Model N (MODN) 8 Aug 232023 Q3 Earnings call transcript

Good afternoon, and welcome to Model N's Third Quarter of Fiscal 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

With that I would like to turn the call over to Carolyn Bass of Investor Relations. proceed. Please

the to is quarter for Officer; Carolyn With today Welcome earnings fiscal Model and N's Blessing, me This Jason Financial call. Bass, on John Model Ederer, afternoon. Chief Officer. of third XXXX N. Model Chief Good N's are Executive call Investor Relations

regarding our performance issued to purpose primary of XXXX. to call is Our was close financial our market The to earnings outlook press quarter and fiscal fourth website. of you our with offer a quarter information provide the XX, and year release is third posted on for September ending today's and

commentary The not disclaim upon risk as management's or this on statements current Please any forward-looking SEC. include obligation subsequent views as outlook. refer in representing differ XX-Q and date. our with be statements. factors relied views to Form of our may may Actual of We should any These to recent made expectations filed materially. statements update and forward-looking the any based results the in forward-looking are as call today most

website. during should addition addition issued to considered call, which In from isolation not financial release today discuss Reconciliations or nearest the GAAP our the to metrics is for a in be as substitute in in GAAP earnings financial the non-GAAP results. we measures. These metrics available included non-GAAP of today's measures will non-GAAP on are

call. our Investor the periodic third and to website SEC visit our release, this quarter order replay encourage I press access of financial investor.modeln.com XXXX you Relations at in fiscal to reports

fiscal this call year comparisons otherwise unless XXXX be will in Finally, to all financial our results. stated

call turn me over Jason. let to that, with the And

exceeded am report our services for quarter and guidance revenue. professional call our Thank We total across expectations today. to third you, the subscription revenue, and pleased board. welcome revenue to I results beat that Carolyn

strong quarter adjusted profitable related model to commitment Overall, and efficiencies another driving record to we underscores continue growth. also transition. We QX EBITDA business our was our posted as to drive

which grew Our also QX SaaS year-over-year. were metrics XX% by by SaaS ARR, strong driven

In from are year. was uncertain environment. and am our points especially, model three we that SaaS in retention last of very of team an addition, proud net dollar macroeconomic transformation I driving, our the up XXX% business QX

I'd talking update give about I Before our the investors that that's important to our two are transition. topics macro business view to the an quarter, very on like and on know model our and

I get approvals QX impact stabilizing and deteriorate to As more on that environment but deals some would to further. scrutiny say our we did and spend shared customers fiscal our We selling were during incremental required saw done. additional I is QX, call cases some our applying in this last saw not in continue

the to Next significant have over projects we are customers close completing and momentum transition year, our to off seen cloud. the move kicking model very business to last

We are by is evident our OpEx, favorable also starting to see trends. as increased leverage EBITDA in

of customers economics. the we of final this deal a these further work the to will his discuss cohort room beneficial of we forward still John As customers all next that year of believe issues, some seeing we are create this conservative remarks. give ourselves next but taking prepared looking quarters to with are couple customers. to stance in as transition, convert to mutually do the with we work We get substantially will over end to timing

we strong saw with of very excited We some very deal future. Model am Rainmaker, in customers. where we June, I N's user a great timing still issues, engagement which call short-term about Despite our the had conference

drive all logo interest also out of we fact, on vision the new will annual new a over for that profitable side. was In the laid in particularly event of a lot next the believe several products new growth years. this resulted pipeline, our company, amount of in substantial and which the we There

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we they phase During Vigilance, build and of expanded Amgen recently Validata completed Amgen's and transition. newer implementing successful relationship include SaaS their year. as will our earlier released our products on with next was which two XXXB QX, this

a distributing automated This Amgen SaaS the compliance seasonal take customers on XXXB Our is of who companies high-value rapidly stabilized complying entities validation implement maintain also successful example testing to suite patient experienced and while of populations. tools of most customer, expanded product a that products. proprietary releases moved serve other quickly stringent covered Model helps latest transition, their Vigilance vulnerable with testing also while suite. products requirements. nation's the Amgen use more helps N internal to system our then

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to Services. Turning Professional

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the experiencing XX% releases. take in that they an reduction the to have For completed seasonal average transition, customers our are on time successfully

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analytics five We data categories, think in with examples. some which along about describe and briefly I'll

