Q1 2025 Intapp Inc Earnings Call

Good day and thank you for standing by. Welcome to Intapse fiscal 1st Quarter 2021 Webcast.

at this time, will participate in a listening mode after the speaker's presentation. There will be a question and answer session.

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Speaker Change: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, David Trone. Senior Vice President in Vastory Relations, David, please go ahead.

David Trone: Thank you. Welcome to In tab, fiscal 1st, 2015, and the call of the call of the week today is John Hall, Chairman and CEO of In tab, David Morton, Chief Financial Officer.

Speaker Change: During the course of this conference call, we made a forward-looking statements regarding trends, strategies, and the anticipated performance of our business, including guidance provided for our fiscal second quarter in full year of 2025.

He is forward looking statements are based on management's current views and expectations.

Speaker Change: and Kale certain assumptions made us up to date.

Speaker Change: and our subject to various risks and uncertainties, including those described in our SEC filings, and other publicly available documents that are difficult to predict and could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

Speaker Change: In Chapter 2, any obligation to update or revise any forward looking statements except as required by law.

Further on today's call we will also discuss certain non-gap metrics that we believe aid in the understanding of our financial results, including non-gap growth margin, non-gap upbringing expenses, non-gap upbringing income, non-gap diluted net income per share, and pre-cast flow.

At the reminder, all of our financial figures we will discuss today are non-gap, except for revenue and revenue growth and total remaining performance obligations.

Speaker Change: Our financial results, along with reconciliation of gaps in our got financial measures, can be found in today's earnings release and at supplemental financial tables.

Speaker Change: which is available on our website and I've been exhibited to the form of 8K furnished with the ATC prior to this call for a supplemental financial presentation which is available on our website.

Speaker Change: with that O'Hand the Conversation Over to John.

John: Thank you, David. Good afternoon, everyone.

John: Thank you for joining us today as we share the results of our fiscal first quarter.

John Hall: Commencing our fourth fiscal year as a public company, I'm pleased to share that once again, David Schleed's strong quarter of the results.

John: Supported by Clio, A. Her Heart Groves, New Products, New Partnerships.

Speaker Change: New logos and expanded client accounts around the world.

Speaker Change: We also added new applied AI capabilities to our platform and furthered our strategic partnership with Microsoft.

Speaker Change: I'll share details on these select growth drivers throughout this call.

Speaker Change: Thank you, one, our Cloud ARR grew to $309 million, up 27% year over year.

Speaker Change: Cloud, now represents 74% of our total ARR of $417 million.

Speaker Change: In the quarter, we earned SAS revenue of $77 million, up 30% year over year, and total revenue of 119 million up 17% year over year.

Speaker Change: Now, I'd like to share some highlights from our fiscal 1st quarter.

Speaker Change: of Start with how we're executing on our vertical AI roadmap.

Speaker Change: Specifically, our continued Applied AI Innovation, its practical applications and our increasing client adoption.

Speaker Change: First, we introduced two new AI powered features.

Speaker Change: for Intapacist for Deal Cloud.

Speaker Change: As you may remember, the Intapacist brings generative AI to the daily work of professionals.

Speaker Change: Helping them better apply their intelligence while driving speed and accuracy.

Speaker Change: In tap assist, our health professionals make sourcing recommendations to help professionals quickly identify ideal target companies aligned with firm strategy such as ideal investment candidates.

Speaker Change: and Interapacist now provides smart tagging.

Speaker Change: to help professionals analyze and organize communications and meeting notes, making complex data easier to search and apply.

David Trone: You're excited that rising client adoption of Intapacist for Deal Cloud is validating our applied AI strategy.

Speaker Change: and its capability to drive tangible results and positive outcomes for our clients.

Speaker Change: For example.

Speaker Change: Serena Clay, Director of International Marketing and Communications at International Investment Bank DC Advisory.

Serena Clay: I think a lot of the time what other companies are saying their AI tools can do can be quite performative.

Serena Clay: But I think the depth to which deal cloud has demonstrated a commitment to it and also their thought process and roadmap for it has been really impressive.

Speaker Change: Second, we expanded the Interapacist Product brand by announcing the general availability of Interapacist for terms.

Speaker Change: This new, generative AI feature makes it easier for legal professionals to comply with client terms.

Speaker Change: By giving them immediate answers to their questions about contractual terms, write in Microsoft Teams.

Serena Clay: This significantly reduces the time and research needed to comply with outside council guidelines.

Serena Clay: and the firm's client and engagement letter commitments.

and it's another example of how we reach professionals in the Microsoft apps they're already using every day, easing adoption and furthering their success.

Serena Clay: As Carly Newmrick, Risk Council at Frederickson and Byron said.

Carly Newmrick: Our staff no longer have to go into intact terms and search for the right document or contact me with a question.

Serena Clay: Now, they're able to pull up Microsoft Teams and ask it terms questions.

Serena Clay: Such as, what are my payment terms with this client?

Serena Clay: and it happens to provide the answer.

Serena Clay: It's a much more streamlined process.

Serena Clay: here.

Serena Clay: We are excited to share that in-tap walls for Copilot.

Serena Clay: is gaining traction in the market as more firms look to apply trusted AI.

Serena Clay: The solution helps professionals use Microsoft Co-Pilot AI in a secure, compliant manner.

Serena Clay: While avoiding revealing protected information.

Serena Clay: We continue to see opportunity to expand our compliance footprint and help firms benefit from AI while adhering to their regulatory, ethical, and client commitments.

Serena Clay: As Torri Corrio, the application manager from LawFirm, Nelson Mullins told us.

Speaker Change: Because we use in tap walls.

Speaker Change: 2 and 4 success rules across our network synaptications.

Torri Corrio: I can confidently point Microsoft's co-pilot wherever we want. And co-pilot will pull only from matters that the user has permission to access.

Torri Corrio: These new AI features and capabilities are great examples.

Torri Corrio: of how our co-innovation with Microsoft is helping to propel our applied vertical AI strategy forward.

Torri Corrio: Speaking of Microsoft, I'll now turn to partnerships.

Torri Corrio: and share how we are expanding our robust partner ecosystem to drive growth.

Torri Corrio: Microsoft continues to be one of our most prominent partners.

Speaker Change: We're proud to have launched fiscal 25 with renewed top tier and global ISC partner status with Microsoft.

Speaker Change: Based on strong joint, go to market activity and co-cell success.

Speaker Change: We continue to grow the number and volume of transactions through the Azure Marketplace in Q1, applying to clients in all our verticals and for both land and expand deals.

Speaker Change: For example, this quarter, one of the world's largest multinational investment banks.

Speaker Change: Significantly increased its number of deal-clubs seeds for its capital formation team.

Speaker Change: as it made the use of deal cloud mandatory for specific roles and approval processes.

Speaker Change: Next, Castle's Brock and Blackwell.

Speaker Change: One of the largest business law firms in Canada, purchased in-tapped conflicts from the Azure Marketplace, to manage its conflicts clearance process, refutational risk, and adopt a solution that can scale with the firm's rapid growth.

Speaker Change: Additionally, our updated partner program launched a year ago continues to attract new partners in our target markets.

Speaker Change: We now have 135 data, technology, and services partners in the program.

Speaker Change: We're also excited about another six partners who joined the program last quarter.

Speaker Change: 5 of which are deal cloud integration partners that bring additional data sets to our already robust platform.

Speaker Change: I'll turn now to Q1, wins and cloud migrations and share some examples of how we're continuing to grow our client base, expand with existing clients, migrate clients to the cloud and gain traction in new markets.

Speaker Change: First, I'm pleased to share that we're continuing to grow through the addition of new clients, including

Speaker Change: Creek PA.

Speaker Change: Private Equity Bath Network of Accounting and Professional Services First.

Speaker Change: which selected Inter-Conflicts to centralize, systematize and simplify the conflict's clearance process for its member firms.

Speaker Change: Next, a nationally recognized restructure and financial advisory firm.

Speaker Change: which chose Inter-Conflicts and Inter-Intake to support its growth through acquisition.

Speaker Change: We chose these as illustrations of the growing need for compliance checking by accounting firms.

Speaker Change: has grown through private equity investment and acquisitions increase in that vertical.

Speaker Change: We see this trend as a significant growth area for Inter.

Speaker Change: and as we continue to win new clients across all our verticals, both domestically and internationally.

Speaker Change: Here are some examples.

Speaker Change: In the US, a top-ranked venture capital firm focused on revolutionary technologies.

Speaker Change: Chose Deal Cloud for its robust CRM capabilities for investor tracking, investor reporting, and pipeline management.

Speaker Change: Next, internationally.

Speaker Change: TGS Baltic.

Speaker Change: A leading commercial law firm operating across the Baltic States shows deal clouds to improve its client account program structure and effectiveness drive cross selling and improve identification of new sales opportunities.

Speaker Change: Additionally.

Speaker Change: Cross-selling and up-selling success in our existing accounts.

Speaker Change: Continued to drive strong net revenue retention.

Speaker Change: A few notable examples include National CPA and Consulting Farm for this Maysars.

Speaker Change: which uses intapapoint compliance to manage personal independence.

Speaker Change: and recently expanded its relationship with Intab.

Speaker Change: The firm added deal cloud.

Speaker Change: To now support its capital advisors team.

Speaker Change: by leveraging AI to manage complex deals more efficiently.

Speaker Change: Next, a multinational law firm.

Speaker Change: and longtime user of our risk and compliance solutions shows deal cloud to support its private equity team.

Speaker Change: Next, a fast growing business advisory, instrument, and investment banking firm, increased its number of field cloud seats by almost 400%.

Speaker Change: and moving on to cloud migrations. We had steady progress here as well this quarter, including Amla to 100 firm Honigman.

Speaker Change: which shows to migrate its four-in-tapped compliance solutions to the cloud, so it can gain access to the latest applied AI and streamline its internal processes.

Speaker Change: Finally, a New York-based Amla 100 firm.

Speaker Change: Chose to migrate its instance of the entire time to the cloud, supporting its goals of achieving more compliant, time and billing, more efficient and profitable matter management and increased client satisfaction.

Speaker Change: In conclusion, we're proud of our strong performance in the first quarter and we're optimistic about our continued growth opportunities.

Speaker Change: As our Q1 performance has shown, we continue to grow by adding new capabilities to our platform and increasing our global and enterprise Go to Market Reach.

Speaker Change: We see continued opportunity, both to add new clients across the broad team and to deliver greater value by expanding within our existing client base.

Speaker Change: We're serving a durable and market with our subscription revenue model, industry-specific cloud platform, and apply AI and compliance capabilities.

Speaker Change: We have a great growth opportunity to drive AI, cloud adoption and modernization across all the industry's research.

Speaker Change: As always, I'd like to thank our clients, our partners, our investors, our board, and our global impact team for their teamwork and dedication. Thank you all very much.

Speaker Change: Over to you.

