Smartsheet (SMAR) 2 Dec 222023 Q3 Earnings call transcript

Ladies and Gentlemen, thank you for standing by. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the Smartsheet Third Quarter Fiscal 2023 Earnings Conference Call. [Operator Instructions]. It is now my pleasure to turn today's call over to Mr. Investor of Head Turner, Relations. Aaron ahead. Sir, please go

everyone, Thank Quarter Third welcome, Earnings you, Good afternoon, Brent. to of Smartsheet's Call. and Fiscal XXXX Year

in release call Smartsheet's CEO, discussing in Mader; and closed We results Pete Mark webcast With issued our Godbole. that and CFO, will press Today's also can the today. slide at are presentation accompanies investors.smartsheet.com. be market Investor prepared website section Relations being after be be available today will me our Events viewed Investor for our of There's Relations replay the which Pete's is the our on remarks, website. announced a

During this meaning laws. the call, within we make statements the securities forward-looking of federal will

and statements on statements and Relations these forward-looking in current website and limited number based are on www.sec.gov. subject forward-looking the have filings to website described those Investor We not risks our including, largely but trends. SEC at factors, financial available SEC and a to, other These future our events of expectations projections on about our

information of that results do to the actual future forward-looking to assume are call the information statements except expectations during All these based in update as we as any statements or reflected events, our this are on believe of statements required and us new made differ reasonable, forward-looking today, materially law. may result and we adversely. obligation available by not Although a as

with to which call me measures discuss available can financials, call, let on GAAP directly will U.S. the certain financial that GAAP the we Mark. the turn over website. Investor to Relations found presentation be accompanies in reconciliation is addition most And our measures. non-GAAP In that, comparable also U.S. the this A to

we're to ROI delivering quarter on how and Hello, our for in to our drives our like durable the current and topics: year fiscal Aaron. how operational measurable Thanks, long-term environment; growth. XXXX. macro the in X our Today, quarter, I'd improving performance efficiency earnings call solid focus third for customers welcome

some million. Children's new While additional quarter, the strong seek And Beverages. expanded to Pete software XX% social out, provide financials from customers many footprint our will recurring details, ARR quarter We out more in AGC quarter. Arizona year-over-year. million, $XXX We as and Hospital, good Smartsheet's added for than others. recruiting the million want Energy, platform, the was such bringing Picasa, $XXX.X among in and significantly Monster total Seattle revenue, Bonterra providers up to Biologics of at our call empowerment the we $XX added annual I Revenue

our customer or Our XX strong $XXX,XXX expanding or climb expanded by more. and $XX,XXX expanding customers motion XXX within customers base with more continued by

quarter, we XX reps And XX.X We sales reps previous discussed Last ARR years. from also more ramping with were now customers we ended Smartsheet over have new users. million. the quarter than million slowly our how more with $X sales than

quarter, in we quota attainment pipeline, pipeline macro-related QX. record This the reps. with newest after improved a our exited and We generation from saw softening quarter in improvements

our also QX. We profitability improvements significant in to made

margin million a point scale policies to made adjustments financial QX. $X.X guidance hiring than significantly operational business was percentage better and and for our non-GAAP QX our Our negative model. of the plan a the and focus we've inherent improvement is operating improvement X sequential of function loss year, in rigor on our a This from heightened economies

as ROI The to the year macro experienced and growth to and these provide us navigate expect they margin to guidance in Smartsheet's came ability beyond. the in income for flow allowing non-GAAP We improve for large persist, backdrop. we operating cash benefits quarter free measurable part our customers the from

to at ARR to Advance Fortune investment Gold over their Since moving by Smartsheet healthcare $X.X ago, license in and a they product. total its more $X programs a now million, QX, growth workflows Data bringing organization powered year to XX XX% by have Bridge scale. in a XX expanded capabilities has XXX% and across teams they've our Smartsheet seen advanced manage leverage example, the as million. For increase company Shuttle Their integration the nearly year, almost usage over processes past increased

this One to seeing of measurable the improved biggest a benefits from customer Smartsheet ROI. is is efficiency, leading

