Q1 2025 AvePoint Inc Earnings Call
Good day and welcome to the F. One Inc. First quarter to a new 25 earnings conference call.
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Speaker Change: I would now like to turn the conference over to Mr. Jamie I'll show, Vice President and Investor Relations. Please go ahead.
Speaker Change: Thank you operator, good afternoon, and welcome to our first quarter 2025 earnings call with me on the call. This afternoon is Dr. TJ Tang Chief Executive Officer, and Jim <unk>, Chief Financial Officer. After preliminary remarks, we will open the call for a question and answer session.
Speaker Change: Note that this call will include forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from management's current expectations.
Speaker Change: Courage you to review the Safe Harbor statements contained in our press release for a more complete description.
Speaker Change: While material in the webcast is the sole property and copyright without point with all rights reserved.
Speaker Change: Please note. This presentation describes certain non-GAAP measures, including non-GAAP gross profit non-GAAP gross margin non-GAAP operating income and non-GAAP operating margin, which are not measures prepared in accordance with U S. GAAP.
Speaker Change: non-GAAP measures are presented in this presentation as we believe they provide investors with the means of understanding how management evaluates the company's operating performance.
Speaker Change: non-GAAP measures should not be considered in isolation from as substitutes for or superior to financial measures prepared in accordance with U S. GAAP a.
Speaker Change: A reconciliation of these measures to the most directly comparable GAAP financial measures is available in our first quarter 2025 earnings press release as well as our updated investor presentation and financial tables, all of which are available on our Investor Relations website with that let me turn the call over to T. J.
T. J.: Thank you Jamie and thank you to everyone joining us on the call today.
T. J.: I'm pleased to report that our first quarter results were an excellent start to the year and a continuation of the strong momentum we displayed throughout 2024.
T. J.: In delivering another quarter of robust financial and operational performance, including outperforming our guidance and delivering strong growth in total a R and record growth in net new a R. We are steadily advancing toward our vision of becoming the world's leading data management software company.
T. J.: And achieving the billion dollar a our target for 2029 that we announced at our March 2025 Investor Day.
T. J.: Our Q1 results reflect two foundational themes.
T. J.: First the intensifying convergence of data security governance and resilience needs.
T. J.: As organizations move from planning to implementing their data management strategies.
T. J.: And second our increasing ability to deliver comprehensive solutions that address these interconnected challenges as companies modernize their data stores.
T. J.: Discuss these themes in the context of current business climate, where companies around the world grapple with tariff uncertainty and the impact on their business as well as on the global economy.
T. J.: Even in these fluid times halfway is well positioned to navigate the road ahead, given our past success in similar periods as well as the mission critical nature of our solutions.
T. J.: Even when the business landscape can evolve drastically from day to day, the data management problems, we're solving in the era of AI <unk>.
T. J.: Including training data provenance motto expand the ability and responsible surveillance.
T. J.: Simply cannot be ignored by any company seeking to build a durable competitive advantage. Indeed, as we look across our vast customer base, we see that AI driven strategies are beginning to shift from experimental testing to practical implementation in turn accelerating the need for solutions that can balance secured.
T. J.: <unk> collaboration and innovation.
Speaker Change: I'll wrap up with some strategic customer wins that demonstrate how our expanded platform capabilities are uniquely positioned to address this maturing and growing need and then I'll turn it over to Jim to discuss our financial results so with that let's jump in.
Speaker Change: As we have said many times, our vantage point across 25000 customers of all sizes in all regions and across all industries give us the unique insight into how data management challenges are evolving.
Speaker Change: While the core issues, we discussed last quarter digital transformation Paradise data modernization needs and security concerns remain top of mind. What is changing is how these challenges are converging and intensifying.
Speaker Change: Organizations are no longer just planning for digital transformation, they're deep implementation and are facing the practical realities of managing exploding data volumes across increasingly distributed environments. This is happening as the cyber security threat surface continues to escalate in sophistication with RASM.
Speaker Change: [noise] attacks, becoming more targeted.