Speaker Change: Thanks John, and thank you everyone for joining us today. I'm three three port strong first quarter performance driven by solid, SaaS revenue growth, an expanding client base, and enhanced operational efficiency.

Speaker Change: Together, these achievements positioned us to extend our leadership as we pursue an exciting market opportunity in fiscal Q2-2025 and beyond.

Speaker Change: We begin our fourth fiscal year as a public company. We announce a strategic shift in February focusing on our cloud business over on-premise and service offerings.

Speaker Change: Accordingly, our disclosures will now highlight SAS, revenue and cloud metrics.

Speaker Change: Starting this quarter, our in-constatement separates SaaS revenue from on-premise support to better highlight the growth trajectory and our cloud business.

Speaker Change: for fiscal Q1, SAS revenue was 76.9 million, a 30% year of a year, driven by new client acquisitions, contractive expansions, and the migration of on-premise products to the cloud.

Speaker Change: As a fiscal Q1, 92% of our clients have adopted at least one cloud module.

Speaker Change: As a reminder, our previous disclosure of subscription license included the upfront portion of our on-premise contracts. We now report this as license revenue, which also includes the on-premise support portion that previously appeared in SAS and support.

Speaker Change: License Revenue was 28.5 million in fiscal Q1 up to percent year-to-year. We're pricing, crease, and contract expansions were off-site by migrations to the cloud.

Speaker Change: Through help bridge the previous fast and support taxonomy revenue total in FQ1, 91.5 million, up to 25% year-to-year, driven by sales to new clients and expansion of existing clients through cross-selling and upselling initiatives.

Speaker Change: Professional Services Revenue totaled 13.4 million down 8% year of year reflecting our strategy to deemphasize services revenue.

Speaker Change: This approach aligns with our focus on deferring more of these functions to our partners, allowing us to concentrate on overall client satisfaction.

Speaker Change: Total revenue was 118.8 million, up 17% year over year, driven primarily by sales of our cloud solutions.

Speaker Change: Our International Business Continues to present growth opportunities for expansion and greater platform utilization beyond the U.S.

Speaker Change: Revenue from our international operations remains strong.

Speaker Change: comprising approximately 34% of total revenue in fiscal Q1, up from 31% a year ago.

Speaker Change: As discussed in recent quarters, we continue to invest in and expand our alliances and partner ecosystems around NTAP.

Speaker Change: Since elevating our partner program a year ago, we have attracted new partners across our target markets, now totaling 135 data, technology, and service partners, a 20% year-over-year increase.

Speaker Change: With additional accreditations and enablement, these investments enhance our capabilities in deal generation, technology, data, and implementation, and we remain optimistic about their ongoing impact.

Speaker Change: NTAP's new vertical SAS AI offerings ASSIST and WALS for Copilot

Speaker Change: contributed once again this quarter. While it is still early in our product rollout, pipeline development, and client provisioning, we are excited about the growth prospects ahead in fiscal 2025 and beyond.

Speaker Change: Q1 non-GAAP gross margin was 76.3 percent, up from 71.8 percent in the prior year period. This margin improvement was driven by a services mix and cloud optimization efforts.

Speaker Change: Non-GAAP operating expenses totaled $75.6 million, compared to $66.5 million in the prior year period, reflecting our continued investment in product-led growth.

Speaker Change: As we continue to focus on our operational efficiency, non-GAF operating income was $15.1 million as compared to $6.4 million in the prior year period.

Speaker Change: Non-GAAP diluted EPS was $0.21 in the first quarter of fiscal 2025, as compared to $0.06 in the prior year period.

Speaker Change: Free cash flow, which is defined as our cash flow from operations less capital expenditures, was $24.1 million for the first quarter, or 20% of total revenue.

Speaker Change: We exited the quarter with 253.8 million of cash and cash equivalents.

Speaker Change: Turning to our key metrics, cloud ARR was up 27% year-over-year and total ARR was up 19% year-over-year.

Speaker Change: Total remaining performance obligations were $549.4 million, up 32% year-over-year.

Speaker Change: Overall, we remain committed to executing our land and expand model, ending the quarter with over 2,600 clients. Of these, 707 had an annual recurring revenue of at least $100,000, up from $626,000 in the previous year.

Speaker Change: Our cloud net revenue retention rate highlights our ability to retain and steadily grow business with existing cloud clients, reaching 119% in Q1 FY25.

Speaker Change: Now turning to our outlook for the second quarter of fiscal 2025, we expect Fast revenue of between 79.5 and 80.5 million.

Speaker Change: As these are newly provided revenue outlook metrics, we are also providing the implied year-to-year growth outlook of between 26% and 28%.

Speaker Change: total revenue in the range of $120.5 and $121.5 million.

Speaker Change: Non-GAAP operating income in the range of $14 and $15 million.

Speaker Change: and non-GAAP ETS results of $0.15 to $0.17 using a diluted share count weighted for the quarter of approximately 83 million common shares outstanding.

Speaker Change: For the full year fiscal 2025, we expect Fast revenue between 327.6 and 331.6 million.

Speaker Change: As these are newly provided revenue outlook metrics, we also are providing the implied year-over-year growth outlook of between 26% and 28%.

Speaker Change: total revenue in the range of $495.5 and $499.5 million.

Speaker Change: We also expect non-GAAP operating income in a range of $61.5 and $65.5 million.

Speaker Change: and non-GAAP EPS in the range of 73 cents to 77 cents using a diluted share count weighted for fiscal year 25 of approximately 84 million common shares outstanding.

Speaker Change: Thank you. And I'll now turn the call back to the operator.

Speaker Change: Thank you. As a reminder, to ask a question please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question please press star 1 1 again. Please stand by while we compile the Q&A roster.

Speaker Change: And our first question comes from Steve Enders of Citi. Your line is open.

Steve Enders: Okay, great. Thanks for taking the questions here. I guess maybe just to start, it would be helpful to, I guess, get a...

Steve Enders: Updating maybe what you're seeing out there in the deal environment and, you know, if there's been any kind of change in some of the, you know, macro or how you're thinking about financial services side in particular, given some of the softness that you saw there in the past year or so.

Speaker Change: Thanks, Steve.

Speaker Change: No, we have not seen a change in the deal environment.

Speaker Change: Demand has been strong. Our pipeline is quite strong.

Speaker Change: We do have the experience of lumpiness in the large deals, as we've talked about from time to time, but we've not seen anything

Speaker Change: related to macro, even in financial services. So that's been great.

Speaker Change: Okay, I guess maybe just to ask a little bit differently, I think we're kind of getting the question from investors just on, you know, some of the and dynamics here and I guess it'd be good to kind of get your view on maybe how you kind of view.

Speaker Change: The year shaping up from a timing perspective, and if this is maybe kind of in line with your expectations, or just how you would kind of characterize how this year might take place versus what we might have seen in the past.

Speaker Change: door. So

Speaker Change: We had done some investment over the previous years to really develop our enterprise-grade features because we were getting interest from larger and larger accounts.

Speaker Change: and we had good success with that model in 24. So at the start of 25 here, we moved more of our sellers into that same model as strategics, we're calling it enterprise.

Speaker Change: And we've given more of the named accounts to both a New Logo Pursuit team and a

Speaker Change: existing account, account management, cross-sell, up-sell team to take advantage of all the new clients that we brought on board in that tier. So, Q1 is definitely the time that we move the accounts to the sales team that has had good success there. We also have the proof point from.

Speaker Change: last year of how well that went. And there's, as we talked about it yesterday, 70% of our SAM is in our top 2,000 accounts. So, we want to make sure that we put the right resource allocation to set ourselves up for the billion dollars and more. And that's going well, but we did see some

Speaker Change: pause in the closing of those large accounts. We did not see anything like that in the mid-market accounts, which gives us good evidence about the macro. Also, the commentary has been quite strong and the pipeline is the strongest it's ever been.

Speaker Change: Okay, great. That's that's helpful context. Thanks for thanks for taking the questions here.

Speaker Change: Our next question comes from Kevin McVeigh of UBS. Your line is open.

Kevin Mcveigh: I don't know if you can hear me.

Speaker Change: David Trone, John Hall, David Trone, John Hall, David Trone, John Hall, David Trone,

John Hall: Kevin, this is John, I apologize. The beginning of your question was.

Kevin Mcveigh: How should we think about the alliances and does that enhance over time or what percentage of revenue that is today and how can that scale over time?

Speaker Change: The Microsoft partnership is the largest one, obviously. We've had a very good amount of progress throughout Fiscal 24 and continued in the first quarter of Fiscal 25 with increased co-marketing and co-selling activities. Obviously, our product announcements.

Speaker Change: around InTapAssist and Walls4Copilot have gone very well. The Azure relationship where the firms can spend part of their minimum Azure spend, their Mac agreement with us because our entire portfolio is available now on the Azure marketplace and the Microsoft sales reps receive.

Speaker Change: Commission and Quota Relief when they sell intact products so all the

Speaker Change: components are aligned for us to be co-selling. We also re-qualified for Microsoft's top tier status and global IFC status, which we're very excited about.

Speaker Change: And we've got good collaboration in the field. We even have some very important large account lead sharing going back and forth. And we're co-selling in several important places. So I'm

Speaker Change: Excited about the relationship with Microsoft. It takes a little while.

Speaker Change: to get that going, but a lot of good progress. And then in addition to Microsoft,

Speaker Change: We have very strong partnership growth. I gave some stats in the prepared remarks, but a lot of data partners coming on board, a lot of services partners helping to expand our reach in different parts of the market and internationally. The partnership program is really developing well.

Speaker Change: And then just to follow up on that, obviously you're seeing a lot of outsized success on the margin in terms of literally that the margin.

Speaker Change: upside, you know, particularly relative to how you're guiding. Any thoughts as to what's driving that number one and then, you know, philosophically, does that continue to flow to the bottom line or do you use that as an opportunity to, you know, reinvest and capture more of the Gen-AI opportunity?

Speaker Change: One moment for our next question.

Speaker Change: I'm sorry, Kevin, just to answer your question on margin. Dave, do you want to take that one? Yes, I will. Kevin, great question. Thank you. We'll continue to work on our productivity and efficiency, not only on the gross margin.

Speaker Change: As we continue to scale, we still have some opportunity there. We've been working, and I want to thank publicly our services team, continue to bring that to not only neutral, but beyond that.

Speaker Change: As well as there's still scale opportunity within our cloud operations altogether. And then when you go below the line, you know, clearly we're going to continue to invest in the company. We've continued to invest.

Speaker Change: So, this hasn't been an absolute reduction, but where you have seen scale has been both in our sales and marketing productivity, as well as in our DNA.

Speaker Change: And so, when you think about how we continue to invest and stay ahead of the front, specifically in our product-led growth organization, that's where you'll continue to see more of an orientation within our product and engineering teams, which gets to your question of Gen AI and other narratives on that.

Speaker Change: Very excited about our roadmap and what that will continue to entail, as well as where that leads us in the back half of this fiscal year. Thanks, Kevin.