spent to workflow powered by than staff more requests, team the one and example, of application on changes process For complex a used for XX%. amount automate a by managing Bridge time decreasing manual it

it ability in and while quick engagement. in moved assignments the the managers volume advance, leverage estimate up handle see employee cost and project Control transactions saw QX a logistics save the to each their because company could advanced hours and for project Smartsheet project view, it after reporting in win they another professional-grade project all a platform Center They to of tools upgrade more management professional that can levels. return Smartsheet hours services that deal, that brokerage will would platform it are reduce project integrated ROI and easy years, customs makes scale connector This and into labor to In lines as saved PPM management chose them Smartsheet to X insight larger a one both group gives Gold investment. advance implement on offers the risks nearly new their earn solution. the for enterprise giving solution They helping also X,XXX portfolio also to Those delivering a to for leading platform Salesforce XXX% and over enterprise Workiva and overruns. time than introductory and We leading determining Advance of provider Smartsheet's $XXX,XXX of licensing year. provider, so improve them

which At portfolio global chose and presented them The the at capacity solve global road management user in time and that By launching many as strategic transformation of capabilities control a environment, by breakout company to On such problems, managers space portfolio resource and we our gratifying face-to-face launched sight portfolios the information visibility capabilities, regions, clear deliver new At We're complex to segments. ability that achieve Smartsheet empowering be front, X person data and of which WorkApps, on for September confidential portfolio shared to layer company has data its recently where hear planning and our ENGAGE drive WorkApps and for outside multiple managers partners we global and several governance platform. and years. and initiative and span for refining Such KPI can capabilities services WorkApps, we shared future energizing was a exported simplicity first Smartsheet are of security also roles with map countries sessions an WorkApps. conference. given deploying of of the needs. Webex, on end portfolio in a a our key more we targets. incredibly to organizational experiences resource customers' during Engage, capacity innovation the drive talent. of for control how controls the food of large Smartsheet initiatives. granular and portfolio the A operating combines connect promises company We're a leadership increased and tailored our control PPM new WorkApps gives governance via across details a thousands line It views the meet HP, Smartsheet companies security tough over protect deepening customers leveraging as organization. reason in stories. view continually any robust current choose to its ENGAGE, allowing PPM the with and how managing Smartsheet investment model tangible AbbVie to customers global power now specific matrix egress, their and solution many is into portfolio launched welcome has results. their gives center create

Ultimately, them when of lender COO's platform in managing meet the another QX, requirements. was teams Smartsheet comply competitor's felt more how to Smartsheet business was example, chose to for mandatory security for their unable solution mortgage with start lines enterprise-grade was a certain customer goals was and across it business the solution easy best efficiently. using impressed help For and like with This various over securely to Smartsheet's the large CWM platform. the they

our which application, enthusiastically was by received We people. also desktop new announced

streamline and brand while within ensure act which the This find of will a to creation can XX-week reimagined and functions. home eliminating As mentioned ML-powered distribute to experience brand last brand search and have its single reduce help source distribution allows track capabilities. outside $XXX,XXX all. will we for significant reduce quickly. By new wholesalers manage management the and for the Brandfolder providing automation The their Smartsheet acquisition company utilize Brandfolder. system market self-service Outfit already meaningful platform, its Brandfolder agency-related for investments assets, daily creative Each company truth providing landed to for distribution assets and with that them to work new and the company consistent These building solution and tracking to to they on On our worth retailers digital model by a efficient provide weeks, management asset the way. will for Outfit using we for marketing process templating call, in-house QX, will a value to and major enabling XX- faster Outfit production. helping their customers plus of templates creative content automation X in time users I creative transparent earnings all as driving automated campaigns. team and existing a solution appliance is synergy plus outfit deal their with be integrated that use Outfit In to powered costs. Brandfolder a a marketing. asset manufacturer of The content of XXX% the quarter's

strong the heard remain continued for we today, despite a had current well you've growth. and quarter environment, macro positioned As