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won respect two which of I dream stand excel. importance that for core recent and values, call recognizing awards to finally, want align we And the our DARE out

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our I'd that the reiterate results enters like world. of the model around collective QX closing, reflect efforts to In strong

continue great our to building we out the all improving and a As will company, close growth customers, value delivering while profitability. year, driving we

fourth John discuss our like financial preliminary provide over With that, the to fiscal turn to the a for John? call results, our guidance I'd to XXXX. offer for quarter, and QX outlook

good and everyone on to today. you, Thank the afternoon Jason call

free in I adjusted as and EBITDA we performance flow, As results grew had guidance very for Jason had trailing that metrics. versus a period. strong in we was our rebound last the our particularly delivered XX-month exceeded profit XX% by cash year P&L solid QX noted, QX which million $XX.X pleased

As while starting also Jason of model we business the even final to SaaS bottom of in benefits some described, working the through see are stages our we terms leverage. to of cloud the line transformation transitions, of are

upper end $XX.X continued of third at to at end the by above our utilization also as quarter, $XX.X grew specifically million, team high-end revenue guidance Subscription to revenue guidance the our million, results the by XX% Looking our services XX% the rates. range. $XX.X which which grew was professional guidance. of exceeding our And revenue to run exceeded total high million increased XX% lastly, for the of to top

our and mind earnings our a numbers keep please is in we of provided results terms will in profitability, of our release. non-GAAP be that full reconciliation In discussing

$XX.X quarter, representing third non-GAAP the XX.X%. a gross was margin gross of million profit For total

number margin and professional subscription revenue as QX XX% total SaaS which as revenue. prior last QX Non-GAAP XX% the a was increased of from non-GAAP XX.X% down in XX% services in an compared but of exceeding expectations. exceptional still in XX.X% gross was gross our was margin subscription year year And to percentage QX, above

Adjusted an for to ahead third XX.X% of XX% the and $XX.X third XXXX EBITDA was improved to year. of EBITDA XX.X%, from of Adjusted last quarter quarter million, compared well margin increase our fiscal the range. guidance

First, factors: activity overperformance and has would have our adjusted three hiring attribute overall shifted our I environment tightened up EBITDA the macro spending. And as on to we

we benefited to required on for are of population certain we of customers. QX operations as and shrinking the support that leverage less to we're Second, innovation personnel-related will the due normalize realize business, expenses able in on-premise some a with in cloud And third, focus to starting across timing QX.

of above increase non-GAAP net year income of million, non-GAAP share QX earnings Finally, was an per last $XX.X of were the which end our XX% $X.XX was from high guidance. and $X.XX

$XX.X million $XXX.X reached metrics was an increase SaaS last ARR XX% versus Turning to our of or SaaS QX, year. million our for of which QX

trailing XXX% SaaS QX. In was XX-month addition, net retention in

net reaching peak last retention in from ARR growth transition SaaS QX activity our and this year, rate SaaS have metrics fiscal Over benefited year. our partially the a

that to with SaaS We long-term right expectations. this XX%. results due trend to have are numerous curve continue with QX in expect of on the on we with talked about and the our bell SaaS in target calls, Further, were transitions line line in growth ARR our QX, we

balance cash was million with up in sheet, the third equivalents quarter $XXX.X of terms In from which ended we $XX and million QX. the

we on on strong quarter to of call, which our quarter, spiked, of As our bit billings. last last despite noted collections anomaly accounts had a receivable a we due an record

versus sequentially down with $XX.X quarter We million followed to a which another that up have of accounts driving collections, million receivable was drop record QX. $XX.X of

$XXX.X was on balance was of million, XX% our representing Performance Remaining $XXX.X of up growth was The million to year-over-year to RPO Turning a which current basis. QX portion RPO X% for up our total year-over-year. Obligations,

SaaS RPO total impacted been activity. has Our by transition

longer-term We in added our last year the to contract in years. had of outsized RPO. SaaS transition with period reflected of These extra three commitments excess a due lengths to a years of well growth value contract deals, total often number long-term

proportion renewals a in normalized length of other transition As return bigger contract bookings RPO non-SaaS and to our seeing total, are more a we become average the level.

total ahead looking share. bottom services adjusted raising to the guidance year end earnings revenue view for our our and per of outlook EBITDA for subscription are increasing non-GAAP Now, the for revenue and professional our we revenue