Speaker Change: And at the same time regulatory departments arent just complex there are actively expanding with new frameworks and cross border compliance standards be implemented globally, adding layers of operational and legal complexity.
Speaker Change: Most notably the convergence of these challenges is happening when AI driven strategies are beginning to shift from experimental two operational for many organizations, creating a urgent need for data governance frameworks that can support innovation, while maintaining security and compliance in other words.
Speaker Change: The question has moved from can we use AI to how do we responsibly implement AI at scale.
Speaker Change: These trends are compounding in ways that make point solutions increasingly adequate org.
Speaker Change: Organizations are recognizing the siloed approaches to data protection governance compliance and content management create dangerous gaps and inefficiencies. This recognition that's driving demand for truly integrated platforms that can deliver comprehensive data management capabilities.
Speaker Change: Our platform strategy continues to resonate strongly with customers precisely because it addresses these converging challenges.
Speaker Change: Rather than forcing organizations to cobble together, a disparate solutions, we provide a cohesive approach to addressing the most pressing strategic use cases. These include protecting.
Speaker Change: Protecting data waking, hence resilience capabilities that go beyond simple backup to include ransomware attack detection and recovery security assessments automate a recovery testing and breach prevention.
Speaker Change: Governing data through intelligent policies that adapt to evolving regulations and usage patterns through automated access control.
Speaker Change: And lastly, optimizing data by identify redundant contents, automating lifecycle management and preparing environments for AI implementation.
Speaker Change: We also know that ongoing innovation is critical to maintain our competitive moat. This quarter. We have further enhanced our platform with expanded multi cloud capabilities and deeper integration between our AI power solution suites that accelerate time to value for customers.
Speaker Change: This integrated approach deliver significant results this quarter across various industries and regions.
Speaker Change: A global leader in human capital Management solutions with 74000 users became a new appling customer in the first quarter. This.
Speaker Change: This customer faced a host of data management challenges, including enforcing data access controls to prepare for companywide rollout, Microsoft copilot, and gaining better visibility into app usage and compliance.
Speaker Change: This customer leverage our control suites to cleanup oversharing of sensitive data enforced workspace level access and reduce data sprawl. This enabled increased productivity and adoption of Microsoft copilot, enabling the customer to maintain their competitive edge.
Speaker Change: We secured another new logo from a prestigious business school EMEA in Q1, the customer initially approached us about data migration, but quickly recognized the need to consolidate and cleanse their migrated data to ensure security and prepare for AI adoption.
Speaker Change: Our into an approach to data management was a deciding factor in leading the customer to purchase products from all three suites. The migration solution in the modernization suites to move terabytes of content, followed by Opus in our resilient suite to classify improve the quality of their data and multiple products from our Concho suite.
Speaker Change: To create and enforce data governance policies cleanup oversharing up sensitive information and reduce data sprawl.
Speaker Change: We also expanded our relationship with a leading APAC based design engineering and advisory company with 8000 users initially using our control suite to assess the risk in their environment the customer adopt opus R. Information lifecycle management solution to take action on the Petabytes of data stored in Microsoft 65.
Speaker Change: With this purchase from our resilient suite the customer can now create automatic scans of their environment ensure data is saved in the right location control access to certain data and files and automatically archiving delete redundant absolutely and trivial content. This expanded relationship has enabled the customer to optimize storage and.
Speaker Change: And reduce costs.
Speaker Change: We also grew our relationship with a global leader in consumer packaged goods with over 210000 users. This customer an existing user of our resilient sweet face data governance challenges that led to a failed audit due to insufficient workspace oversight.
Speaker Change: The products purchased from our Concho suite serve as the foundation in the establishment of a operational governance process across the customer state <unk> stage and is a great example of how we solve both customers business and technical needs.
Speaker Change: Additionally, there are in discussion to purchased our co pay adoption analytic solution further enhancing the customers data management capabilities and ensuring a successful rollout co pilot.
Speaker Change: These wins demonstrate how our platform play continues to resonate across customer segments industries and regions. These organizations are ultimately seeking the same outcome.