Speaker Change: Thank you. Our next question comes from Alexei Gogolev of J.P. Morgan. Your line is open.

Alexei Gogolev: Thank you.

Alexei Gogolev: Thank you. Hello, everyone.

Alexei Gogolev: John, David, may I confirm the implied guidance for year-of-tax revenues in the back half of fiscal 2025?

Alexei Gogolev: It seems like you're suggesting there might be a slightly lower share of those revenues in the second half of the year versus 2Q, maybe some out-local color, why that might be.

Alexei Gogolev: Well, you're disclosing pure SAF now, and in 2Q you're guiding 67%, or thereabouts, almost 67, and for full year, closer to 66.

Speaker Change: We're just trying to understand if you are expecting some change in the revenue mix or this is just a conservative assumption.

Speaker Change: No, we're being prudent on the overall metrics.

Speaker Change: I think what you'll see as we uptick both SAS as well as the total revenue in total, we do have some shift evolutions as we continue to balance license as we talked about and putting more

Speaker Change: in the cloud, which, you know, is a time and effort and an evolution, as well as you get an associated pickup when that happens that we talked about.

Speaker Change: So it's not a matter of if, it's just when. So that's one balancing impact. And then the other balancing impact.

Speaker Change: is also how we've continued to articulate the services portion.

Speaker Change: and that we wanna not only focus more on our customer satisfaction.

Speaker Change: but then also continue to grow our partner economy. And so that's been a balancing act as we think about our respective guide, all of which continue to be very prudent in our eyes, and so we can continue to deliver the expected results.

Speaker Change: Great. Thank you, David. And can you remind us what your outlook is on mid-year customer additions versus upsell and cross-sell, the ratio that you anticipate going forward?

David Trone: Yeah, we don't guide specifically on that per se, but I can tell you historically you've seen about 20, anywhere from, I'll call it 20 to 40% of net new logo.

David Trone: As far as ACB dollars and then they have responded being the expand motion

David Trone: So we do, you know, we've got the wonderful opportunity not only to deliver a billion dollars and beyond just on our net new logos.

Speaker Change: But then also, as you know, as we continue to cross sell and upsell, we have a billion dollar opportunity in front of us just on that motion as well. But for this year and our time in place of how we're thinking about the back half of fiscal 2025, it's going to fall into those ranges.

Speaker Change: Great. Thank you, David.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Koji Ikeda of Bank of America. Your line is open.

Koji Ikeda: Yeah, hey guys, thanks for thanks so much for taking the question

Koji Ikeda: I had a question on cloud ARR, you know, it just grew 27.5%.

Koji Ikeda: Really, really strong performance.

Koji Ikeda: all things considered, but...

Koji Ikeda: I do look at it and it has been decelerating and I listen to the commentary.

Koji Ikeda: you know, on the pipeline, which sounds really, really strong.

Koji Ikeda: But then I also listened to, you know, it sounds like there might be a little bit of elongation out there, too. So I guess the question is, you know, what is the potential for this cloud ARR growth metric to accelerate over the next several quarters from here, and what would be the drivers for that?

Speaker Change: Thanks, Koji. So I'll give some...

Koji Ikeda: points in the day if you can.

Speaker Change: anything you like. But the core of it is we sell all cloud now.

Speaker Change: As you know, we're steadily moving up the percentage of the overall business in the cloud and we report that.

Speaker Change: So all the new additions add to the cloud growth. We also have more new logos that we acquire each quarter, and so the cross-sell and up-sell that we do to existing clients is all cloud.

Speaker Change: And so the fundamental growth of the business is in that.

Speaker Change: cloud AR number. There's also a movement to migrate the existing remaining components of our client base to the cloud and we talked about that a little bit.

Speaker Change: I think as far as

Speaker Change: The deals go, as we move up to the larger firms, and you saw some very large numbers in Q4 when we reported the number of million dollar

Speaker Change: ARR clients.

Speaker Change: Those firms are not only large opportunities when we land them, but they're large opportunities when we expand as well.

Speaker Change: So as we allocated resources to pursue the 2,000 named accounts at the top of the market more and more, which we made a move here in 25 to do more of, I think you're going to see an exciting opportunity for us to bring in larger deals. They do

Speaker Change: tend to be lumpier, as we've talked about, from quarter to quarter. At the same time, when they come in, we can have some really exciting results. So, those are the major components.

Speaker Change: Got it. Thanks for that, John. And maybe just a quick follow-up here. Last quarter...

Speaker Change: You gave a percentage of net new ACV coming from AI products at 4%. I know there's some qualitative or, yeah, qualitative commentary in the prepared remarks, but I was wondering if we could get that number, an updated number. You know, what was that this quarter versus last quarter, if you could, please. Thank you.

Speaker Change: Hey Koji, it's Dave. Yeah, we're just going to provide that more so on an annual basis. We know we kind of brought it out last quarter kind of as a rolling thunder just to give some insight and thought, leadership in and around how we're monetizing that. That continues.

Speaker Change: and we'll continue to provide periodic updates, but not one of a quarterly metric.

Koji Ikeda: Got it. Thanks guys. Thanks for taking the questions.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Alex Sklar of Raymond James. Your line is open.

Alex Sklar: John or Dave, can you just elaborate a bit more on the changes in the sales team and go-to-market that you spoke to? How much of the team was impacted? When did you make those changes?

Speaker Change: And I'm curious, have you seen any market improvements in terms of productivity to that large account team in October that gave you some visibility to take up the full year guide above the Q1 beat? Thanks.

John Hall: Thanks, Alex.

Speaker Change: So we tested out the model in 24. At the very top of the market, we saw some excellent results.

Speaker Change: We moved a significant portion of the team at the beginning of fiscal 25 when we gave new territories and and comp plans for the year. I'm very appreciative of the team's excellent work. We have long standing team members who are very experienced.

Speaker Change: in this industry, and there was a lot of collaboration to help move accounts to folks in each area. We also

Speaker Change: followed through on what we discussed at Investor Day, which was to put the entire team into a new accounts, existing accounts model.

Speaker Change: because there's a significant number of new logos across the board for us to go continue to focus on and when we can get to a billion dollars or more just doing that.

Speaker Change: But we also have a billion dollars or more from cross-sell and up-sell. So we wanted to make sure we had the right account management investment to drive the whole portfolio through the business.

Speaker Change: The number of million dollar accounts that we showed in Q4 came both from new logo acquisition and cross-sell into those large accounts, and there's a huge opportunity for us.

Speaker Change: to meet the needs of the underserved market this way. So I think the resource allocation choice that we moved on here was well proven. I think

Speaker Change: The opportunity going forward as people now have had a chance to meet everybody and talk to their new accounts and get going with

Speaker Change: pipeline advancement, pipeline development, and advancing the deals that were handed over to them are in good shape. And so we're excited about the rest of the year.

Speaker Change: Okay, thank you for that color. And then maybe we'll follow up for you, Dave, just in terms of the drivers and cloud NRR this quarter and any changes between end market growth or expansion by solution type. And then, and then separately, are you going to, can you disclose the total NRR number for this quarter? Thanks.

Speaker Change: Any key drivers? No, I mean, it was continued success. The teams that continue to garner the expanse, right?

Speaker Change: you know, they do a wonderful job doing cross-sell and up-sell and continue to monetize those opportunities, which, you know, even going back to our analyst day on February 22nd, you've seen the cohorts of each of those respective years and how big they can be. So that's just a continuation of that.

Speaker Change: are 10Q. It was approximately 114% within the suspected range of the 113 to 117, but I really want to, you know...

Speaker Change: transition everyone over to primary cloud metrics because those are going to be the ones that we're focused on and obviously

Speaker Change: that we're garnering more and more attention to, as well as support and investment thereof, specifically on the expand motion, because when you go from on-prem to off-prem, it's gonna change some of those cohorts as well, right? And so I just don't wanna get into a reconciliation of how that attribution is going forward. So anyway, there you go.

Speaker Change: All right, great. Thank you both for the color.

Speaker Change: Thank you.

Speaker Change: Thank you. Bye.

Speaker Change: Our next question comes from Saket Kalia of Barclays. Your line is open.

Saket Kalia: Okay, great. Hey guys, thanks for taking my questions here.

Speaker Change: Thank you. Bye.

Saket Kalia: John, maybe for you, a lot of great examples in

Saket Kalia: the prepared remarks around

Speaker Change: new and existing customers and around Gen AI. Maybe a bit of a broader question.

Speaker Change: Can you just speak to sort of...

Speaker Change: where you think we are in the journey?

Speaker Change: of converting those on-prem customers to SaaS. I mean, you know, there are a lot of things that you can do to entice them.

Speaker Change: you know, to move over. Where are we sort of in that journey and what do you think is going to change here in Fiscal 25?

Speaker Change: around that. Does that make sense?

Speaker Change: Thank you, Socrates.

Speaker Change: Um,

Speaker Change: We talked at Investor Day about the fact that we historically had been at the client's option, but starting in fiscal 25, we were looking to be a little bit more encouraging to move firms along. And we're definitely doing that. We're doing that in a few ways.

Speaker Change: The first, fundamentally, is you can only get the generative AI capabilities and, in fact, even more, the AI capabilities more broadly in the cloud.

Speaker Change: And there's a lot of pressure coming from the professionals across these firms to create a more modern experience.

Speaker Change: for them and for the way that they work inside their organizations.

Speaker Change: that they want to take advantage of all these new capabilities. So there's a natural pull.

Speaker Change: that was always there, but I think AI obviously gives a lot of excitement to people to pull that in. Secondly, there's a real demand from the firms to move.

Speaker Change: into the cloud because of scalability and reliability and security. Firms have just come to the correct conclusion that they don't have the IT spend

Speaker Change: scale to create the right kind of security and scalability environment that they could get working with us and partnering with Microsoft around Azure that the firms basically just need.

Speaker Change: And so there's a lot of pressure to the firms to get off their on-prem remaining environments themselves, and we're benefiting from that.

Speaker Change: and then

Speaker Change: You know, I think to your point about what we're doing specifically we absolutely have a program now

Speaker Change: in fiscal 25 that we have launched to go through each of the remaining firms that have some on-prem component.

Speaker Change: and help them.

Speaker Change: in a variety of ways to get over the hurdle and move to the cloud platform. Because as Dave showed at Investor Day in some of his client account expansion slides.

Speaker Change: Boy, is it worth it to get those firms onto the cloud because their expansion rate really picks up. So we're making judicious

Speaker Change: Prudent choices in each area to help every firm, through a variety of techniques, make the case to get there. And I'm excited about how positively we're received. There is not a remaining firm out there that's making an argument that they should be on the cloud. I'm sorry, be on-prem. They all know they need to get to the cloud. It's just a practical question. How do they line up their IT schedule to do that?

Speaker Change: Got it. Got it. That makes a lot of sense.

Speaker Change: Dave, maybe for you, maybe to the earlier point just around net new ARR being lumpy, you know, total net new ARR was down year over year this quarter, of course.