QX, with revenue range total expect million, $XX services In to of be of revenue range $XX.X and to summary million to million we $XX.X in range $XX.X to subscription of revenue the in in $XX.X the expect the $XX.X we million, professional for million. million

holiday the typical quarters our with is note would business schedules. September professional impacted in I and and by there December seasonality services that, some vacation

run a again range adjusted compared diluted fully million be a $X.XX approximately And expenses share, range finally, a based EBITDA expect share per $XX QX. to $X.XX non-GAAP on more to the rate which expect shares. per reflects count XX.X million earnings to normalized We in of $XX million, we for of share of for to

to in fiscal we services $XX.X the $XXX.X million $XXX XXXX total in in of million, and For $XXX.X of range the of million $XX.X full subscription year range $XXX.X be with professional the million revenue expect revenue million. revenue to the to to of range million

based of adjusted We of and $XX.X be EBITDA share to per $X.XX to non-GAAP fully count $XX.X diluted be the share billion to XX.X earnings million shares. range expect in a to of share million per range in on the $X.XX approximately

ahead a is this timing time nuances earlier. the outlook looking XXXX, provide to a to discussed particularly given Jason fiscal five-quarter Finally, challenging that

we we and and line while to have today. is pipeline lot Rainmaker, the to want future what second our and for of approach a prudent around sight on interest of While improving of the for calendar be the half data potential focus year coming there's in out analytics of

FY and will similar we have challenges. XXXX In trends some

to growth the challenging but of will year-over-year for ARR year target comparisons. be notably SaaS year quarters certain QX we continue next to due XX% First, tough

decrease seen again from the have headwind next the macro approaching will And offerings, maintenance on lower potentially from we these decline subscription impact a environment XX% offerings expect our Second, software-enabled be third revenue service next growth and then year. a in more year.

up, of all wait how year in of Rolling that of but with go and revenue appropriate would is the from recent Hopefully, these there will next pipeline QX upside all the next the some to quarters update expect at factors you line we guidance. see in time. be we'll couple our growth build

that growth to side, our profitability years. last profitable the I margin with commitment adjusted improvement demonstrated believe steady Now, we in over have the EBITDA on several

benefits in We and QX will transition as specific the on continue of profitability and to we FY model provide we'll our XXXX call. earnings show improved more capitalize business on guidance our

QX, delivering performance SaaS and our profit results time at focused financial driving So improvements. and pleased continued while our on profitability the ARR we growth, with to we are in remain summarize especially same

value a prudent we both will that continue our shareholders. to deliver in ensuring way and customers our business our manage We to

that, to Operator? questions. operator With call the for the over turn I'll any

Thank you.

[Operator We will Instructions]. now conduct a question-and-answer session.

Craig with first question Stanley. Hettenbach from Please comes Morgan Our proceed.

on I into color parts appreciate the all XXXX. moving Thanks.

and just rest of of that because would normalizing of a of or transition XXXX? here do how kind of elements timing some the transition? you through timing how little you that the transition, about there As of do a the about talking the elements characterize that thinking customers if bit complete cloud timing catch-up think you're over you cloud kind some about is pushed out, Is when into and of element,

Jason, that. That's is answer I'll question. a This great

reminder, year Act also that's communicated recently first that's to December have do we the and non-negotiable. customers this that going to on-premise life the not Reduction we So like our some is legislation releases. in be a customers to of end of backported enacted our Inflation the We've told of key been

big make economic take little motivation this say arrangements good So business decision a takes cohort for on negotiated business extra that to little they need a help good just there would last a a as these end is this win-win. up -- They've this a move and to of it's in they them of felt What time cases. pretty gotten year it customers in feel to I we customers more to like bit still the forward. we've proven customers their have is to

economics want year of these either five -- five given are We particularly many in three away that contracts. to long-term to don't give discussions, these

of right have with going on convert that leak that customers where year on these maybe that today is do cohort visibility around best the but slipped about sit think maybe out it deals December got guidance consistent to we've are we little calls. prior had bit way a So based still the that couple a the we we've quarters, is a we've into believe next given time of frame remainder to which good of

Understood. see the model. John. the some a And in to just Nice follow-up of for leverage operating then

levers you a as key the Kind again are of about intermediate business onto of next and term? kind means curious Just more you segue that the and customers from into cloud. operating perspective? How the thinking year margin get what you longer to to

more And get next of thematic But to regards we we business where are legacy then scale of Sure. just more of to Yeah. the hosting of that's cloud to a in on new that things on-prem our our having innovation. products as time particularly another of amount terms on when R&D, the certain give business the then well high-level to guidance a organization as we're cloud. transition we year. the today. more we'll as QX of as supporting give getting in specific with cloud seeing part products perspective well and fewer obviously area Happy answer bigger and spend support a from the And the opportunities effort operating have both call as some things support cloud to in side to over that both

of cost to we revenue get to and time both so of move OpEx. of we business, points on leverage start on side exclusively the And pick cloud the and through up as focus

Got it. that. Thanks for

Yeah.