Speaker Change: Comprehensive data management solutions that enable innovation, while delivering holistic data security and AI governance.
Speaker Change: Looking ahead, while we are mindful of the larger macroeconomic environment. Our primary focus is on what we can control solving the hardest data management challenges through our integrated platform approach and the market dynamics, we're seeing the convergence of security and governance concerns accelerating AI adoption.
Speaker Change: An increasing regulatory pressures and the need to reduce costs.
Speaker Change: All play to App with strength and I'm excited about the many opportunities ahead.
Speaker Change: With that let me turn the call over to Jim.
Jim: Thanks T J and good afternoon, everyone. Thanks for joining us today as we review our strong Q1 results, which are a testament to the team's broad based execution.
Jim: As T. J just said our focus remains on controlling what we can control, but this mindset is not merely about cost savings in a time of macro uncertainty instead, our goal for several years has been to deliver profitability improvements, while strategically investing for growth and to capture.
Jim: The market opportunity we see.
Jim: Our Q1 results are further evidence of that commitment highlighted by an acceleration of our topline growth rates meaningful operating margin expansion and continued improvement on a number of financial and operational metrics.
Jim: So, let's turn to the quarter.
Jim: Total revenues in Q1 were $93 $1 million up 25% year over year and above the high end of our guidance on a constant currency basis total revenues grew 27% year over year.
Jim: SaaS continues to drive our business as we delivered first quarter revenue of $68 $9 million, representing year over year growth of 34% and 37% on a constant currency basis and in Q1 SaaS comprised 74% of total revenues.
Jim: Compared to 69% a year ago.
Jim: Looking at our other revenue lines term license and support grew 12% in Q1, primarily driven by several large deals in the APAC region.
Jim: And looking at our combined SaaS and term license revenues or what we consider our subscription revenues. These grew 31% in Q1, which was an acceleration from Q4.
Jim: Maintenance revenue declined year over year, both in dollars and as a percentage of total revenues as we expected and lastly service revenues grew 4% year over year, but declined as a percentage of revenues to less than 12% for the quarter and as a result more.
Jim: And then 88% of our total Q1 revenues were recurring our highest ever mix.
Jim: We are often cited our balanced geographic footprint as one of the things that makes add point unique and we are pleased that each region in which we operate delivered another strong quarter in North America SaaS revenues grew 31% year over year and represented 82% of.
Jim: Total North America revenues, which in turn grew 22% year over year in EMEA SaaS revenues grew 36% year over year and represented 85% of total EMEA revenues, which in turn grew 29% year over year and in APAC SaaS revenues.
Jim: Grew 40% year over year and represented 51% of total APAC revenues, which in turn grew 24% year over year.
Jim: On a constant currency basis, EMEA SaaS revenues increased 39%, while total revenues increased 33% and for APAC SaaS revenues increased 45% on a constant currency basis, while total revenues increased 27%.
Jim: This balanced performance is also apparent when we look at our regional Aeromar in Q1, North America are our grew 22% EMEA error grew 26% and APAC AOR grew 34% once again each region was a strong contributor.
Jim: Two our total error, where we ended the first quarter at $345.5 million, including $2.8 million from the acquisition of Identic, which closed in Q1.
Jim: This represents year over year growth of 26% and 28% when adjusted for FX.
Jim: Net new <unk> in Q1 was $18 $5 million, representing organic growth of 57% year over year, our highest ever as a public company. Additionally, we ended the first quarter with 689 customers with air are over.
Jim: $100000, an increase of 23% from the prior year and the highest growth rate, we have delivered in 10 quarters.
Jim: We're also seeing an acceleration in the growth rates of our larger customer cohorts as well.
Speaker Change: Driven in part by some of the wins that T. J discussed earlier as well as our ongoing success at the enterprise level.
Speaker Change: As of the end of Q1, 55% of our total error came through the channel compared to 51% a year ago and for Q1, specifically, 63% of our incremental air are came through the channel compared to 61% for Q4 of 2024.