global like macro our Wave. helping continues work guide their QX especially profitability. was we're considering to tools. leader broad in decision-making. choose their XXXX Forrester for report headwinds. in recognized case pressure focus last leaders types, capabilities. important for to Just the With to The With the use company, availability reports of automation And named ability with in extensive are quarter, improving a our way was Smartsheet deliver the Wave in the I creation their end Smartsheet use for remain closing, collaborative continued delivering extremely an and work in needs, In strengths report, right on operational under set and growth that Forrester among long-term efficiency management the customers, cases quarter solid user another ROI Smartsheet month, the of are greater this durable performance solution that QX for in CWM provide our a confident people this the flexible

you Now, turn over Let me Pete? Pete. to

Thank good you, Mark, and afternoon, everyone.

QX, their grew workflows. growth Capabilities of the references most management basis earnings strong quarter both line reconciled and improving and before and diverse GAAP a third our a was to our I the deploy continue customers capability-based particular our and exceeded advanced on the work non-GAAP strong aided by QX our release top our streamline scale We that for financial mission-critical to improving reflected strength guidance in mentioned, intense on operating economies of saw quarter. for expenses and Unless to continue their mission-critical to as these results all customers go durable to Mark through the turn was in focus otherwise to and Brandfolder. results As will we growth now profitability. bottom call. efficiency. set and our Smartsheet presentation benefit XX% in from subscription offering customers We are of on to posted that results needs, and our enterprise stated, products operational revenue among an as

of quarter Subscription $XX.X in $XXX.X of year-over-year up Third year-over-year revenue representing came XX% XX%. representing Services million, XX%. million revenue growth $XXX.X year-over-year. was million, at growth revenue was

Turning to billings.

in at annual total. Quarterly billings. XX%, than of XX% year-over-year $XXX.X our less and X% of the billings total subscription growth came representing Multiyear X% of billings with were semiannual billings million, quarter approximately X% represented monthly. of Third approximately represented

over respectively, to over customers ARR $XX,XXX over The Moving XX% is our customers These XX% metrics. ARR. segments percentage with year-over-year ARR customers $XXX,XXX, represent of XX% year-over-year reported ARR X,XXX XX%, grew now ARR customer with The of from XX%. now total coming and on of of grew the to number X,XXX. our $X,XXX and number with to

by XXX%. given our grew XX% X% net domain the remains retention We $X,XXX. rate with the quarter macro ACV expect net of a rate our average year. churn mid-XXXs ended current year-over-year the rate of overall dollar-based be Next, the full the end dollar-based to to environment, retention The in we below

financials. the to back turning Now

Our margin was total gross XX%.

QX XX%. Our subscription gross margin was

revenue, continue or Overall, in the was point plan for a XX%. was negative discussed to margin we in cost-saving hiring negative expect sequential improvement million gross quarter of The result represents operating to included X% loss of We our which improvement. margin and $X.X 'XX above margin our percentage previous FY moderation quarters, remain X initiatives rationalization. which of cost the

period portion model. commission gross base million. improvement also change led X leverage accounting from our cash the improved X-year Based expense to flow outperformance demonstrating bottom amortization business This the of we Additionally, our line, we for about our dropped operating in negative our Free $X.X retention, commission X-year QX. a quarter amortization inherent moved -- margin in points was in our the to on revenue contributed of period.

Now me let guidance. on move to

which our visibility. to impacts dynamic, on comments few The a environment details, the into go macro approach near-term guidance. I Before

prudent We relates to as are, to appropriately line remain it our therefore, top electing performance.

FY expect operating million range in range revenue the million be we to the to $X be non-GAAP fourth to and of For of the $X. in $XXX to quarter of loss 'XX, negative $XXX

to outstanding XXX.X of We to million. expect non-GAAP $X.XX share be loss net $X.XX average based weighted negative on shares per

XX%. the our to million are to we $XXX full billings to For $XXX growth of million, guidance year 'XX, representing raising fiscal XX%

are to We also growth of representing $XXX our to million million, raising revenue XX%. guidance $XXX

total to revenue. X% expect of We be services

average improving year XXX are non-GAAP to shares in operating be range We net $XX approximately million million non-GAAP to for loss $X.XX outstanding. to loss share the $X.XX weighted to on of per the million be based $XX our and

was our free raising guidance $X cash strong conclude, are for year QX to million. the flow another To quarter. We

drive for turn their our profitability world work continue demanding We and durable most improving management in to ability mission-critical to to demonstrate with the needs. growth the data-intensive as Smartsheet businesses

it me the back let for to operator questions. Now turn Operator?