Thank you.

question Please next proceed. comes from with Joe Our Vruwink Baird.

on a practice. update Great. big There from I'll particular a macro. Hi, consulting just start Maybe was everyone.

on and wanted is that of is have macro experienced terms case? Model the access pricing just one activity sound doesn't I a actually comment whether think right efforts confirm and like how N. extending market in It really partners just maybe to shift about to your focused broad of that I decision-making. talking

Part the case? industry the offset. true And is around it's question why is giving focus a compliance an the just do the then, that because of part just if [ph] this And think be would you you regulatory A second is bit of within

And resiliency environment? a from so some net-net you're discussion seeing

take is Yeah, Jason. Joe this I'll that.

on again what and High we have calls the Tech, in line talked talking year. with of broader we've model seen impact about past kind some I'm about any So on

how view into High Tech out we to factor quarters. the has so And

dynamic the our core then yeah, medium continue And drive which somewhat is to large pharma. business from insular fluctuation and economic would regulatory I environment, say certainly, of particularly does part the with

software, did remains software we overall life are our our some I to sold in we resilient. and out a more sciences have John be very demand both in And a remarks, talked our answer. And subscription then on our in customers but the quantitative prepared pipeline customer I some qualitative mention June. for of out really services complement saw cautious also the my side of As back and well some that as component just generation about seen script, nice event of saw kind really point we that coming this our to

Okay. That's great.

Just like what anticipate I'll the a you fiscal that XXXX of more benefits and to transition that Obviously approach in the bottom bit north quarter EBITDA there's call a next model reflect is more you time steady-state terms of seems is started XX%? things and as of already time of now But the SaaS happening. the Is be fully you've still some endpoint would something frame this line year you're realizing a to realize? of that frame? to right it maybe

in would to improvements years do XXXX. that continuing committed But are and little in Joe of doing us side-step what I FY a you've over committed that good seen several the profitability. going think talking drive terms And very Yeah. a reiterate forward. about I'll I And question. to that bit we we're it's it last today to is

bottom of but you and a through with XXXX continued that process incremental profitability. I will won't commitment planning line, an some go trade-offs even and on going between investment we for growth the through for frankly process magnitude for benefit to still give those FY today order we're dropping the of opportunities deciding as

increased we'll forward. to to we opportunities other continue drive about the those at business going I already increased but talked on scale cloud profitability some the for these the there are look of think when and overall, business we the over and question as we move

you Okay. very much. Thank

Thanks Joe.

Hotchkiss with Goldman question proceed. Please comes Our Sachs. from Adam next

first momentum to Great. the cohort strength just amongst could guess sciences question. taking latest some the services, you update an on I but the seeing the in the Thanks had us life cross-sell mentioned softness in software. you think give cloud you're the I for folks around shifting

this Just of of to incremental earlier color how about comparing any customers think cohort some adopters? the of on behavior cloud you the

Yes, Adam talked it's as typically are and the a past into a the the what will that call now question. couple still of over within great take pattern a certainly of years -- lays three products. the and our platform our map transition next And Model a road period quarters come the it they kind And of we're with pattern comes these into stabilizing almost more SaaS I've complete in SaaS of also remains on back with three-year out N. transition two-year of that about cloud SaaS that live couple customer every after going our one phases is to a transitions

I that their we've in a transition. adding are now with products. my year pattern I they customers live quarters very script a Amgen this did And completing in involved that seen two customer And of so stabilized SaaS transition after and with repeat earlier new their back was couple went were mention

So out line as transition. consistent customers of it's been trend a pretty their come

Tech High then just really side things. helpful. the on of That's And Great.

there? or the be there think squishiness business to stabilize is there fair starting last a a called piece I little headwinds quarter. continue of to little out Is bit, that does bit to you of say it

and the this I continue to platform It's and leaders usage. we've some trends year particular expand AMD industry that Kyocera invest certainly like We've seen seen pipeline. AMD. with in talked our and about run positive stabilized in

stabilized. seen that high-tech that on And interesting new business logo So our I part some of activity pipeline also do has the think we've our in side.

