin: That, you know, we expect experiment and session replay and a whole bunch of our other stuff to be as well.
Maybe just to add on to that.
Brent Braslin: The Comand-A acquisition was really one that brought great product capabilities and a great team. There was very little revenue overlap. It's a very small company, but they had such a great offering that when we did our analysis, it was very clear that it was much better for us to bring them on as part of the team than try to go build that ourselves.
It will absolutely be a better together story.
Speaker Change: Certainly makes sense. And then just for you, Andrew, as you think about NetNewAR, pretty healthy in light of some of the headwinds you had relative to some of the Russia contract changes there, the distributor. You mentioned it was mostly on the expansion side.
Speaker Change: Why now? Why do you think you saw some big expansions? I mean the last time I think we talked you were a little more nervous around renewals and downsizing and we've seen that kind of pressure on NRR for the last, better part of the last, you know, couple years. What changed?
Speaker Change: I think this is where Spencer was talking about earlier, we made investments early on this year about moving more and more of our sales coverage to enterprise clients. We're introducing more and more product capabilities, and that better together, value for the money, driving greater efficiencies in their operations, really made sense to a number of our existing clients, and they trusted us.
and we earned the right to have those expansions.
Speaker Change: Now, I think that we need to have more of that, we need to be broader with our customers, we need to see more of customers who are recognizing Amplitude as the consolidator in the market, so we've got our work cut out for us.
Speaker Change: But definitely is very positive in that respect. It's just gotta be broader. Yeah, Brent, just to give you one example, the realtor,
contract that we did.
Speaker Change: Typically in the past, that would have taken us a few years to get that point.
Speaker Change: Because we built relationships with the chief marketing officer, chief product officer, and head of data at Realtor, we were able to accelerate that from a few quarters from the first trial deployment to a full end-to-end deployment across multiple products.
and so, you know, I...
Speaker Change: attribute that back to the focus on when the enterprise and the execution there and the great things that Thomas and
Speaker Change: folks across the board and go to market have been doing to be able to drive that expansion, to do the one with the Global Sports League, to do a lot of the very larger ones that we did this past quarter. Now, as Andrew said, we certainly have our work cut out for us in terms of replicating and scaling that as we go into Q4 in 2025, but some great early group points.
Very helpful. Thank you.
Speaker Change: Great. Next question, Matt Pryde from Citi, followed by Arjun Bhatia from Blair. Matt, go ahead, please.
Matt Pryde: Hey guys, thanks so much. Was wondering if we could just dig into the increase in operating loss expectations and and if that should be a normal cadence like heading into next year.
Speaker Change: Yeah, Matt, I'll take this one. Matt, I would tell you that what really colored our guidance change on op loss was related to assuming the operating expenses associated with command AI, the deal related expenses, and some of the ongoing legal expenses we have with outstanding lawsuits. Now, that's really the predominance of the change.
Thank you very much. Have a great day.
Speaker Change: Got it. And last quarter you mentioned that your average deal size in the pipeline was up about 25%. I guess in terms of the size of the deals, has that changed at all in the most recent quarter?
Speaker Change: In terms of the size of deals that you're seeing in the pipeline?
Speaker Change: Well, I would tell you that we talked about the number of deals that we saw that were over seven figures in the quarter. So that should tell you that when we've seen that earned right to expand with clients, they're rewarding us with those larger deal sizes. So I think that that speaks to the potential of our ability to execute in a broader sense with our customers and drive those big deal sizes.
Got it. Thank you.
Speaker Change: Great. Next, Arjun Bhatia from Blair, followed by Nicholas Danowitz from Scotia. Arjun, go ahead please.
Speaker Change: Hi, this is Willow An for Arjun Bhatia. Thanks for taking our question. So I'm going to start off with the self-service AB testing and web experimentation announcement. How are you monetizing this product and how has early customer reception been?
Speaker Change: So it's very similar to our other products out there. We're directly selling it. We've already seen some deals that have been closed, even though WebExperiment's only been out for about a month at this point.