Speaker Change: And 62% in Q1 of 2024.
Speaker Change: These improvements reflect our strategic priority of driving more business through the channel, where we expect to realize greater market reach while maintaining efficiencies on our sales and marketing spend and in turn supporting our ongoing focus on profitable growth.
Speaker Change: Turning now to our customer retention rates adjusted for the impact of FX, our trailing 12 month gross retention rate for the first quarter was 89% a two point improvement from a year ago.
Speaker Change: And our FX adjusted net retention rate for the first quarter was 111% a one point improvement from a year ago to remind you our updated long term targets for G R R and N or or or 90%, plus and 115% respectively and were pleased.
Speaker Change: To show steady progress on these critical customer metrics.
Speaker Change: On a reported basis Q1, <unk> was 88% in Q1 <unk> was 111% for G. R. R. This represents a two percentage point improvement versus the prior year and for <unk>. This represents a one point improvement versus the prior year.
Speaker Change: Turning back to the income statement gross profit for Q1 was $69.8 million, representing a gross margin of 75% compared to 74, 1% in Q1 of 2020 for the improvement in our gross margin is primarily the result of increased.
High margin subscription revenue as a percentage of our overall revenue.
Speaker Change: Moving down the income statement operating expenses for Q1 totaled $56 $5 million or 61% of revenues compared to $48 $6 million or 65% of revenues a year ago. As a result, Q1 operating income was 13.
Speaker Change: $4 million or an operating margin of 14, 4% and above the high end of our guidance. This compares to non-GAAP operating income of $6 $6 million in the prior year or an operating margin of eight 9%.
Speaker Change: This represents year over year margin expansion of nearly 550 basis points as we continue to drive leverage and pursue efficiencies across the business.
Speaker Change: Turning to the balance sheet and cash flow statement. We ended the first quarter with 351 $8 million in cash cash equivalents and short term investments and this includes 87 $3 million of proceeds from warrant exercises in the first quarter.
Speaker Change: Cash generated from operations was $495000 for the first quarter, while free cash flow was negative $1 million. This compares to cash generated from operations of $7 $8 million and free cash flow of $7 $3 million in the first quarter of 2020.
Speaker Change: Four.
Speaker Change: Our lower cash flow from operations compared to a year ago is primarily due to approximately $7 million in one time tax payments related to performance based earn out shares that were distributed to <unk> point employees in December of 2024, Lastly, we repurchase.
Speaker Change: <unk> 800000 shares in the first quarter for approximately $12 million I would now like to turn to our financial outlook and provide some color into our updated full year expectations to.
Speaker Change: To remind you the global nature of our business exposes us to fluctuations in currency rates and in the first quarter. We saw a modest tailwind from the weakening of the U S dollar.
Speaker Change: This weakening has accelerated in Q2 and the corresponding incremental FX tailwind are reflected in our updated full year guidance for our revenue and non-GAAP operating income. Additionally, our updated full year guidance for revenue and non-GAAP operating.
Speaker Change: Income includes the respective first quarter beads relative to our guidance.
Speaker Change: While we are seeing strong demand signals in the business and a healthy pipeline. We believe our current guidance is prudent and properly accounts for potential risks from the current geopolitical environment in the second half of the year.
Speaker Change: As a result for the second quarter, we expect total revenues of $95 3 million to $97 $3 million or growth of 22% to 25% and on a constant currency basis, we expect revenue growth of 20% to 22% we.
Speaker Change: <unk> non-GAAP operating income of $13 2 million to $14 2 million.
Speaker Change: For the full year, we now expect total error of $411 8 million to $417 $8 million or growth of 26% to 28%.
Speaker Change: This includes an FX tailwind of approximately $10 $5 million and so on an FX adjusted basis. We continue to expect total <unk> growth of 24% to 26% for the year.
Speaker Change: We now expect total revenues of $397 4 million to $405 $4 million or growth of 20% to 23%. This includes an FX tailwind of $13 $8 million as well as the $3.6 million revenue be.
Speaker Change: From the first quarter.