So definitely feeling better about we're that.

Jason. Really helpful. Thanks,

Thanks, Adam.

comes next with from Samad proceed. Our Please Samana Jefferies. question

for is on Congrats Jordan a quarter. strong Hi, [indiscernible] This guys. on Samad.

John. a maybe question first So for you

imply like substantially fiscal for at obviously the XXXX that rate. growth that for right SaaS XX%. that growing guide And a net a similar ARR new up year-over-year On of ARR of pretty would is it implies That around perspective. kind the initial picked from added

within think piece? you to XX% Maybe I what's speak for back And SaaS maybe for So booked? layering guide there? into the that stepping your you what can are expectations visibility growth

speak can level. that at I high a to Yes,

SaaS be look think you're the terms I a if it be target for would But an and it's ARR in about you my as we've that amount of will there. do guess achievable we excess setting talking this that of -- at an think a that added that year us there the target. goal,

But at are year-over-year But a QX need the challenge. target. front like today an as this cross-sell certain well to quarters But we of go We're as be to will to year comparison have we upsell certainly business as going transitions the to logo in to on sitting execute. SaaS we reasonable go after. very for from feel remaining new look particular on Obviously, in ultimately we tough be standpoint. the next believe and target up that's and us cross-sell a are is execute achievable a us. opportunities that going

Awesome. maybe for one question Thank Jason. you you. then And

tightening one on the that and prepared area tightening impacting focusing more hiring is definitely on R&D called to echo that it's everyone really some and above there's else's sales exciting You curious I'm evenly? expectations. is front. remarks in you comments out just your profitability Are

the just near-term? So focusing to as in that curious whether savings you're I'm

Yes.

add to particularly quarters, line. over sales new expenses investment product especially been on on continue for in bit to tightening of continued selective do year line. on us innovation. the what think next some John quite selective for have overall, and light I in across very to our We've next capacity very year. the side it's being environment bottom it's a a the it's – this did ago quarters build in strong ago We of right terms hiring focus our to bottom couple hiring, to drive see show the said the important to some We now. about generally improvement incrementally a on and of just In in on three of But of this certainly, company maybe year of we've R&D desire

feel well business do we generally of simplifying board lot a now we and speaking, we're our the today. on right of So scale we're and benefits do resources economy model with resourced getting like of have

for Thank my you Congrats again. question. Great. taking

Thanks, Ben.

Bennett Hallum. proceed. Our from Craig Chad next question Please comes with

Great. question. Thanks my for taking

on narrative trying into we're of the year, of from that into I quarter transition those the guess at we end future to cloud I'm or deals QX year? what with in transition life Is understand quarters to fourth so end just and expect slippage trying fiscal the So the message? this next

way half it expected is little we that cohort the probably in think a year I of that QX, bit this fiscal And of we to a year. slip to over we some to some taken our QX, beginning in second have about and the may close into deals close longer of have QX expect do deals that Best had the of close.

I as away good year to long-term have sense said, little construct so their give these this And deals on of think I feel take And on to said to three a just to work makes them business five plus sure about to and customers, economics closely business we contracts. also pricing it we we good don't more time as cohort move. their last make case with their they

Okay. SaaS I side, I on growth this to at then in target, appreciate ARR correlated XX% SaaS be well that is obviously the in SaaS, transition. point but of color things terms John those assume And would the the should apply just there. the pretty subscription maybe the

Yes.

should is growth revenue SaaS same growth ARR metric. a – level. So SaaS based ARR metrics essentially our metric and SaaS The at on be revenue the

Got me. one it. maybe last And then for

about you think terms sense a the we on the can talked I with we're and you of year slide? roughly maintenance I not XX%, done September give of this but yet end us decline know where in maintenance Just

Well, reiterate what I Yes. commented on can before. we've

for expected another maintenance And then or on we're that fiscal $XX and we FY so FY XXXX on so year, XXXX. track million in by we shy and top, decline year expect here more would with we to see for of finished last XX% that just And to that. XX% potentially basically revenue, decline XXXX, next in

you we're to of when of so end low down starting to we XXXX the FY to And as pretty maintenance. exit XXXX, drop levels get FY

Great.

the I so Thanks much. Okay. appreciate color.