Speaker Change: I think the key thing with web experimentation is it's very friendly for marketers.
Speaker Change: and growth teams. And so teams that might not have access to engineering resources to make coding changes where they can just point and click on a website in order to run an A-B test. So.
Speaker Change: We've already monetized it in a few of our enterprise deals, and I think it's a great combination with our traditional server-side experimentation and feature flagging.
Speaker Change: And then one more question, if I may, can you comment on the competitive environment? Has there been changes? Are you seeing new players you haven't traditionally seen like marketing players, for example?
[inaudible]
It's been, so I'd repeat the themes that
Speaker Change: I've been talking about the last few quarters, which is that both versus the legacy MarTech players, as well as versus the point solutions, there is a drive towards consolidation and a drive towards buying the next generation stack. And so we
Speaker Change: Part of the reason that we're being so aggressive with launching these other products, web experimentation, the command AI acquisition, you know, we're gonna be getting out mobile session replay soon, is because there's a lot of asks for consolidation from our customer base, where they wanna use all the same provider and they wanna standardize on whoever they've chosen for analytics, which is us.
Speaker Change: And so, I think the one call out I'd say that's a little bit more interesting this quarter is we see a lot of increased dissatisfaction with Google Analytics 4, where
Speaker Change: A lot of their enterprise customers have been forced to use that for the first time for the last quarter in Q3. And they're realizing the lack of depth, as well as a whole bunch of issues around the privacy side, makes it so that they have to go find something else, and that's where they ended up talking to us.
Speaker Change: Thanks for taking our questions. Great for sure Willow. Next question from Jackson Ader from KeyBank followed by Elizabeth Porter from Morgan Stanley. Jackson go ahead please. Hey guys this is Jack Nichols on for Jackson Ader. I wanted to touch on if you guys could talk about how contract renewals are coming in relative to your expectations.
I think, too.
Speaker Change: We are past the significant majority of the optimizations from 2021 and 2022, so that's been great, and we expect to, you know, there's still a tail of them and, but that's continuing to reduce as we go into Q4 and 2025, as far as the visibility we have.
Speaker Change: I think newer cohorts also tend to be healthier, both on growth.
Speaker Change: and Net Dollar Retention. So that's good. But I would caveat that overall with we are not happy with where renewal rates are at and need to continue to make progress as we go through 2025. And as we do that will naturally lead to acceleration of business.
Speaker Change: One, a big part of our, like me talking a lot about when the enterprise is to focus away from SMB and mid-market customers where you have a lot of tech startups that frankly are not doing well and so the renewal rates are adversely impacted.
Speaker Change: Great, that makes sense. And maybe as a follow up, can you talk about kind of the levers that you can pull to increase the sales efficiency that you guys were talking about earlier on the call?
Thank you.
Speaker Change: I think it so I think it as I was saying on an earlier question, I think it will naturally as a result of like we built out the team that we need to. And then as we go into Q4 and 2025, an acceleration on the top line.
Speaker Change: will naturally lead to a whole bunch of metrics there improving.
Got it. Do you want to?
Speaker Change: Did you want to comment on that as well? Sure. I think it's a natural evolution of how a sales force, when increasingly focused on an enterprise motion.
Speaker Change: is, you know, invariably those sales cycles are longer, so you have to be a little bit more
Speaker Change: focused on delivering and proving out your value over a period of time. We're also introducing a lot of new product capabilities that are augmenting an increasingly stronger value proposition in a better together platform story. And the sales team is getting more and more adept at demonstrating that to new and existing clients who maybe didn't think about Amplitude to solve some of those really complex problems in the past. So I think this is one where we have to be diligent, we have to be focused, we have to be wanting to have a little bit of patience as we get better and better at that execution. Actually, just to be really clear on that, one of the big drivers that we're going to focus on in 2025 is adoption of the full platform.