Speaker Change: But maybe the question is, as you sort of look at the strength that Intap had in Q4, is there anything that, just looking at the post-mortem, we need to keep in mind when thinking about timing, in terms of how deals sort of fall in one quarter versus the other?

Speaker Change: Not necessarily from a pull forward or push out or anything like that or even a nominal seasonality.

Speaker Change: I do think, as we think about really coming into this new fiscal year, and as John alluded to, and getting the teams aligned and organized, and the sales kickoff, and

Speaker Change: You know, seeing all the success from previous years, you know, where's the opportunity of kind of how we articulated how we're going to get to a billion dollars and the named accounts and mid market and so on and so on. I think for us.

Speaker Change: As we think about the opportunity coming into this quarter and others, we've been spending a lot more time on kind of our own hype gen, hype analytics, pre-shopping, shopping, where those cohorts

Speaker Change: um, land.

Speaker Change: and to John's earlier point

Speaker Change: We haven't seen a strongest play.

Speaker Change: Maybe in the history of kind of our time. And so, you know, we're excited about those opportunities and it's for us to go and monetize and convert those over. And so we like how Q2 started to play out as well as not only here, but also into the back half of the fiscal year.

Speaker Change: Very helpful. Thanks, guys.

Speaker Change: Thank you.

Speaker Change: Thank you. Bye.

Speaker Change: Our next question comes from Parker Lane at CFEL. Your line is open.

Parker Lane: Hey guys, thanks for taking the question. You talked a lot about the development and go-to-market around some of the generative AI opportunity, but I was wondering if you could touch on any particular learnings you've had in discussions with their customers around the pricing and packaging of those solutions. Has there been any sort of changes or excitement around the way you guys are pricing? What are your early impressions of how it's being received?

Parker Lane: Thanks, Parker

Speaker Change: You know, I think.

Speaker Change: We, as everybody has, have benefited from the whole Gen AI buzz over the past

Speaker Change: year or two on one hand. So the world has done its work to educate the market, even down to the professional users, that there's the potential for something like this out there. I think we're moving into a phase of the Gen AI generation where the general promise is hitting the real world.

Speaker Change: and our strategy, which we have

Speaker Change: argued from the beginning is that these generational shifts in the technology

Speaker Change: They happen in specific applications. It's the old killer app idea. What is it that's going to pull in these...

Speaker Change: generations of capabilities with very specific applications that really understand the end user. And I think the vertically oriented companies, and obviously, we with this particular end market that's very susceptible to the potential.

Speaker Change: The whole trick is how do you build very specific applications early on that the user can get an immediate benefit?

Speaker Change: Coverage and sourcing and origination of new opportunities.

Speaker Change: cross-selling and looking for opportunities inside the firm's client base.

Speaker Change: I was very excited about this Intap Assist for Terms launch, which brings the whole concept into our compliance.

Speaker Change: value proposition to help people just talk conversationally through Teams to InTap Assist, and it answers questions about their promises to clients across the firm or some promise that some other professional that's one of their partners made somewhere else in the world that they need to know about when working with the client. So those specific applications are really winning.

Speaker Change: with the individual users and with the firm's leadership.

Speaker Change: And from a pricing and packaging standpoint, we've seen good success in being able to defend pricing, even in this era when some of them were generic.

Speaker Change: are getting a little bit of pressure, we've got great value because we've been able to isolate down to some of these specific value propositions.

Speaker Change: Obviously, over time, InTap Assist will grow, and we'll have more and more of those. It'll be a richer and richer platform, but I think the real trick from a marketing and go-to-market standpoint is really to nail those use cases, and the team's done a fantastic job. I'm very grateful to the work that they've done and to the clients for taking it up.

Speaker Change: Great feedback. Thanks, John.

Speaker Change: Our next question comes from Terry Tillman of Truist Securities. Your line is open.

Terry Tillman: Yeah, thanks for taking my question. I'm not going to ask about ARR. I'm going to focus on KPMG. I think last quarter you all had...

Terry Tillman: A pretty important win, I think, in terms of their across their global network of businesses. So maybe after that deal being signed, what can you say about your collaboration product in general? Has that been a linchpin to win more business? And then secondly, I think that deal was

Terry Tillman: concluded with an Azure Marketplace situation. And so like, what is that doing in terms of reducing friction and getting deals done in terms of the leveraging credits, et cetera? Thank you. Thanks, Terry.

Speaker Change: So you're right. We were very excited about that announcement. It gives us an opportunity to go across the KPMG network in that case, and there are analogous opportunities for us across the whole market. Historically, this end market, these professional and financial services firms, have been underserved.

Terry Tillman: by a vertical player like us, and we're bringing a purpose-built platform in the cloud with generative AI that they just haven't had access to before. So we're excited about that. With regard to collaboration specifically, this is the product that is most closely

Terry Tillman: enabled through the Microsoft partnership because we help firms take advantage of Microsoft Teams and SharePoint and Microsoft 365, Office 365, in a way that works in the

Terry Tillman: professional firms where it really understands the deals and matters and engagements and projects that the firms are working on, and it also understands the compliance requirements that those teams have as they work together. So we think it's a great fit.

Terry Tillman: KPMG is one example, but we have quite a few new firms that have come on taking up

Terry Tillman: our collaboration solution in a way that gives us a lot of confidence about the future there. And KPMG is an interesting example in accounting. We've had a lot of uptake.

Terry Tillman: in the accounting market, I think because they have been so underserved historically. We're seeing more uptake in the other markets, but accounting has really

Speaker Change: gotten excited about it. So we're super happy about that. I think with regard to the to the Azure Marketplace question, it has a couple of benefits for reducing friction. One is the firms have already signed a contract with Microsoft that they're going to spend X dollars this year on Microsoft stuff.

Speaker Change: And so once they've done that, if you can go in and show them capabilities like collaboration that fit their

Speaker Change: needs for their IT priorities and they've already promised to spend the money, why not spend it with you? And I think that's the simplest.

Speaker Change: argument for the Azure marketplaces, those MAC agreements.

Terry Tillman: But I also think that firms are trying to simplify their vendor relationships. They want to work with people that are at scale that can supply across the portfolio. And so the Intep-Microsoft partnership really helps them simplify their environment. And the fact that we're helping them get the most value out of the existing Microsoft spend on Office 365 and Teams really helps them as well.

Speaker Change: So the field loves it. When we engage now, this is one of the first questions that the team asks the prospect is, do you have a relationship here? Do you have a MAC agreement? Can we work with you on the Azure Marketplace? And the response is generally very positive because people are getting used to buying it that way.

Speaker Change: Thanks for the call, I appreciate that.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Arvind Ramnani of Piper Sandler. Your line is open.

Arvind Ramnani: Hi, thanks for taking my question. Yeah, I wanted to ask about your kind of partnership with with Microsoft, which obviously has been, you know, kind of a really important part of the equation in terms of your kind of AI strategy.

Speaker Change: The question, one is, you know,

Speaker Change: Are you kind of keeping your options kind of flexible? I mean clearly Microsoft is still sort of leading the way, but are you keeping your options open as AI technology continues to evolve and change and there may be like a new...

Speaker Change: kind of leader in the space.

Speaker Change: And the second thing is, you know, from a cost perspective.

Speaker Change: Is there any risk that Microsoft is going to take its leadership position to

Speaker Change: kind of, you know, increase, increase it's, it's kind of, you know, kind of the cost it's kind of pushing with its partners.

Speaker Change: Thanks, Arvind. On the first point...

Speaker Change: As we've talked about on other calls today and yesterday, we do have...

Speaker Change: More than one.

Speaker Change: AI technology capability in the company. As we shared with you all, we have been developing AI-based technology for this end market with specialized vertical purpose-built applications for 10 or 15 years. We had some of the first technology in the market.

Speaker Change: 10 or 12 years ago with our Time product that helped the lawyers at the time figure out what they should bill for. And over the years, we have grown our AI team, and generative AI is the most recent example, and now it's kind of news everywhere. But we've been in that.

Speaker Change: line of technology for quite a while because there's such an opportunity in this market in particular to use AI techniques and AI technologies to help firms make sense of structured and unstructured information in a more

Speaker Change: productive way. So we're big believers in it. And yes, we do have other technologies working inside the platform. So we're not

Speaker Change: exclusive with Microsoft on AI technology. That being said, this end market is also a very Microsoft-oriented end market.

Speaker Change: The professional firms, the financial firms, particularly in their IT departments, but more generally, spend all their time in the Microsoft environment. So the partnership is very important. It's also very strategic.

Speaker Change: for us to make sure we can say yes.

Speaker Change: to these firms and be aligned with their IT strategy. And I think that this actually gives us a real advantage versus technology companies that don't have the same alignment with Microsoft's plan.

Speaker Change: I think your question about cost is kind of the flip side of that. There are all kinds of...

Speaker Change: things progressing in the open source world and elsewhere around AI technologies. And Microsoft certainly has a tremendous position, but there's also all kinds of options out there. So I think we're going to benefit from that as will the whole world and industry on this idea of how do you get the most effective AI at the right

Speaker Change: Co-founder of Catellation. Thanks for joining us. I've been joined by my colleague, earlier today, Joe Mods. Our second guest is going to talk to us about perceiving your content across different platforms and how you can cap that insight in time for hosting webmasters. First up is Jabl Raai, owner and CEO of Catellation Buddhism Airline. Now, asinga jabl ilty is a sustainable company that is Now, asinga jabl is

Speaker Change: That's perfect. Thank you so much.

Jabl Raai: Thank you.

Jabl Raai: Thank you.

Speaker Change: Our next question comes from Brian Schwartz of Oppenheimer. Your line is open.

Brian Schwartz: Yeah, hi, thanks for taking my questions this afternoon. Don, I was hoping to just follow up on your commentary that the large deal activity was, maybe it was less robust than what the business had seen the last couple quarters.

Brian Schwartz: I'm just curious, you know, because the pipeline commentary is very strong. Do you think that that's just seasonality? Or is it a macro or maybe election related? Curious to get what your take is on that.

Speaker Change: Thanks, Brian.

Speaker Change: I think because we've seen

Brian Schwartz: such consistent performance in our mid-market business, the main factor is the realignment that we did at the beginning of fiscal 25 to put more resources against the 2000 enterprise accounts. I think that's the main driver. Whether the election has something to do with the market generally, we probably would have seen in the mid-market if it did.

Speaker Change: You know, who knows to that question, but I think generally speaking

Speaker Change: We started the year and did the appropriate assignment of resources to the large accounts with a good proof point from last year about what that could do for us. And I think the opportunity scale is

Jabl Raai: Significant.

Jabl Raai: And so we want to build the company to a billion dollars. I want to make sure we've got the team set up to do it. And we've got sales professionals who have been through this before and all they got to do is go meet the firms and get their pipeline.

Jabl Raai: advanced and that's what we saw in the first quarter. So I'm comfortable that we've put the right resources against a very large opportunity here and we're set up to go.