Instructions]. [Operator

line the Guggenheim question DiFucci from comes Securities. first John Your with of

about pipeline wanted softening given dig conversion backdrop. to I comment your in the macro improved on

which You positive. raised billings guidance is for certainly year modestly, the

think year, are that pipeline we stays sales And made you've conversion we the about As pipeline the relative the and throughout at conversion to productivity, about or of investments ramp. force year? next think levels current you on workforce some should assuming front continues improves to the how

habit. Sorry for long the question. bad That's my

is this your question parts. I'll John, take in Pete.

our The of to improve from And your pipeline the new closing question for what rep first us I saw we about conversion saw our part was was we October reps, related talked essentially, conversions and physical it pipeline sense. of what time pipeline terms to view relates productivity was last closing. ramping month in that pipeline, a strong as

X them so are pipeline how the you rep deals about, the want from they you sort of those So and standpoint, the dimension part of repeat other on a question and sequence. elements business Can to asked from conversion looked. One, of I your the just take second how closed. in

or it it? it assume we pipeline at think year, gets should As should changes about you assume think or better How we backdrop, maybe stays too. How that it next for we we levels, worst, current knows to who about the do should guidance? as about the relates think that conversion macro

how haven't with decide next we the those macro year. of of But two I be going to number come a you for going what deals progressing. function and it's that's up would So the sort is tell of to because is things, what of sort guidance are

that's into to very to be will ramped, a and the We year conversion. sales positive going go with team that's

line is Canaccord next of Genuity. Your DJ Hynes question from with the

curious how, in any for obviously, messaging I you've current the on all, sale. Mark, you. one of is mean, numbers if the evolved environment? important the set Congrats in ROI here. nice at I'm go-to-market

remarks. more in there use that times products prepared certain or your if environment? mentioned in You several get a I'm tougher are emphasis wondering cases it

they're I most think like and things companies is achieve when achieve conversation. terms, trying typically that, an speak that program have break the process, And when helping you simplest savings. or its you of you apply can revenue we're to to scaled it in a have one cost using down to a drive plans opportunity or something

and center, Data you more make. times. you get across hands are so when information we systems. cycle having calculations think fewer on quickly can control moving Shuttle think These We things about all very hard can like things about So ROI efficiently shorter

also oriented to not seats are capabilities, across of somebody, continued our from think but which think we've the to engagement, which employee those from. introducing I ourselves discussions. of And soft terms So Customers to goes is in shift, important, really shift a the into underpinning selling responding the are that the calculations. but such for harder I lot a benefit benefits how only super calculate

cycles. Yes. That's this of the quarter about? rethink rates, longer-term at in talked a I'm improving look, all on margin helpful. And And it we've whip pipeline. doesn't of around the stuff strong what conversion kind But Does mean, in hiring to guess kind follow-up, record you I realize a then seeing? plans that you're I XX-day getting as expansion I based make commitment moderation

I We think And really healthy had to not gone the a a number we through members. year. in company. have team our we of on start robust massive a brought layoff

said, a And quite with We've ramping ramp a a the good So execute. of Pete retained that a think end I really confidence year just ago, we had out have in larger gives into we team, going team bit those ramp to year strength. individuals. and actually the of invested as us than

year brought in with So had year. the the talent of a beginning [indiscernible] of different we we on all the a I would be very think position finished great it that

still year like of some earlier those beneficiaries So I feel of the moves. we're the in

Brent of line Thill question Jefferies. next from with the Your is

Obviously, KPIs seeing completely different you're position. But time calendar into through Mark, the CRO 'XX? you parallels any monitoring that the last you're were in a going learnings you're recession. went in we in