Speaker Change: We are at 23% multiple product adoption, which, you know, great progress, but we need, I want to get that 200%.
Speaker Change: because we see those customers are much stickier in terms of the renewal rates. They buy way more, they get to much higher ASPs. There's just a lot more value created from buying the whole platform. So that's gonna be a really big focus of ours.
A couple. Thank you guys for answering.
Speaker Change: Great. Next question, Elizabeth Porter from Morgan Stanley, followed by Clark Wright from G.A. Davidson. Elizabeth, go ahead, please.
Elizabeth Porter: Great, thank you so much. I wanted to ask on the command AI acquisition. It sounds like there has been a lot of disruption in the space also with WAPMI kind of taken out. So I just wanted to get your view on how bright this market is for consolidation and what the go-to-market process looks like there.
Speaker Change: Yeah, very, very ripe for consolidation. The reason we did it is the reason we did this acquisition is because
Speaker Change: Our customers have been asking us for a consolidated solution. It makes no sense to run a standalone tool, whether that be WalkMe or something else.
Speaker Change: They'd much rather integrate it all on one platform, not just because there's lower cost of ownership, but because you can target users a lot better. So if you have the analytics data, you know when and where to send a nudge or a pop-up to the user, as opposed to just kind of blanket spamming your entire customer base.
Speaker Change: Yeah, I think we're going to see quite a bit of adoption of it as we launch it next year.
Speaker Change: Great. And then just as a follow up, I wanted to touch on the pipeline, you know, understanding there's still two months left in the year. How would you characterize the pipeline thus far heading into 2025 relative to the year or no period?
Speaker Change: It's early to call it out for 2025. You know, I'd say Q4 we're entering with strong pipelines, so that's good to see. Obviously a bunch of work on the execution front to convert it.
Speaker Change: And the early signals that we see in Q1 and Q2 are similar, but it's early to say exactly where we'll land.
Speaker Change: I do want to call out, like, from a pipeline standpoint, we aren't a much...
Speaker Change: Better spot than we were a year or two ago in terms of the repeatability of our processes and also in terms of the enterprise out I think for we're kind of. [inaudible]
Speaker Change: Bucketing everything all in the same, where, you know, you'd have SMB and mid-market pipeline be like, oh, we hit our pipeline number when actually, you know, not high enough percentage of it is quality enterprise pipeline. We've since changed that, and so there's a much, much stronger enterprise pipeline.
Thank you.
Clerk Wright: Great last question. Clerk Wright from G.A. Davidson. Go ahead please, Clerk.
Thank you.
So a quick question in terms of the long-term RPL.
Clerk Wright: number accelerated to 49% year over year. That's pretty astonishing given kind of the buying environments and what you're talking about. Love to kind of maybe dig into that and what you're seeing if it's more of the long-term commitments by the enterprises or if it's directly an outcome of your enterprise. Go to market motion changes.
Speaker Change: Is there anything to call out there, and then I'll have one follow-up.
Speaker Change: So I can take that one. It absolutely is a result of the focus we've had on building stronger, deeper relationships with clients.
Speaker Change: aligning our contracts to how customers view their value accretion over a period of time. You know, enterprises buy in very different ways than SMB and mid-market do. They don't consider a new vendor or an existing vendor for those types of contracts without having really understood how best to partner with them to drive that long-term value. And for us, it's one that we want to do that as well with our clients because it enables us to have, as you surmised, a much better view on the long-term revenue. It gives us greater predictability. And I think it gives us a lot of confidence that we're doing things in the right way, especially since most of those contracts, those customers, have bought into the full platform.
Speaker Change: Got it. And then just following up, are you assuming anything in terms of 4Q from IT budget flushes, or does that represent potential upside?
Speaker Change: I wouldn't say we've geared our guidance based upon any form of expectations on budget flushes.
Thank you.
Speaker Change: Great. With that, I'm seeing no further questions in queue. Thank you very much. We know it's a very busy night for earnings. We appreciate so many of you joining our call today.