Speaker Change: Thank you for that call, John. Appreciate it. David, maybe just one with you. In terms of maybe the assumptions that's underlining your growth guidance, I'm just curious how you're thinking about the capital markets activity. Are you expecting any change?

Jabl Raai: And maybe the end market demand for that segment from

Jabl Raai: Maybe what you were thinking three months ago, given how interest rates have changed since you last gave guidance. Thanks. No, thanks, Brian.

Jabl Raai: For us, our end markets have been relatively healthy that we've commented on. We had one aberration that we commented approximately a year ago when we saw some headwinds, specifically with

Jabl Raai: One, you know, specific group within overall financial services. But if you think about.

Jabl Raai: in broad base, everything's been really healthy, quite candidly, and so

Jabl Raai: You know, this has been about us and able to execute and drive everything from height to conversion you know, we're just

Jabl Raai: avid believers in our product, our platform. We believe we're one of nobody who's got the very specific purpose-built platforms for what they're looking for. And so it's for us to go execute outside of

Jabl Raai: You know, whether it be an election cycle outside of some of the capital market, interest rates, you know, other things going on.

Speaker Change: Thank you for taking my questions.

Speaker Change: Thank you. There are no further questions at this time. I'd like to turn it back to John Hall for closing remarks.

John Hall: Okay, thanks everyone. We appreciate your attention and questions. We have a great Q1 behind us and we're excited about our continued momentum throughout fiscal 25.

Speaker Change: Thanks again for your time today. We look forward to talking to you all next quarter.

Speaker Change: This concludes today's conference call. Thank you for participating and you may now disconnect.

Speaker Change: . . .

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Speaker Change: Good day and thank you for standing by. Welcome to NCAP's fiscal first quarter 2025 webcast.

Speaker Change: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised.

Speaker Change: To withdraw your question, please press star 11 again.

Speaker Change: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, David Trone.

Speaker Change: Senior Vice President, Investor Relations. David, please go ahead.

David Trone: Thank you. Welcome to NTAB Fiscal First Quarter 2025 Financial Results. On the call with me today are John Hall, Chairman and CEO of NTAB, and David Morton, Chief Financial Officer.

David Trone: During the course of this conference call, we may make forward-looking statements regarding trends, strategies, and the anticipated performance of our business, including guidance provided for our fiscal second quarter and full year 2025.

Speaker Change: These forward-looking statements are based on management's current views and expectations.

Speaker Change: entails certain assumptions made as of today's date.

Speaker Change: and are subject to various risks and uncertainties, including those described in our SEC filings and other publicly available documents.

Speaker Change: that are difficult to predict and could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

Speaker Change: In tact, it claims any obligation to update or revise any forward-looking statements except as required by law.

Speaker Change: Our financial results, along with reconciliations of GAAP to non-GAAP financial measures, can be found in today's earnings release and at supplemental financial tables.

Speaker Change: which is available on our website and as an exhibit to the Form 8K furnished with the SEC prior to this call, or a supplemental financial presentation which is available on our website.

Speaker Change: With that, I'll hand the conversation over to John.

John Hall: Thank you, David. Good afternoon. Everyone. Thank you for joining us today as we share the results of our fiscal 1st quarter.

John Hall: Commencing our fourth fiscal year as a public company, I'm pleased to share that once again we've achieved strong quarterly results.

John Hall: Supported by Clough A. Hargrove. New products. New partnerships.

John Hall: new logos, and expanded client accounts around the world.

John Hall: We also added new applied AI capabilities to our platform and furthered our strategic partnership with Microsoft.

John Hall: I'll share details on these select growth drivers throughout this call.

John Hall: In Q1, our cloud ARR grew to $309 million, up 27% year over year.

John Hall: Cloud now represents 74% of our total ARR of 417 million dollars.

John Hall: In the quarter, we earned SAS revenue of $77 million, up 30% year-over-year, and total revenue of $119 million, up 17% year-over-year.

John Hall: Now, I'd like to share some highlights from our fiscal first quarter.

John Hall: I'll start with how we're executing on our vertical AI roadmap.

John Hall: Specifically, our continued applied AI innovation, its practical applications, and our increasing client adoption.

John Hall: First, we introduced two new AI-powered features

John Hall: for InTapAssist for DeoCloud.

John Hall: As you may remember, InTap Assist brings generative AI to the daily work of professionals.

John Hall: helping them better apply their intelligence while driving speed and accuracy.

John Hall: InTapAssist now helps professionals make sourcing recommendations.

John Hall: to help professionals quickly identify ideal target companies aligned with firm strategy, such as ideal investment candidates.

John Hall: and InTapAssist now provides smart tagging.

John Hall: to help professionals analyze and organize communications and meeting notes, making complex data easier to search and apply.

John Hall: We are excited that rising client adoption of InTapAssist for Deocloud is validating our applied AI strategy.

John Hall: and its capability to drive tangible results and positive outcomes for our clients.

John Hall: For example,

John Hall: Serena Clay, Director of International Marketing and Communications at International Investment Bank, DC Advisory, said

Serena Clay: I think a lot of the time what other companies are saying their AI tools can do can be quite performative.

Serena Clay: But I think the depth to which Deocloud has demonstrated commitment to it, and also their thought process and roadmap for it, has been really impressive.

Speaker Change: Second, we expanded the InTapAssist product brand

Serena Clay: by announcing the general availability of InTapAssist for Terms.

John Hall: This new generative AI feature makes it easier for legal professionals.

John Hall: to comply with client terms.

John Hall: by giving them immediate answers to their questions about contractual terms right in Microsoft Teams.

John Hall: This significantly reduces the time and research needed to comply with outside council guidelines.

John Hall: and the firm's client and engagement letter commitments.

John Hall: And it's another example of how we reach professionals in the Microsoft apps they're already using every day, easing adoption and furthering their success.

John Hall: As Carly Numrich, Risk Counsel at Fredrickson and Byron said,

Carly Numrich: Our staff no longer have to go into INTAP terms and search for the right document or contact me with a question.

John Hall: Now, they're able to pull up Microsoft Teams and ask it terms questions.

John Hall: Such as, what are my payment terms with this client?

John Hall: And InTapAssist provides the answer.

John Hall: It's a much more streamlined process.

John Hall: We're excited to share that in-pat walls for co-pilots

John Hall: is gaining traction in the market as more firms look to apply trusted AI.

John Hall: The solution helps professionals use Microsoft Copilot AI in a secure, compliant manner.

John Hall: while avoiding revealing protected information.

John Hall: We continue to see opportunity to expand our compliance footprint and help firms benefit from AI while adhering to their regulatory, ethical, and client commitments.

John Hall: As Tory Carrillo, the application manager from law firm Nelson Mullins, told us,

John Hall: because we use intact walls.

John Hall: to enforce access rules across our networks and applications.

John Hall: I can confidently point Microsoft CoPilot wherever we want, and CoPilot will pull only from matters that the user has permission to access.

John Hall: These new AI features and capabilities are great examples.

John Hall: of how our co-innovation with Microsoft is helping to propel our applied vertical AI strategy forward.

John Hall: Speaking of Microsoft, I'll now turn to Partnerships.

John Hall: and share how we're expanding our robust partner ecosystem to drive growth.

John Hall: Microsoft continues to be one of our most prominent partners.

John Hall: We're proud to have launched Fiscal 25 with renewed top-tier and global ISV partner status with Microsoft.

John Hall: based on strong joint go-to-market activity and co-sell success.

John Hall: We continue to grow the number and volume of transactions through the Azure Marketplace in Q1, applying to clients in all our verticals and for both land and expand deals.

John Hall: For example, this quarter, one of the world's largest multinational investment banks,

John Hall: significantly increased its number of deal cloud seats for its capital formation team.

John Hall: as it made the use of DL Cloud mandatory for specific roles and approval processes.

Speaker Change: Next, Castles, Brock, and Blackwell.

John Hall: one of the largest business law firms in Canada, purchased InTap Conflicts from the Azure Marketplace to manage its conflicts clearance process, reputational risk, and adopt a solution that can scale with the firm's rapid growth.

John Hall: Additionally, our updated partner program launched a year ago continues to attract new partners in our target markets.

John Hall: We now have 135 data technology and services partners in the program.

John Hall: We're also excited about another six partners who joined the program last quarter.

John Hall: Five of which are GeoCloud integration partners that bring additional data sets to our already robust platform.

John Hall: I'll turn now to Q1, Winds and Cloud Migrations.

John Hall: and share some examples of how we're continuing to grow our client base.

John Hall: expand with existing clients, migrate clients to the cloud, and gain traction in new markets.

John Hall: Crete PA

John Hall: a private equity-backed network of accounting and professional services firms.

John Hall: Next, a nationally recognized restructuring and financial advisory firm,

John Hall: which chose Intap Conflicts and Intap Intake to support its growth through acquisition.

John Hall: We chose these as illustrations of the growing need for compliance checking by accounting firms.

John Hall: as growth through private equity investment and acquisitions increase in that vertical.

John Hall: We see this trend as a significant growth area for Intel.

John Hall: And as we continue to win new clients across all our verticals, both domestically and internationally,

John Hall: Here are some examples.

John Hall: In the U.S., a top-ranked venture capital firm focused on revolutionary technologies.

John Hall: chose DealCloud for its robust CRM capabilities for investor tracking, investor reporting, and pipeline management.

John Hall: Next, Internationally.

John Hall: TGS Baltic

John Hall: Additionally,

John Hall: cross-selling and up-selling success in our existing accounts.

John Hall: continue to drive strong net revenue retention.

John Hall: A few notable examples include national CPA and consulting firm Forvis Mazars.

John Hall: which uses INTAP employee compliance to manage personal independence.

John Hall: and recently expanded its relationship with NTAP.

John Hall: The firm added DealCloud to now support its capital advisors team.

John Hall: by Leveraging AI to Manage Complex Deals More Efficiently.

John Hall: Next, a multinational law firm

John Hall: and long-time user of our risk and compliance solutions chose DealCloud to support its private equity team.

John Hall: And moving on to cloud migrations, we had steady progress here as well this quarter, including AMLA 200 firm Honigman.

John Hall: which chose to migrate its four InTap compliant solutions to the cloud so it could gain access to the latest applied AI and streamline its internal processes.

John Hall: chose to migrate its instance of in-tap time to the cloud, supporting its goals of achieving more compliant time and billing, more efficient and profitable matter management, and increased client satisfaction.

Speaker Change: In conclusion, we're proud of our strong performance in the first quarter and we're optimistic about our continued growth opportunities.

John Hall: As our Q1 performance has shown, we continue to grow by adding new capabilities to our platform and increasing our global and enterprise go-to-market reach.

John Hall: We see continued opportunity both to add new clients across a broad TAM and to deliver greater value by expanding within our existing client base.

John Hall: We're serving a durable end market with our subscription revenue model, industry-specific cloud platform, and applied AI and compliance capabilities.

John Hall: We have a great growth opportunity to drive AI, cloud adoption, and modernization across all the industries we serve.