Yes.

lessons, one quick, sole is think of being I quickest. and the the of survival another the big just notion Brent,

would I solving around are we're FY And and I solving Pete corner. not 'XX. for have for just think the be like about QX, though, it's that, QX. you talking to thoughtful. not FY 'XX just started right is pair we're

I So me it's window. not manage like is on next of has I some these been think partner are over-rotated the dimensions. all good Pete that too to of learnings And helping to XX-day get important in And a one balance. that think

largest I think So probably takeaway. the that's

follow-up Was at on it one something your as Was -- attainment you to mean, we're Yes. that's What the particular there? was you, quick pulse do you of on kind companies. What right other I can now? mean, hearing think that other I productivity. it what environment? inverted Pete, just we're the happened in because rep the of it's what counter counter to changed a demand what for in kind companies put hearing there geography? anything quota

of Yes, that never the newer And absolutely seeing reps. well-timed was rep I for what ramp accounts, managed productivity that reps territories had into think was our had the I We call initiatives had they we're play. dividends series never of how we of I newer a and meticulously defined would managed. they describing the

So we've seen the productivity of those reps client.

Now had ramped that remember, class we significant we a in.

we're of when the impact average of the up looking a systematic what seeing. set many So ramped that people plays, getting at with weighted that's you're of

on Brent, that where we're We're in seeing productivity of think to rep I we not last were there. an terms also certain quarter cohorts. with relative making a it's improvement We statement. were recognize pleased important,

So the direction. right in heading

we on against as statement a though think quarter levels saw at I opposed all fronts. last exceeding we is are all to what that

improve. go good continue I still a room have think to to we to

of the with from Your JPMorgan. line next question Pinjalim is Bora

just quarter. right? a understand companies are the it's well, consternation of we guess you seems quarter lot wanted had It are some other as I little a numbers to great Mark, hearing great, was quarter. Last from but faced on I difficulties. a Congrats like bit.

does versus or helped improvement trying discussions it that messaging some it this to did quarter? Is little understand to that you a -- quarter worse? the feel within So kind for feel normal macro front. does last the the I'm a similar how of macro Or is on of plays Is better you? it these that bit you

I think quite it feels similar.

those we're responding produce similar. is priority solutions starting I would feeling these being budget function of list yield say way thus the to engaging us. quite present I say to starting ways consideration as to again. customer of say think have would proven them. is I tenor how the opposed within I to customer the resonate we're customers amount And But in environment a getting be that I more swell for to that reps But that would are has it think positive. conversations much that higher yourself to able with confident, that is as for in in the

our really it's us. stack that's in placement helping think that rank, I So

Yes. WorkApps. wanted about Got it. ask One to follow-up. I you

conversations people We just talking apps, app have with scheduling right, built have of of of work Is more for applications, being customers money some seeing third-party Are plan some where this kind your trying -- with that? about are not but in-house on which of management save who point we some less? enterprise are to or around that are other WorkApps. consolidation, a to the had consolidation top else, apps, something at you driver

Yes.

a ways. in the And a any can a and it point think yield I higher can use a utilized That's that be across of -- for amount time someone thing. utilize I multitude that they have of sees multiple any cases a an time think opposed the of tool platform as beautiful is thing you about to good a technologies spending. drive set

that So spear. a tip I of things there. presenting I of the It's clients. WorkApps for to us think one say whole we're the a WorkApps is is contributing wouldn't of multitude

an ENGAGE are a really think been I see control the I for we to has the connecting center, think continue will happy by gain Customers which successful really in to to years, offering coming that. it had release WorkApps steam, us.

marriage in we'll and control that see benefits some WorkApps I touch center of think the quarters between come. to

of line Morgan Josh Baer Your from next is the with question Stanley.

implied in ask sort around relation billings the guidance. in just of guidance can the one in deceleration to see a the strong QX the quarter. to commentary I We on net rate. macro on retention decline the and and Congrats wanted

could So of guidance? embedded some in I about some that does was talk talk that assumptions about hoping details there? when you that's mean could And prudence, you what you if the add macro