Speaker Change: On a constant currency basis, we now expect revenue growth of 18% to 20% compared to the 17% to 19% growth. We initially guided for the year and lastly, we now expect full year non-GAAP operating income of $61 4 million.
Speaker Change: To $64 $4 million or an operating margin of 15, 5% to 15, 9% with more than half of the FX tailwind to full year revenue flowing through to operating income.
Speaker Change: Lastly, we have added several slides to the investor presentation on our website, which summarize the components of our updated guidance, including the FX dynamics that are more pronounced this year in.
Speaker Change: In summary, Q1 was a strong start to the year and we are excited for another year of continued execution and capitalizing on the substantial long term opportunity ahead of us.
Speaker Change: Thanks for joining us today and with that we would be happy to take your questions operator.
Speaker Change: Thank you.
Speaker Change: Well now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: The first question comes from Joe Vendrick with Scotia Bank. Please go ahead.
Hey, Thanks for taking my question.
Speaker Change: I'm curious are you guys seeing any change in the demand environment at all whether that be hesitation from customers or.
Speaker Change: Longer sales cycles, just would love to hear more about what exactly you are seeing.
Joe Vendrick: Thank you Joe a question.
Joe Vendrick: So far the demand environment remained the same versus prior quarters.
Joe Vendrick: We're in B to B software.
Joe Vendrick: Addressing.
Joe Vendrick: Text needs for enterprises and partners today, the top needs remain AI and security so those do not change.
Joe Vendrick: Of course, we are all monitoring the macro.
Joe Vendrick: To see potential second order impacts.
Joe Vendrick: That may come second half of the year, but so far from the overall climate perspective for our business and our industry. It's the same as prior quarters.
Joe Vendrick: Okay. Thank you for that and one more for me.
Joe Vendrick: Maybe if you could just talk a bit about the competitive environment.
Joe Vendrick: What's changed over the past six months. It seems like you guys are executing really well on that data governance space specifically, helping.
Joe Vendrick: Customers prepare for widespread deployment of AI.
Joe Vendrick: Curious if data governance is helping you guys drive new logo lands.
Joe Vendrick: As companies are looking to adopt to a pilot.
Joe Vendrick: Towards the landing point, typically resilience or migration.
Joe Vendrick: Especially for those larger customers what are they typically landing.
Joe Vendrick: Yes, great question Joe.
Joe Vendrick: Yes, so our confidence platform addresses resiliency, which is a backup recovery ransomware detection and of course, as well as modernization, which data analytics integration as well as control, which is governance lifecycle management.
Joe Vendrick: We do see multiple entry points we.
Joe Vendrick: We call them tip of spear to get into enterprise accounts.
Joe Vendrick: Historically, it has been migration to cloud.
Joe Vendrick: But drained disrupt highly disruptive times like Covid, it's been governance being a leading <unk>.
Joe Vendrick: Solution. So today as enterprises move from my prepared remarks, we talked about just experimenting to act actual implementation deployment.
Joe Vendrick: Security and governance as a top of mind for the enterprise. So that's definitely our key motion and driver. We also discussed the prior quarter, earning that our highest growth suite is the control suite that focus around cloud unstructured data governance to prepare customers for that AI right.
Joe Vendrick: Dienes posture.
Joe Vendrick: That makes sense. Thanks for taking my question.
Speaker Change: Thank you.
Speaker Change: The next question comes from Jason Ader with William Blair. Please go ahead.
Yeah. Thanks, Good afternoon, guys TJ for you just want to understand a little bit more about the.
Speaker Change: Momentum that you are having on the MSP side I know you did an acquisition there recently.
Speaker Change: Can you just talk through some of the dynamics, what's going well what youre still working on.
Speaker Change: And I don't know if you could size that business for us, but just give us a general sense of like how significant.
Speaker Change: A part of the business it is and how fast it's growing.
Jason Ader: Hi, Jason Thanks for the question. So yes, we remain very bullish and excited about the MSP segmentation.
Speaker Change: So recently, we asked you had.