Yes. Thanks.

comes Truist proceed. Securities. with Meares question next Our Please from Joseph

question bit through coaxing and little SaaS Is logos? how taken sense guys. Hey, many you to us give a double-digit the transition, for it that's taking Among the could single-digit details get here. the Is all just a cohort logos? more Thanks it the that is this? customers of

are they for they actually Just And happens to like of of guess what how carrot life life, is? get see trying end end transitioned Like then, end what if with the powerful the losing? I by year? this of functionality don't the the

Yes, I'll take that last part first.

are have will security-related. some going period So they big, call you to or it But to that back-ported on-premise of not fixes is doing be be go releases. the the if of want Act the the to Inflation stake carrot unsupported Reduction a essentially of our code be any short we'll longer no do updating We a where lines. on-premise and period we'll

customers. So that's for catalyst a pretty big

with and we're they left a I on the specific somewhere as I how give not the transitioning a guess business the they give just economics fulsome as last doesn't definitely negotiate reason. business call I a transition. to deal done And get going we'll many to But in if that our said, long-term cohort can I update ones to low-teens. it's are But deal a see quarter to. for in yes, make in up And just we're trying of next get to model better and it's They said a deal. good sense mean terms customers this are double-digit are that

of land just that's if And for talked pipeline level out curious for potential Rainmaker. SaaS and transitions. taking there's high of the coming the really that I'm being out That's pipeline then make any the to at by of questions. helpful. up the about ground some you pushed products Thanks multiple potentially

of was logo. who Yes. N saw lot I existing to about coming good the story. things. of chunk it and had it new we mean a it of And two I thing pipeline think the was Model fairly then Rainmaker maturing prospects It was majority were combination a new out pipeline -- there the or in of is the exciting that was generation of we

convert start came a I matured pipeline to that prospects we the pipeline. that that think, we that into the will feel Rainmaker in that move certainly certainly year, good as So, baseline well built and fiscal good at of we as next additional into

and So, see trend the it's to exciting it bias towards the exciting to the see new logo.

for Thanks that.

Thank you.

Our RBC. with proceed. next Jaluria Rishi question from comes Please

may about generative easier by implementations to ability some my terms as some issues get then, much thinking Thanks end or And quick taking accelerating the maybe of up maybe speed to wanted question. have may use use on that for a in well customers got have, kind and as cloud to past of your road that follow-up. AI the Wonderful. you near it kind make and it maybe the I the to of I've start of so transitions. concerns customers of migrations

proposition launch products today talked are the about Yes. Europe, on some to is forward. global sequence that AI complex decisions helps we the products to launch move helps leverage with past all we've make in Certainly, and customers that certainly, informed and I pricing excellence that the in that have products. more rationalize mean, how value and help of when get customers the

kind product MetaBot AI so and new excuse some mentioned that system built also We and customer a Rainmaker Medicaid for called that lot automates we in the a -- me, check a we was has that a of -- of claims detection to is and that or state this upload that do. have product fraud people announced work would helps at

prop on is side. and more AI opportunity would the value I our product So the say,

in on migration efficient side proven those running professional I budget on been projects profitably. certainly and we've the think and side we've on time very that very services the

say, front. AI more product the So I'd the on story, is

it. Got

That's Okay. bit and gross really bit turning deeper that. helpful. diving a into And to little just a then little margins

over about what How cloud. As that more of life the can we time could gross end maybe towards like years? should and going long-term product like you're bit look mix a look margin of little over line shift think Thanks. and next the right get we about subscription several that to the be thinking

a take one John. This shot first. I'll that at Sure. is

important look keep revenue. think, So when in an at of thing the to mix overall, mind is I line we the subscription

that so And line. have flowing today through we SaaS revenue

then We have have our and of we the associated small and service offerings, revenue term amount with a maintenance subscription licenses left.

overall subscription in And what level at a margin the that -- will a offerings that versus SaaS we're improvement the is blended so all pretty side rate. number total those seeing higher elements the that's and what into of steady and gross comes on gross service see the be of margin things, factor then you

a in to offerings see continue And improvements if so growing versus expect we subscription SaaS all things at margin higher some of service overall. the to see being level equal we gross would

Perfect. much. Really so Thank you helpful.