Absolutely.

substantiates growth a And from which billings And QX guidance So that's implied the QX the you macro in guidance customer your we've ago. projected of question, that from an in. the composite macro you that of QX when we Josh, that outlook gave built decel spending would year the macro combined quarter with But I is comp worsening QX given which guide expectation sort is a budget that's our be we're I compared lower a prior macro periods. includes to softer of was in strong function a seeing and prudent given environment, worsening. the of sort what ago, is had a news a good gave a and of

basis So the that's the of assumption.

and commentary Okay. of on QX? sort Have of November. month-to-month trends into Great. you could over just seeing leading get you a the of sense. add things quarter linearity any the worse last months And the That lot demand if then into throughout makes been

to month October pipeline I -- strong saw. what out expectations. the the was rates So we close November steady the close call rates us our to a for and relative turned the,

very and consistent results expected to We be our the that produced cycle play, it are with expectations. in macro

great in to business there So January. remember, deal is in be of December QX, a booked and

as the guided assumption our to we've what's quarter. built that's into So

with comes question of Scott Needham. the from next Your line Berg

quarter and questions that guess good here. two I on Congrats

about of Pete, you in the talked where think revenues all, XX% capabilities of it I First quarter. was

gaining look that are ARPU levels? today? customers move the how kind should to As on these like adding I continues more, you're company what about And lift then capabilities does we at know, think that of, upmarket those peak the of mix that from some don't

cases there Still I capabilities as that the, a total, I of percentage where think, sort when the you but over I because -- are of about a capabilities. fast our we as think isn't going the much be motion. gave of surface client talk our our solid statement they it be we growth during of we're case, of as a the piece if of stretching And call to see guidance it. of sort part use use expand time see wide both to We remember of license the it. of that provided being number on drive variety of what growing We really have drivers. Mark how relative of part capabilities Day user reports, license growing We think that as they some on the latest our you on see of big that core information Analyst as And it. the we business. width last could on implies Think

customers do customers I deployed So more and scale more feel large like demanding unlock as going to small after way. they've them that need the see they most and you're to start start to solution, the use in the

for a wanted And bit. little Mark. I competitive That's if about question a to this you from framework. helpful. environment the it. maybe can is follow-up see the I in perspective, then Got the asked talk And

yours maybe tonight be not continuing driving that. that a that were nearly business strength their had your as report anything out might competitor of not others well. versus you seeing Are we'll results You go strong there with the different as as

a to relative for Scott. statement, make harder It's me

I share and I it a growth think is think as appear earlier, capabilities composite And well to, responding manifests alongside our what said that not be I retention. can in I to only licenses, also in people that core the but customers itself to are the offering. responding

I to you think have value healthier drive points a somebody, relationship. multiple think you that's have can you deliver If helping our And I that business.

Congrats on the good quarter.

Oppenheimer. Your next Iwanyc George question from of comes line with the

from of you Mark, and what a kind this point? app give us of congratulations. maybe perspective the could bit desktop my launch Also this you're at on feedback getting

the next software in in so tray want of tabs someone that app of beautiful just their think a I the we've don't with think high-value see a been want I easy other it. get able their be many companies their represent that thing. the browser. to where the always on than example George, the is excited to Chrome funny co-mingled want quick most Yes, Smartsheet that's years all extremely the to desktop Microsoft access They the of They feature or machine. And find this doing in somehow people browsers tabs I about but to such Safari I is over it get work bunch obscure one want things says, or really

that thankful design, easier, life things can simple very and it. better their is living are for either they're or respond these your to. app when think I more through you And So someone in access, people quicker make

things, of at I team you look learn with conference. the substitute ENGAGE. it is we've booth, people which were versus sense a of one app get really wanting number When And time. topical members many that thing up queued you you many thousands digital the at to at And desktop are the our those. Thousands this of today. this this about some matters. been people, is on been think something can't some surprised It's of for using other of people just working something for

will broadly. still EAP. an it's It be released shortly, think I

So continue to invest we'll behind that.