Jason Ader: MSP.
Jason Ader: Platform launch, our new extended popular offering as in form of elements.
Jason Ader: At our NASDAQ right after our NASDAQ Investor day event, where we actually roll out.
Jason Ader: Additional functionality to help our msp's be March more powerful and user so to summarize these managed service providers. They are taking care of cloud assets for hundreds if not thousands of small to medium businesses behind the scenes. So they actually be at the MSP providers are using our software.
Jason Ader: To scale their business to drive this recurring monthly managed services offering so we become mission critical for them from the whole end to end, what we would call confidence.
Jason Ader: <unk> to do the data management to do that use our management, we have since expanded that in form of what we call. The elements platform, which is tailor suited for partner go to market.
Jason Ader: Emotions and.
Jason Ader: In term of multi tenant management in term of pool license a monthly contract etcetera. So it's a very very strong momentum so the MSP a or at the end of 2024 was 14% of our total a R.
Jason Ader: It grew 60% per year from 2020 to 2024 basis average CAGR.
Jason Ader: It's actually growing faster as we continue to roll out more solutions. So we're pretty happy with our <unk> acquisition, it's a small revenue.
Jason Ader: AD, but very importantly, it's a very important new IP expansion of our platform you will hear more from us on this topic in the coming.
Jason Ader: A couple of months as we continue to roll out aggressive new offerings in this space. So this is a we think is a game changer for our approach to continue to scale the business through channel.
Jason Ader: Through working with partners and turn effectively our platform into their mission critical.
Jason Ader: Businesses applications.
Jason Ader: Gotcha.
Jason Ader: Are you.
Jason Ader: Steering I guess.
Jason Ader: At the low end of your.
Jason Ader: Product portfolio towards elements, where you kind of having both.
Jason Ader: Maintaining both the traditional portfolio.
Jason Ader: Direct to Smbs, and then having a separate <unk>.
Jason Ader: Portfolio for MSP.
Speaker Change: Yeah, that's a great question. So far, it's really being our avenue to go after the small to medium businesses.
Speaker Change: to really allow our enterprise grade SaaS solutions accessible to that market segment via this intermediary which is MSPs thus far.
Speaker Change: Well, what we are recently discovering is that the challenges we saw for multi-tenancy, license management, change management, baseline what we call actually exist also in the upper end spectrum of large, large enterprises. [inaudible]
Speaker Change: So we actually have even close couple of deals leveraging that platform for some of our large, very large enterprises with several hundred thousand user bases.
Speaker Change: So it's very interesting how the market continue to evolve. Clearly, we will stay very close to our customers, whether it's in the large enterprise segment or our MSP partners that are using us for their mission critical operations. That's the way to stay ahead of the game as we go through this highly disrupted market condition.
Very helpful, thank you guys
Thank you. Thanks Jason.
Thank you. The next question comes from Nehal Chokshi with Northland Capital Market. Please go ahead.
Speaker Change: Thank you, absolutely breathtaking seat and raise in the seat, business and
Um, it did a good, uh...
Yes, absolutely. I estimate that... [inaudible]
Speaker Change: We're relative to the guidance all around ARR, the work and systems, and we were set up at excluding the impact of the favorable impacts of currency and
Speaker Change: As implied by slide 43 here when you were talking about the revenue performance. Is that correct?
Speaker Change: Yeah, I think in Q1 specifically, we did have a very strong quarter as you're noting.
Speaker Change: Obviously, we're only guiding to revenue and operating income in Q1. So, you know, we see the beat there in both of those areas.
We only obviously guide to air on an annual basis.
Speaker Change: And part of the, I would point out, part of the revenue beat was a little bit of a mixed shift that we saw in Q1, right? Where, you know, you and I talked about this before but we kind of were not expecting a significant improvement in term license revenue and that came in actually ahead of anticipation in Q1.
Speaker Change: and when we think about that translating to ARR, whether it's SaaS or Term on the revenue lines is just an accounting function, but the ARR is actually the same, right? The same ARR for those two different outcomes on the revenue side.