Rishi. Thanks,

from Please Our question next proceed. comes with Brian Peterson James. Raymond

Brian. is for This for on Johnathan McCary taking question. Hello. Thanks the

transition the focusing some I on on driving to and instead resources from away maybe So, you've SaaS spoken and logos. net shifting on transition new that think upsell focusing

sets department, expect hiring of focus. you year And do the last to or marketing tweeting how needed shift that motion internally? there investment about sales and you then incremental do think you So, go-to-market any that in kind your up

Yes.

really especially a we base four we because focused new perspective on as well last were logo the it's back our look so team investment three, were that over as perspective. the rep both quarters, transition. and When And and last leadership four years the much the latter. focused three gotten or team over so hiring as you have out not from building a So, on

growth team us I'm going to for that year. excited super this year have they're next driver major a and I a about to think strong and So, finish be

also And to a in reps reps on some driving we're of in think talked earlier products. understanding that about I the base, then and build great the relationships we self-transitions relatively add-on to for response the then and them customer pitching customers' patterns it of makes can that of upsell. about it's that do lot as and business And terms follow the question same seeing, easier makes -- transition because the that cross-sell to of sense and easy the with

and think pretty and right now of the to I that right feel level we forward all as year investment look good So, the sales next. our said, got in we we've about capacity of end

then And maybe front state overall? of maybe XXXB at the of a what Thank sciences key inning we're of kind kind compliance-based driver Okay. of that obviously XXXB I upsell. in focus But can lot been has for approximate rainmaker. on and then mentioned you the on know you. transparency and Thanks. regulation you've price a there's kind opportunity And of legislation life

about that baseball unique is the from with know talked keeps it's the end the me finite resonates that game compliance don't game think complex the and I that customers a more the more Yes, that. more like thing opportunity by with they and used it about analogy I we've for the in just like code benefit and talk getting about tax we a beginning as

solutions our with right pipeline our big XXXB and That part said, it's now. a of certainly

and the and there part So, -- price our still I pipeline we're big is customers early of management also our transparency good early in shows innings. a think a state that that's solution with resonating

gotten fully even with implemented. And and then Act. customers We're how our gets industry experts out sort started Reduction with haven't the really working that Inflation to we still

more well. regulation the products the of as be tailwind guess, to us an in continue I So, for new and opportunity story changes the a is for

next comes Our McNamara William BTIG. with from proceed. Please question

Hi. a should will? the mentioned improve you you This it question. if taking quarter? kind in think is guys for fourth Thanks we Like of I think is or have forecasted wanted we're bottom know Matt. Bill on for to just the of to how my you approaching environment if stabilizing. know I selling that do

would Yes, would the take face that value. I I comments say at

the we don't we have I at when think a ball. perfect environment, look macro crystal

should to forecast we best And our line so, are up today we do look we think we be. currently the at what and where

that's guidance line based way way the it. a I sight approach similar constructive we've a so, the our very to always And view and on it's we've approached taking done of today. would say,

Great. Thanks.

The next question JMP Please with Austin from comes Cole proceed. Securities.

taking for question. the Thanks

the heading Jason this top prepared fourth next you're -- from the maybe a So priorities hear your is top high I'd maybe, what what it's are into focused quarter? the remarks, are sounding two to things your And At level into all Thanks. on just two are but something love pretty your heading what quarter? positive.

question. Yes. That's a good

a because up and drives to that embolize. us the sure transitions position that upsell it of near-term realizations expense talking we're cross-sell helps approach are in making John it important certainly mean about. sets transitions to So up wrap as was some sales, with we I

our part that on of business. on the focused part of logo very business the also very new I'm and So focused

in been we've as the logo I pipeline. But excited about I'm talked very I'm engaged with of sales and the customers their have cycles making second opportunity. team for priority. focused I've been base excited year shape As involved ready super sure about personally about us excited next that I'm the some so in I've that for new is big customer good reasons. look forward, about on and the that obvious is the

Thanks Great. hear. to

call to Jason CEO Blessing today's comments. concludes [indiscernible] This for the closing

to all summer. you for August everyone and and call conclusion our attending road September. seeing look to in you you thank and And operator, you on great to thank John I Well, the tonight. out wish forward your a I

a great night. have thanks again So, everyone and

teleconference. today's concludes This

time. at You you have Thank lines participation for and a great your may disconnect day. this your