with multiple in could And platform? you give the perspective engage app, you them the with when more are with on some in a maybe broad products way that, people seeing overall are

more you say products product with... of more you or our integrations elements mean When

your product. of elements more Yes,

that happen. explore remove friction forward quite we hurdle lowering on shared people from Yes. are and And -- dovetail into thing to I more our as further we seeing management think yes, portfolio. the traverse, one I our call, prior a experience the remove things able to easily into our core we that this for people Brandfolder being I'm entire The looking as to resource experience, height like by and that

a today a and working said second manner. those engineering And really capabilities team explore, are value on lot and let continue self-directed As consultative discover, sale. of are ago, what the buy a those Praerit realize Pete then to the in ultimately people

because see products much in I lowering people in using years, you're friction. going think our diversity So coming in the we're things greater more X to a that

line from Alex Wolfe comes question with next Your Research. of the Zukin

as is But where to the and to you This Brook ask, growth looking way way NRR on guess think it's Alex about next like thinking it. quarter. color Congrats stabilize, XXs should you high I I NRR where we next will go about I right should think wanted be on if Ethan is mid-XXX quarter. year, the would we next about the the Zukin. for look appreciate right for year, to

construct we're bookings, year we all talking that's part the billings, of we next next Ethan, what because whole elements. see see about a not year. It's to of related those how

So sort a about be. number little talk of premature that it's will where to

products we've in see based and the I pipeline. on number think great of grow just for longer capability we our got the to that history sort term,

So leave that's I'll the way it.

the of XX% want And thinking in ask, to for also, margin, pace more? more a improvement balancing, 'XX And I negative congrats about side? the forward? going margin table? kind we incremental cash on bit also improving the then rate to expect about just the are improved how showing still margins And improvement I this I this we the X%. Great. a margin Can guess great is the XX calendar and negative is free I should guess, on guess from [indiscernible] like little bit flow you little on think margin

hiring. We've I improvements and really operational by Ethan, question. on focusing So the appreciate significant moderating made strides

there it play what to that continue said, going bit effort So we you've as something we've a improvement tell be years that's how is What after is that margins clips in through callouts trying point. we go done There's before going continue and of go little would get seen. rate going specific being we're to you to it. several work through and margin not much seen That of at. I out efficient to growth, just the that for we'll be to we're by

the quarter. again, on good Congrats,

Markets. the next Jaluria of comes RBC Rishi Your with Capital from line question

pockets is This and saw XX -- Poland of on within bifurcate any Richard that? just way demand to of of I for days the you'd between and Rishi is either ago, terms guess what are or you're softening out improvement macro kind SMB there seeing call of kind you there any enterprise demand just that what environment versus Jaluria. in

with enterprises. just we've on mid-market, What seen broadly had I Pete. of is based we've more in the we've book if sort U.S. to would so. the enterprise I transactions the this global segments seen, these of we've would Richard, you strength differently. would impacts seen able the market So the in been say say is of we've number parse

the So those be would like on it. texture

looking that you're think I for level.

seen I we've media, architecture, and will, you construction, you if probably verticals technology, verticals, the energy of will. strength terms consumer if of global weaker think manufacturing, have in in and some for good, us been

compensation just to the nicely came down. Should to I think then I quarter. mean, stock-based That's very we about trend continue And in down expect that Great. SBC, as helpful.

think Just kind of how update your comp? stock-based around on any about you thoughts

of Stock-based important a element us to how the key it's really Yes. look business. we at is comp because

to think few expect in your question out. the That's I outset, expect future right I'll Yes, compensation decline. we the the stock-based things the a as should will of at answer percent revenue? come you decline do results to way a happen. should it

people how Now our plan of moderated doing hire essentially, going to stock-based same very the it We're need driver. much of as this hiring forward, when think think of the differently. times the don't compensation, a them because you number pace. being offer we you We've

comp. So what stock number you've the history the of the has you're the positive what we're it comp impact is of to being a on bringing and impact That on in in past. by is people said, stock going done dictated see

in goes sure So prior that stock that But that down total it we've put of already effects when the on year-over-year large into the created, play you it of percent X look set so at place. focused it, comp hires a are we're as is you those part revenue. -- the that say gets making and by

Your of Tillman next line from question is Truist Terry with Securities. the

newer Terry. update a usage from for users if to customers the on helping Curious the of with initiatives G. Robert penetration experience other newer get year to is around so? some ago, greater and started have versus that, specific drivers onboarding see today Have on an what This of been say all customers newer recent and the start you quickly.