John Hall: As always, I'd like to thank our clients, our partners, our investors, our board, and our global Intap team for their teamwork and dedication. Thank you all very much.

Speaker Change: Okay, David, over to you.

David: Thanks, John, and thank you, everyone, for joining us today. I'm pleased to report a strong first quarter performance driven by solid SAS revenue growth, an expanding client base, and enhanced operational efficiency.

John Hall: Together, these achievements position us to extend our leadership as we pursue an exciting market opportunity in fiscal Q2 2025 and beyond.

John Hall: As we begin our fourth fiscal year as a public company, we announced a strategic shift in February focusing on our cloud business over on-premise and service offerings.

John Hall: Accordingly, our disclosures will now highlight SAS, Revenue, and Cloud metrics.

John Hall: Starting this quarter, our income statement separates SAS revenue from on-premise support to better highlight the growth trajectory and our cloud business.

John Hall: For fiscal Q1, SAS revenue was $76.9 million, a 30% year-over-year, driven by new client acquisitions, contract expansions, and the migration of on-premise products to the cloud.

John Hall: As of fiscal Q1, 92% of our clients have adopted at least one cloud module.

John Hall: As a reminder, our previous disclosure of subscription license included the upfront portion of our on-premise contracts. We now report this as license revenue, which also includes the on-premise support portion that previously appeared in SAS and Support.

John Hall: License revenue was $28.5 million and fiscal Q1 of 2% year-over-year, where price increase and contract expansions were offset by migrations to the cloud.

John Hall: to help bridge the previous SAS and support taxonomy revenue totaled in FQ1 91.5 million of 25% year-over-year driven by sales to new clients and expansion of existing clients through cross-selling and up-selling initiatives.

John Hall: Professional services revenue totaled $13.4 million, down 8% year-over-year, reflecting our strategy to de-emphasize services revenue.

John Hall: This approach aligns with our focus on deferring more of these functions to our partners, allowing us to concentrate on overall client satisfaction.

John Hall: Total revenue was $118.8 million, up 17% year-over-year, driven primarily by sales of our cloud solutions.

John Hall: Our international business continues to present growth opportunities for expansion and greater platform utilization beyond the U.S.

John Hall: Revenue from our international operations remains strong.

John Hall: comprising approximately 34% of total revenue in fiscal Q1, up from 31% a year ago.

John Hall: As discussed in recent quarters, we continue to invest in and expand our alliances and partner ecosystem around NTAP.

John Hall: Since elevating our partner program a year ago, we have attracted new partners across our target markets, now totaling 135 data, technology, and service partners, a 20% year-over-year increase.

John Hall: With additional accreditations and enablement, these investments enhance our capabilities in deal generation, technology, data, and implementation, and we remain optimistic about their ongoing impact.

John Hall: NTAP's new vertical SAS AI offerings, ASSIST, and WALS for Copilot contributed once again this quarter. While it is still early in our product rollout, pipeline development, and client provisioning, we are excited about the growth prospects ahead in fiscal 2025 and beyond.

John Hall: Q1 non-GAAP gross margin was 76.3 percent, up from 71.8 percent in the prior year period. This margin improvement was driven by a services mix and cloud optimization efforts.

John Hall: Non-GAAP operating expenses totaled $75.6 million, compared to $66.5 million in the prior year period, reflecting our continued investment in product-led growth.

John Hall: As we continue to focus on our operational efficiency, non-GAF operating income was $15.1 million as compared to $6.4 million in the prior year period.

John Hall: Non-GAAP diluted EPS was $0.21 in the first quarter of fiscal 2025, as compared to $0.06 in the prior year period.

John Hall: Free cash flow, which is defined as our cash flow from operations less capital expenditures, was $24.1 million for the first quarter, or 20% of total revenue.

John Hall: We exited the quarter with 253.8 million of cash and cash equivalents.

John Hall: Turning to our key metrics, cloud ARR was up 27% year-over-year and total ARR was up 19% year-over-year.

John Hall: Total remaining performance obligations were $549.4 million, up 32% year-over-year.

John Hall: Overall, we remain committed to executing our land and expand model, ending the quarter with over 2,600 clients. Of these, 707 had an annual recurring revenue of at least $100,000, up from $626,000 in the previous year.

John Hall: Our cloud net revenue retention rate highlights our ability to retain and steadily grow business with existing cloud clients, reaching 119% in Q1 FY25.

John Hall: That turning to our outlook for the 2nd quarter of fiscal 2025, we expect. That's revenue of between 79.5 and 80.5M.

John Hall: As these are newly provided revenue outlook metrics, we are also providing the implied year-over-year growth outlook of between 26% and 28%.

John Hall: Total revenue in the range of $120.5 and $121.5 million.

John Hall: non-GAAP operating income in the range of $14 and $15 million.

John Hall: and non-GAAP EPS results of $0.15 to $0.17 using a diluted share count weighted for the quarter of approximately 83 million common shares outstanding.

John Hall: For the full year fiscal 2025, we expect Fast revenue between 327.6 and 331.6 million.

John Hall: As these are newly provided revenue outlook metrics, we also are providing the implied year-over-year growth outlook of between 26% and 28%.

John Hall: total revenue in the range of $495.5 and $499.5 million.

John Hall: We also expect non-GAAP offering to come in a range of $61.5 and $65.5 million.

John Hall: and non-GAAP EPS in the range of 73 cents to 77 cents using a diluted share count weighted for fiscal year 25 of approximately 84 million common shares outstanding.

John Hall: Thank you, and I'll now turn the call back to the operator.

Speaker Change: Thank you. As a reminder, to ask a question please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question please press star 1 1 again. Please stand by while we compile the Q&A roster.

Speaker Change: And our first question comes from Steve Enders of Citi. Your line is open.

Steve Enders: Okay, great. Thanks for taking the question, Pierre. I guess maybe just to start, it would be helpful to, I guess, get an update on maybe what you're seeing out there in the deal environment and, you know, if there's been any kind of change in some of the macro or how you're thinking about financial services side, in particular, given some of the softness that you saw there in the past year or so.

Speaker Change: Thanks, Steve.

Pierre: Demand has been strong. Our pipeline is quite strong.

Speaker Change: We do have the experience of lumpiness in the large deals, as we've talked about from time to time, but we've not seen anything

Speaker Change: related to macro, even in financial services. So that's been great.

Speaker Change: Okay, I guess maybe to ask a little bit, you know, differently, I think we're kind of getting the question from investors just on, you know, some of the ARR and billing dynamics here, and I guess it'd be good to kind of get your view on maybe how you kind of view the year shaping up from a timing perspective, and if this is maybe kind of in line with your expectations or just, you know, how you would kind of characterize how this year might take place versus, you know, what you might, what we might have seen in the past.

Speaker Change: door. So,

Speaker Change: We had done some investment over the previous years to really develop our enterprise grade features because we were getting interest from larger and larger accounts.

Speaker Change: and we had good success with that model in 24. So at the start of 25 here, we moved more of our sellers into that same model as strategics, we're calling it enterprise.

Speaker Change: And we've given more of the named accounts to both a new logo pursuit team and a

Speaker Change: existing account, account management, cross-sell, up-sell team to take advantage of all the new clients that we've brought on board in that tier. So Q1 is definitely the time that we move the accounts to the sales team that has had good success there. We also have the proof point from...

Speaker Change: last year of how well that went. And there's, as we talked about it yesterday, 70% of our SAM is in our top 2,000 accounts. So we want to make sure that we put the right resource allocation to set ourselves up for the billion dollars and more. And that's going well, but we did see some

Speaker Change: pause in the closing of those large accounts. We did not see anything like that in the mid-market accounts.

Speaker Change: which gives us good evidence about the macro. Also, the commentary has been quite strong and the pipeline is the strongest it's ever been.

Speaker Change: Okay, great. That's the public contact. Thanks for taking the questions here.

Speaker Change: Our next question comes from Kevin McVeigh of UBS. Your line is open.

Speaker Change: David Trone, John Hall, David Trone, John Hall, David Trone, John Hall, David Trone,

John Hall: Kevin, this is John. I apologize. The beginning of your question was.

Kevin Mcveigh: How should we think about the alliances and does that enhance over time or what percentage of revenue that is today and how can that scale over time?

Speaker Change: The Microsoft partnership is the largest one, obviously. We've had a very good amount of progress throughout fiscal 24 and continued in the first quarter of fiscal 25 with increased co-marketing and co-selling activities. Obviously, our product announcements.

John Hall: around IntapAssist and Walls for Copilot have gone very well. The Azure relationship where the firms can spend part of their minimum Azure spend, their Mac agreement with us because our entire portfolio is available now on the Azure marketplace and the Microsoft sales reps receive.

John Hall: commission and quota relief when they sell intact products.

John Hall: Thank you.

John Hall: components are aligned for us to be co-selling. We also re-qualified for Microsoft's top tier.

John Hall: status and global IFC status, which we're very excited about.

John Hall: and we've got good collaboration in the field. We even have.

John Hall: Some very important large account deal sharing lead sharing going back and forth and we're co selling in several important places. So I'm.

John Hall: excited about the relationship with Microsoft. It takes a little while.

John Hall: to get that going, but a lot of good progress. And then in addition to Microsoft,

John Hall: We have very strong partnership growth. I gave some stats in the prepared remarks, but a lot of data partners coming on board, a lot of services partners helping to expand our reach in different parts of the market and internationally. The partnership program is really developing well.

Speaker Change: upside, you know, particularly relative to how you're guiding. Any thoughts as to what's driving that number one and then, you know, philosophically, does that continue to flow to the bottom line or do you use that as an opportunity to, you know, reinvest and capture more of the Gen AI opportunity?

Speaker Change: One moment for our next question.

Speaker Change: I'm sorry, Kevin, just to answer your question on margin. Dave, do you want to take that one? Yes, I will. Kevin, great question, thank you. We'll continue to work on our productivity and efficiency, not only on the gross margin, as we continue to scale. We still have some opportunity there.

Speaker Change: We've been working, and I want to thank publicly our services team. Continue to bring that to not only neutral, but, you know, beyond that.

Speaker Change: As well as there's still scale opportunity within our cloud operations altogether. And then when you go below the line, you know, clearly we're going to continue to invest in the company. We've continued to invest.

Speaker Change: So, this hasn't been an absolute reduction, but where you have seen scale has been both in our sales and marketing productivity as well as in our DNA.

Speaker Change: And so, when you think about how we continue to invest and stay ahead of the front, specifically in our product-led growth organization, that's where you'll continue to see more of an orientation within our product and engineering teams, which gets to your question of Gen-AI and other narratives on that.

Speaker Change: Very excited about our roadmap and what that will continue to entail, as well as where that leads us in the back half of this fiscal year. Thanks, Kevin.

Speaker Change: Thank you. Our next question comes from Alexei Gogolev of J.P. Morgan. Your line is open.

Alexei Gogolev: Thank you. Hello, everyone.