Speaker Change: So overall we were really pleased with the performance in Q1 but we've actually you can tell from our AR guidance for the full year.
Speaker Change: Other than for the FX tailwind, we are not increasing that and that's really a function of this larger macro environment that we're trying to be responsible and really be prudent in terms of our guidance.
Speaker Change: And again, you're responsible with that. So that's how we're thinking about the AERR guidance for the full year.
That's great, okay, thank you
Jason Ader: TJ, you may have already said this at the beginning of your comments, I apologize if this is a repeat, but you did talk about how you have a great purview of the market giving your 25,000 customers.
Speaker Change: Did you say, or if you did not, can you say, what's the sense, since 25,000 customers are generally speaking of what you believe the overall market is now in deployment phase, rather than testing of cold pilots?
Thank you for watching!
Speaker Change: That's a great question, Nehal. We would say 80% of customers are actively testing coal pilot.
Deployment of Co-Pilot Estil, Moe,
Speaker Change: It's better than before. Microsoft have indicated as such as well, but we would say it's still under 10%.
Speaker Change: But it is markedly better than before. Well, we have seen though the bigger change as we stay in the prepared remarks.
Speaker Change: is the active deployment of AI type of functionalities across the businesses, leveraging AI services, whether it's cognitive services on Azure or other type of commercial available AI services.
Speaker Change: So that is happening, so Cole Pilot of course is very tightly associated with the Office Cloud and is licensed per user, per employee across the organization. And you have also seen Microsoft may some meaningful licensing changes.
Speaker Change: where you don't actually have the license for everyone, but still take advantage of the AI benefits. So we see a mix of those type of formats in the field. So yeah, the actual deployment of AI is happening.
Great, thank you very much.
Thank you.
Speaker Change: And I'm going to be talking about the the the the the the the the the the the the the the
Speaker Change: Thank you. The next question comes from Kirk Materne with F-Core ISI Peace Go ahead.
Thank you for watching!
Speaker Change: Hi, this is Chirag on for Kirk. Thanks for taking the question and many congratulations on the strong start of the year.
T. J.: TJ, you mentioned in your prepared remarks that companies are moving from from planning to implementation of their data modernization and management strategies.
I just want to ask how much further along? [inaudible]
Speaker Change: Are we on this timeline now compared to a quarter ago, a few quarters ago, and how long do you think these data modernization tail winds will last for or will persist? [inaudible]
Thank you [inaudible]
Great question.
Speaker Change: What we were still in the very early endings of data monetization and deployment.
Speaker Change: So that is actually the hardest part of the work along with obviously. [inaudible]
Speaker Change: Data Cleansing and Data Consolidation, and the World Data Quality Management. So these are really, really difficult tasks to do, especially along with business process engineering. You cannot just...
Speaker Change: Drop AI into existing business processes and expect it to improve your productivity marketly without re-engineering a lot of your existing overall business processes along with change management and culture and that goes with it. We find that the larger the company the harder it is.
Speaker Change: to actually implement, meaningfully changing AI, so it will take a while for this to happen. So we're really just seeing the early endings here.
Alright, thank you so much.
Speaker Change: Thank you. The next question comes from Derek Wood with TD Coven, please go ahead.
Speaker Change: Great. Thanks, guys. This is Colin for Derek. I want to ship back to the go to market and. And um.
Speaker Change: and talk about the direct sales effort versus the channel. I'm just wondering, you know, coming into this year, if you have any tweaks, initiatives, etc., that you're making with the direct sales team to kind of supplement the growing channel next.
Thank you.
That will remain the case.
where a channel is very focused on. [inaudible]
The small to medium sized businesses.
Speaker Change: Having said that we do have large enterprise segment where we do work with increasingly that country level size as well as global GSIs on large size deals with customers. Given the macro backdrop from our perspective, you asked about tweaks.
Speaker Change: My team's mandate to all of our business organizations is...
The key now is stay close to the customer.