Alexei Gogolev: John, David, may I confirm the implied guidance for ...

Alexei Gogolev: Here are some revenues in the back half of fiscal 2025.

Alexei Gogolev: It seems like you're suggesting there might be a slightly lower share of those revenues in the second half of the year versus 2Q, maybe some outlook or color why that might be.

Speaker Change: Sorry, could you repeat the question? Were you looking at just the pure SAS or SAS and support or...

Speaker Change: Well, you're disclosing pure SAP now and in 2Q you're guiding 67% or there about almost 67% and for full year closer to 66%.

Speaker Change: We're just trying to understand if you are expecting some change in the revenue mix or this is just a conservative assumption.

Speaker Change: No, we're being prudent on the overall metrics.

Speaker Change: I think what you'll see is we've uptick both SAS as well as the total revenue in.

John Hall: total. We do have some shift evolutions as we continue to balance license, as we talked about, and putting more in the cloud, which, you know, is a time and effort and an evolution, as well as you get an associated pickup when that happens that we've talked about.

John Hall: So it's not a matter of if, it's just when. So that's one balancing impact. And then the other balancing impact.

John Hall: is also how we've continued to articulate the services portion.

John Hall: and that we wanna not only focus more on our customer satisfaction.

John Hall: but then also continue to grow our partner economy. And so that's been a balancing act as we think about our respective guide, all of which continue to be very prudent in our eyes, and so we can continue to deliver the expected results.

Speaker Change: Great. Thank you, David. And can you remind us what your outlook is on mid-year customer additions versus upsell and cross-sell, the ratio that you anticipate going forward?

David: Yeah, we don't guide specifically on that per se, but I can tell you, historically, you've seen about 20, anywhere from, I'll call it 20 to 40% of net new logo.

John Hall: As far as ACB dollars and then they have responded being the expand motion

John Hall: So we do, you know, we've got the wonderful opportunity not only to deliver a billion dollars and beyond just on our net new logos.

Speaker Change: But then also, as you know, as we continue to cross-sell and up-sell, we have a billion-dollar opportunity in front of us just on that motion as well.

Speaker Change: But for this year and our time in place of how we're thinking about the back half of fiscal 2025, it's going to fall into those ranges.

Speaker Change: Great. Thank you, David.

David: Thank you.

David: Our next question comes from Koji Ikeda of Bank of America. Your line is open.

Koji Ikeda: Yeah, hey guys, thanks for thanks so much for taking the question

Koji Ikeda: I had a question on cloud ARR, you know, it just grew 27.5%.

David: really, really strong performance, all things considered. But I do look at it and it has been decelerating. And I listened to the commentary on the pipeline, which sounds really, really strong. But then I also listened to, it sounds like there might be a little bit of elongation out there too. So I guess the question is, what is the potential for this cloud ARR growth metric to accelerate over the next several quarters from here and what would be the drivers for that?

David: Thanks Koji, so I'll get some

David: points in the day if you can.

David: anything you like, but the

David: The core of it is we sell all cloud now.

David: As you know, we're steadily moving up the percentage of the overall business in the cloud, and we report that.

David: So all the new additions add to the cloud growth. We also have more new logos that we acquire each quarter, and so the cross-sell and up-sell that we do to existing clients is all cloud. And so the fundamental growth of the business is in that.

David: cloud AR number. There's also

David: a movement to migrate the existing remaining components of our client base to the cloud and we talked about that a little bit.

David: I think as far as

David: The deals go, as we move up to the larger firms, and you saw some very large numbers in Q4 when we reported the number of million dollar

David: They are our clients.

David: Those firms are not only large opportunities when we land them.

David: but there are large opportunities when we expand as well.

David: So as we allocate our resources to pursue the 2,000 named accounts at the top of the market more and more, which we made a move here in 25 to do more of, I think you're going to see an exciting opportunity for us to bring in larger deals. They do tend to be lumpier, as we've talked about, from quarter to quarter. At the same time, when they come in, we can have some...

David: really exciting results. So those are the major components.

Speaker Change: Got it. Thanks for that, John. And maybe just a quick follow-up here. Last quarter...

Speaker Change: You gave a percentage of net new ACV coming from AI products at 4%. I know there's some qualitative or yeah, qualitative commentary in the prepared remarks, but I was wondering if we could get that number, an updated number. You know, what was that this quarter versus last quarter? If you could, please. Thank you.

Speaker Change: Hey Koji, it's Dave. Yeah, we're just going to provide that more so on an annual basis. We know we kind of brought it out last quarter kind of as a rolling thunder.

David: just to give some insight and thought, leadership in and around how we're monetizing that. That continues.

David: And we'll continue to provide periodic updates, but not one of a quarterly metric.

Koji Ikeda: Got it. Thanks guys. Thanks for taking the questions.

Speaker Change: Our next question comes from Alex Sklar of Raymond James. Your line is open.

Alex Sklar: Thank you. John or Dave, can you just elaborate a bit more on the changes in the sales team and go to market that you spoke to? How much of the team was impacted? When did you make those changes? And I'm curious, have you seen any market improvements in terms of productivity to that large account team in October that gave you some visibility to take up the full year guide above the Q1 beat? Thanks.

Speaker Change: Thanks, Alex.

Speaker Change: So we tested out the model in 24. At the very top of the market, we saw some excellent results.

Speaker Change: We moved a significant portion of the team at the beginning of fiscal 25 when we gave new territories and and comp plans for the year. I'm very appreciative of the team's excellent work. We have long standing team members.

Speaker Change: were very experienced in this industry and there was a lot of collaboration to help.

Speaker Change: move accounts to folks.

Speaker Change: In each area, we also.

Speaker Change: followed through on what we discussed at Investor Day, which was to put the entire team into a new accounts, existing accounts model.

Speaker Change: because there's a significant number of new logos across the board for us to go continue to focus on and when we can get to a billion dollars or more just doing that.

Speaker Change: But we also have a billion dollars or more from cross-sell and up-sell. So we wanted to make sure we had the right account management investment to drive the whole portfolio through the business.

Speaker Change: the number of million dollar accounts that we showed in Q4.

David: came both from New Logo Acquisition and CrossSell into those large accounts, and there's a huge opportunity for us to meet the needs of the underserved market this way. So I think the resource allocation choice that we moved on here was well proven. I think

David: The opportunity going forward, as people now have had a chance to meet everybody and talk to their new accounts and get going with

David: pipeline advancement, pipeline development, and advancing the deals that were handed over to them are in good shape. And so we're excited about the rest of the year.

Speaker Change: Okay, thank you for that color. And then maybe we'll follow up for you, Dave, just in terms of the drivers and cloud NRR this quarter and any changes between end market growth or expansion by solution type. And then, and then separately, are you going to disclose the total NRR number for this quarter? Thanks.

Speaker Change: Any key drivers? No, I mean, it was continued success. The teams that continue to garner the expanse, right?

Speaker Change: you know, they do a wonderful job doing cross-sell and up-sell and continue to monetize those opportunities, which, you know, even going back to our analyst day on February 22nd, you've seen the cohorts of each of those respective years and how big they can be. So that's just a continuation of that.

David: are 10Q. It was approximately 114% within the suspected range of 113 to 117, but I really want to, you know...

David: transition everyone over to primary cloud metrics, because those are going to be the ones that we're focused on. And obviously, that we're garnering more and more attention to as well as support and investment thereof, specifically on the expand motion. Because when you go from on prem to off prem, it's going to change some of those cohorts as well. Right. And so I just don't want to get into a reconciliation of how that attribution is going forward. Anyway, there you go.

Speaker Change: All right, great. Thank you both for the color.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Saket Kalia of Barclays. Your line is open.

Saket Kalia: Okay, great. Hey guys, thanks for taking my questions here.

Saket Kalia: Thank you. Bye.

Saket Kalia: John, maybe for you, a lot of great examples in the prepared remarks around new and existing customers and around Gen AI. Maybe a bit of a broader question, can you just speak to sort of where you think we are in the journey of converting those on-prem customers to SaaS? I mean, you know, there are a lot of things that you can do to entice them, you know, to move over. Where are we sort of in that journey? And what do you think is going to change here in Fiscal 25 around that? Does that make sense?

Speaker Change: Thank you, Socrates.

Speaker Change: and David Trone. Thank you. Thank you.

Speaker Change: We talked at Investor Day about the fact that we historically had been at the client's option, but starting in fiscal 25, we were looking to be a little bit more encouraging to move firms along. And we're definitely doing that. We're doing that in a few ways.

Speaker Change: The first, fundamentally, is you can only get the generative AI capabilities and, in fact, even more, the AI capabilities more broadly in the cloud.

Speaker Change: And there's a lot of pressure coming from the professionals across these firms to create a more modern experience.

David: for them and for the way that they work inside their organizations.

David: that they want to take advantage of all these new capabilities. So there's a natural pull.

David: that was always there, but I think AI obviously gives a lot of excitement to people to pull that in.

David: Secondly, there's a real demand from the firms to move.

David: into the cloud because of scalability and reliability and security. Firms have just come to the correct conclusion that they don't have the IT spend

David: scale to create the right kind of security and scalability environment that they could get working with us and partnering with Microsoft around Azure that the firms basically just need. And so there's a lot of pressure to the firms to get off their on-prem remaining environments themselves, and we're benefiting from that.

David: and then

Speaker Change: You know, I think to your point about what we're doing specifically, we absolutely have a program now.

David: in fiscal 25 that we have launched to go through each of the remaining firms that have some on-prem component.

David: and help them.

David: in a variety of ways to get over the hurdle and move to the cloud platform. Because as Dave showed at Investor Day in some of his client account expansion slides.

David: Boy, is it worth it to get those firms onto the cloud because their expansion rate really picks up. So we're making judicious

David: prudent choices in each area to help every firm through a variety of techniques make the case to get there. And I'm excited about how positively we're received. There is not a remaining firm out there that's making an argument that they should be on the cloud. I'm sorry, be on-prem. They all know they need to get to the cloud. It's just a practical question, how do they line up their IT schedule to do that?

Speaker Change: Got it. Got it. That makes a lot of sense.

Speaker Change: Dave, maybe for you, maybe to the earlier point just around net new ARR being lumpy. Total net new ARR was down year over year this quarter, of course. But maybe the question is, as you sort of look at the strength that Intap had in Q4, is there anything that, just looking at the post-mortem, we need to keep in mind when thinking about timing, in terms of how deals sort of fall in one quarter versus the other?

David: Not necessarily from a pull forward or push out or anything like that or even a nominal seasonality.

David: I do think, as we think about really coming into this new fiscal year, and as John alluded to, and getting the teams aligned and organized, and the sales kick off, and

David: You know, seeing all the success from previous years, you know, where's the opportunity of kind of how we articulated how we're going to get to a billion dollars and the named accounts and mid market and so on and so on. I think for us.

David: As we think about the opportunity coming into this quarter and others, we've been spending a lot more time on kind of our own hype gen, hype analytics, pre-shopping, shopping, where those cohorts

David: land.

David: and to John's earlier point

David: We haven't seen as strong as pipe.

David: Maybe in the history of kind of our time. And so, you know, we're excited about those opportunities and it's for us to go and monetize and convert those over. And so we like how Q2 started to play out as well as not only here, but also into the back half of the fiscal year.

Speaker Change: Very helpful. Thanks, guys.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Parker Lane, if Stiefel, your line is open.

Parker Lane: Hey guys, thanks for taking the question. You talked a lot about the development and go-to-market around the generative AI opportunity, but I was wondering if you could touch on any particular learnings you've had in discussions with your customers around the pricing and packaging of those solutions. Has there been any sort of changes or excitement around the way you guys are pricing? What are your early impressions of how it's being received?

Speaker Change: Thanks, Parker

Speaker Change: You know, I think.

Speaker Change: We, as everybody has, have benefited from the whole Gen AI buzz over the past

Speaker Change: year or two on one hand. So the world has done its work to educate the market, even down to the professional users, that there's the potential for something like this out there. I think we're moving into a phase of the Gen AI generation where the general promise

Speaker Change: is hitting the real world.

Speaker Change: and our strategy, which we have

Speaker Change: They happen in specific applications. It's the old killer app idea. What is it that's going to pull in these...

Speaker Change: generations of capabilities with very specific applications that really understand the end-user and I think the vertically oriented companies and obviously we with this particular end market that's very susceptible to the potential

Speaker Change: The whole trick is how do you build very specific applications early on that the user can get an immediate benefit?

Speaker Change: sourcing and origination of new opportunities.

Speaker Change: cross-selling and looking for opportunities inside the firm's client base.

Speaker Change: We're very excited about this Intap Assist for Terms launch, which brings the whole concept into our compliance.

Speaker Change: value proposition to help people just talk conversationally through Teams to InTap Assist and it answers questions about their promises to clients across the firm or some promise that some other professional that's one of their partners made somewhere else in the world that they need to know about when working with the client. So those specific applications are really winning.

Speaker Change: with the individual users and with the firm's leadership. And from a pricing and packaging standpoint, we've seen good success in being able to defend pricing, even in this era when some of the more generic gen AI systems are getting a little bit of pressure. We've got great value because we've been able to isolate down to some of these specific value propositions.

Speaker Change: Obviously, over time, InTap Assist will grow and we'll have more and more of those. It'll be a richer and richer platform, but I think the real trick from a marketing and go-to-market standpoint is really to nail those use cases, and the team's done a fantastic job. I'm very grateful to the work that they've done and to the clients for taking it up.

Speaker Change: That's great feedback. Thanks, John. We'll jump back in.

Speaker Change: Our next question comes from Terry Tillman of Truist Securities. Your line is open.

Terry Tillman: Yeah, thanks for taking my question. I'm not going to ask about ARR. I'm going to focus on KPMG. I think last quarter, you all had...

Terry Tillman: a pretty important win, I think, in terms of their across their global network of businesses. So maybe after that deal being signed, what can you say about your collaboration product in general? Has that been a linchpin to win more business? And then secondly, I think that deal was

Terry Tillman: concluded with an Azure Marketplace situation. And so like, what is that doing in terms of reducing friction and getting deals done in terms of the leveraging credits, et cetera? Thank you. Thanks, Terry.

Terry Tillman: Requirements that those teams have as they work together. So we think it's a great fit KPMG is one example, but we have quite a few new firms that have come on taking up.

Terry Tillman: Our collaboration solution in a way that gives us a lot of confidence about the future there and KPMG is an interesting example in accounting we've had a lot of uptake in the accounting market I think because they have been so underserved historically, we're seeing more uptake in the other markets, but accounting is really good.

Terry Tillman: I'm excited about it so we're super happy about that.

Terry Tillman: With regards to the Azure marketplace question. It has a couple of benefits for reducing friction. One is the firms have already signed a contract with Microsoft that theyre going to spend X dollars. This year on Microsoft stock.

Terry Tillman: So once they've done that and you can go in and show them capabilities like collaboration that fit their need.

Terry Tillman: Needs for their it priorities and they've already promised to spend the money why not spending with you and I think thats the.

Terry Tillman: The simplest argument for the Azure marketplaces, but it's Mac agreements, but I also think that firms are trying to simplify their vendor relationships. They want to work with people that are at scale that can supply across the portfolio and so the Microsoft partnership really helps them simplify their environment and the fact that we're helping them get the most value out of.

Terry Tillman: The existing Microsoft spend on obviously 65 and teams really helps them as well so the field loves it when we we engage now this is one of the first questions that the team asks the prospects do you have a relationship here do you have a Mac agreement can we work with you on the Azure marketplace and responses generally bear.

Terry Tillman: Positive because people are getting used to buying it that way.

Terry Tillman: Yeah.

Speaker Change: Thanks for the color I appreciate that.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Our next question comes from Arvind <unk> of Piper Sandler Your line is open.

Arvind Ramnani: Hi, Thanks for taking my question.

Terry Tillman: Yes.

Terry Tillman: Courtyard.

Terry Tillman: Sure, but with Microsoft, which obviously has been.

Terry Tillman: Kind of a really important part of the equation in terms of your.

Terry Tillman: Youre kind of AI strategy.

Terry Tillman: <unk>.

Terry Tillman: So question one is.

Speaker Change: You are kind of keeping our options kind of flexible I mean, clearly and Microsoft is still sort of leading the way, but you're keeping your options open.

Terry Tillman: It's kind of this kind of.

Terry Tillman: Technology continues to evolve and change and then maybe like a new car.

Terry Tillman: Kind of leader in the space.

Terry Tillman: And the second thing is from a cost perspective.

Terry Tillman: Is there any risk that Microsoft kind of takes its sort of like leadership position to kind.

Terry Tillman: Kind of increase increase.

Terry Tillman: It's kind of on it.

Terry Tillman: The cost is kind of pushing with its partners.

Speaker Change: Thanks Arvind.

Terry Tillman: On the first point.

Terry Tillman: As we've talked about on other calls and at Investor Day, We do have.

Terry Tillman: More than one AI technologies capability in the company as we shared with you all we have been developing AI based technology for this end market with specialized vertical purpose built applications for 10 or 15 years, we had some of the first technology in the market 10, or 12 years ago with our times product time product that helps.

Terry Tillman: The lawyers at the time figure out what they should build for and over the years, we have grown our AI team and degenerative AI is the most recent example, and now it's kind of news everywhere, but we've been in that.

Terry Tillman: Line of technology for quite a while because there is such an opportunity in this market in particular.

Terry Tillman: Use AI techniques and AI technologies to help firms make sense, so structured and unstructured information in a more productive way. So we're big believers in it and yes, we do have other technologies working inside the platform. So we're not.

Terry Tillman: Exclusive with Microsoft on a technology that being said this end market is also very Microsoft oriented market. The professional firms the financial firms, particularly in their it departments, but more generally spend all their time in the Microsoft environment. So the partnership is very important. It's also very strategic for us to make sure we can say yes.

Terry Tillman: These firms and be aligned with their it strategy and I think that this actually gives us a real advantage versus technology companies that don't have the same alignment with Microsoft plan. I think your question about cost is kind of the flip side of that there are all kinds of things progressing in the open source world and elsewhere around AI technology.

Terry Tillman: <unk> and Microsoft certainly has a tremendous position, but theres also all kinds of options out there. So I think we're going to benefit from that as well the whole world and industry on on this idea of how do you get the most effective AI at the right cost structure to enable you to bring solutions to market that the firms can really take off and we're going to see.

Terry Tillman: See how it plays out but I think <unk> is very well positioned around AI to take the best advantage as we go forward.

Speaker Change: That's perfect. Thank you so much.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Brian Schwartz with Oppenheimer. Your line is now open.

Brian Schwartz: Yes, hi, Thanks for taking my questions. This afternoon, John I was hoping to just follow up on your commentary that the large deal activity was.

Brian Schwartz: Maybe it was less robust than what the business had seen the last couple of quarters I'm. Just curious you know because the pipeline commentary is very strong do you think that that's just seasonality.

Brian Schwartz: Or is it a macro or maybe election relay that I'm curious to get what your take is on that.

Brian Schwartz: Thanks, Brian.

Speaker Change: I think because we've seen such.

Speaker Change: Such consistent performance in our mid market business. The main factor is the realignment that we did at the beginning of fiscal 'twenty five to put more resources against the 2000 enterprise accounts I think thats. The main driver whether the election has something to do with the market generally we probably would have seen in the mid market.

Terry Tillman: It did.

Terry Tillman: Who knows to that question, but I think generally speaking.

Terry Tillman: We started the year and did the appropriate assignment of resources to the large accounts with a good proof point from last year about what that could do for us and I think the opportunity scale is.

Terry Tillman: Significant.

Terry Tillman: And so we wanted to build the company to $1 billion I want to make sure. We've got the team set up to do it and we've got sales professionals, who have been through this before and all they got to do is go meet those firms and get their pipeline.

Terry Tillman: Advanced and Thats, what we saw in the first quarter. So.

Terry Tillman: Comfortable that we've put the right resources against a very large opportunity here and we're set up to go.

Terry Tillman: Thank you for that color John appreciate that David maybe just one with you.

Speaker Change: In terms of maybe the assumptions underlining your growth guidance, just curious how youre thinking about the capital markets activity are you expecting any change.

Terry Tillman: Maybe the end market demand for for that segment.

Speaker Change: From.

Terry Tillman: Maybe what you were thinking three months ago, given how interest rates have changed since you last gave guidance. Thanks.

Terry Tillman: <unk>.

Terry Tillman: Thanks, Brian.

Speaker Change: For us our end markets have been relatively healthy.

Speaker Change: That we commented on we have one aberration that we commented approximately a year ago. When we saw some headwinds specifically with.

Terry Tillman: One <unk>.

Terry Tillman: Specific group within overall financial services, but if you think about.

Terry Tillman: In broad based everything has been really healthy quite candidly and so.

Terry Tillman: This has been about us and able to execute and drive everything from Pi to conversion.

Terry Tillman: We're just avid believers at our product our platform we believe.

Terry Tillman: Or one nobody who has got the very specific purpose built.

Terry Tillman: Platforms for what Theyre looking for and so it's for us to go execute outside of <unk>.

Terry Tillman: Whether it be election cycle outside of some of that capital market.

Terry Tillman: Interest rates.

Terry Tillman: Other things going on.

Speaker Change: Thank you for taking my question.

Speaker Change: Thank you there are no further questions at this time I would like to turn it back to John Hall for closing remarks.

John Hall: Okay. Thanks, everyone. We appreciate your attention and questions. We have a great Q1 behind us and we're excited about our continued momentum throughout fiscal 'twenty five.

John Hall: Thanks again for your time today, we look forward to talking to you all next quarter.

Speaker Change: This concludes today's conference call. Thank you for participating and you may now disconnect.