Speaker Change: Whether that customer is a managed service provider or that customer is a large enterprise sophisticated IT. We have to stay close to the customer to anticipate.
Speaker Change: The changes that's happening in real time, both in technology disruption as well as macro climate disruption. So we are being very very careful and diligent about staying agile and be able to pivot. This is not the first. [inaudible]
Speaker Change: Big macro cycle that we've gone through, the company's been around for 24 years.
Speaker Change: So we have gone through this many times before and every time there's a major cycle we actually come out stronger and do better.
Speaker Change: So this time is no different. So our mandate to our organization is to the extent that you cover your customer either direct or channel model for the different segments, stay close to that customer, stay close to the partner, and that's the only way to be able to remain agile.
Speaker Change: Great, helpful. And then I just want to quick fall out. The license outperform is in the quarter. I, you know, with earnings specific driving that large deals or with this. [inaudible]
Was this just a, you know, timing, dynamic? Thanks [inaudible]
Speaker Change: that you're pointing out. We did have a number of large deals, I will point out.
that we had 40 deals in the quarter over 100K. [inaudible]
Speaker Change: Up 43% kind of year over year when we think of those size deals, so that definitely was a...
Speaker Change: A Contributing Factor. We did have a number of large deals literally around the globe. Every region had a number of large deals. So I do think that that diversification that T.J. alluded to and
Speaker Change: and our geographic kind of diversity definitely played well in the first quarter strong performance across each of the regions and it also showed up in large deals as well.
Appreciate it. Thanks.
Speaker Change: Thank you. Again, if you have a question, please press star then one.
Speaker Change: The next question comes from Brett Knoblauch with Berrenberg, Per Capital. Please go ahead.
Brett Knoplow: Perfect, thanks guys. I just want to clarify an FX is the entire call it beaten raise in excessively in the first quarter attributed to FX.
Brett Knoplow: So for the full year, yes, we are, again, I think taking a very prudent approach.
Brett Knoplow: As we mentioned, Q1 was a very strong quarter, Q2 looks also very strong, we feel good about Q2.
but we understand there's definitely a lot of...
Brett Knoplow: Activity in the macroenvironment, the geopolitical environment is very uncertain and so we've taken the approach of being very prudent and reasonable with that guidance and not increasing beyond the beats from Q1 and then the FX impact. [inaudible]
Brett Knoplow: and you'll see in the, I know you probably haven't a chance to see it yet, but. [inaudible]
Brett Knoplow: In the investor deck, we did highlight in a couple new slides that you'll see really dissecting the FX impact as well as the beat from Q1. So it's highlighted very hopefully helpful for for the people on the call to be able to see that but short answers yes.
Speaker Change: Perfect. Thank you. And then it seems like many of the public markets the AI trade has unwinded a bit. I'm curious if the actual companies implementing AI or your customers has that slowed down at all. And I've seen that kind of develop into the conversations you're having with customers. Thank you very much.
Speaker Change: No, thank you, great question, Brett. We have not seen that slow down at all. I think it's a mission critical now for folks to really look at meaningful way to implement the AI within the enterprise.
Speaker Change: There's definitely a very feeling of urgency across businesses that what's happening right now it's much more real the changes are much more rapid than before so the AI implementation adoption has not slowed. [inaudible]
Perfect, thank you guys, really appreciate it.
Thank you. Thank you.
Thank you.
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to TJ Jiang for closing remarks.
Thank you.
T.J. Jiang: I want to emphasize that while the macroeconomic environment is fluid, we are no strangers to navigating all types of economic cycles as we have done so throughout our 20 plus year history as a company.
T.J. Jiang: Our platform remains vital and necessary for organizations across all economic climates.
T.J. Jiang: and we are well positioned to continue executing our strategy of solving the hardest data management challenges effectively. We're confident in our approach and excited about the opportunities ahead as we capitalize on our strength that sets us apart in this landscape.
T.J. Jiang: Thank you again for joining us today and we look forward to speaking with you more this quarter.
Speaker Change: The conference has now concluded. Thank you for attending to this presentation. You may now disconnect.