Yes.

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is of Jake question next William Blair. with from Your the Roberge line

hiring a lot great cost talked plan margin Congrats Pete, moderation and on the your of the rationalization results. on you've helping about front.

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quarter. the for Yes,

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operating that continued to a year the think benefit leverage. as created So in we've this manner of year see next we we're the going

peers? layoffs rates or headwinds, base seen you you That's really called of focus, then Have that context. result user customers your from issues reduce immune peers a those enterprise And are tech given than some given of helpful some perspective, some as just out to have and some a large and those slower headcount customer any your other more at companies. headwinds hiring

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Citi. the from Steve comes Enders question line of next Your with

for Steve. on George is This

in difficult environment. rep I back congrats execution earlier wanted about to great circle on the on productivity. to want discussion a Just

frame. over about But these you when think that are time were I over quarter, were you in -- obviously thinking any about potential into talking you how forward I expected curious, And month X guidance? viewing have are am seen last months. first talking is X you the What improvements improvement of we X just there the QX? to improvement baked

really have pleased George, started. seen benefits they've Pete. the are as newer of of the how it just productivity quickly reps We've say, we become about gone teams is have sort of to this field productive. who I wanted with improving

into see baked to will involve continue them our plans guidance. expectation we is how we because productivity and those productive. improvements changes That's our in reps Our multi-quarter get

rep our we overlay that of macro thoughtfully an as considered. think should the guidance you of with combined prudently improving So have new productivity, and

nature quite into Got follow-up upside came just of and of? that could on there's sense. dig billings be makes we the ahead it. if of wondering in Are we upside remodelling. still kind I aware onetime just if then unusual in That quick should was X that anything -- And you drove or what

nothing nature George, there onetime was in or numbers. those unusual

bookings into organic billings. it's which translates So

is question of Turrin line the next Michael Fargo. from Your Wells with

wanted for and on through with same. expansion on expansion seat again are driving This rates can a you issue, or quickly, discussion X? into And past seats still have nicely that over the the Maybe Bird potential dive to I is quarter. in Turrin. on expectations the exit Michael if walk been capabilities of versus know I number they us Michael expansion pretty rate the changed mix the that's meaningfully rate quarter

rates we of then the Obviously, call, question. still expansion what start meta if that's We is of growing they part year and revenue. how in you will a ago, the, them than standpoint, And from capabilities the that at I And into stats seats they're sear with capabilities. said XX% the faster We factored were gave in, I'll chime a it, on you terms are operating. between not see. the Mark a capabilities. of difference sort We're looked of that seeing big some XX%.

expanding with people healthy seeing seats are with you're as that capabilities. but in mix a people clearly, So of well mix.

moving. So meta that's of a rates how of like kind point are expansion

I think Yes, don't -- to add I have much I think to that.

line Jason Your MoffettNathanson. the next question from of with comes Ader

Ader. Jackson for on Bule Kyle is This

that constant onto at has line Or of Or of near historically? seeing. future that slowing a seen what kind expansion here? to you you've dig to you do for the line are the in the see term all? Just that that guys kind little as of time expansion remaining slowing time bit kind Is deeper

bookings So key the talking into they them convert -- Obviously, core if you're how and you quickly a its you expansions and fundamental, think and of bookings materialize. expansions are about of billings. part

cycles sales being So we've we've think you deal seen it of as in compression. an seen should -- and elongation

number happening. how of stay let's people those any that about a seen are So The place plays out. potential just reviews that for elongations, purchase, itself with take actually we've longer way talk

should a get specific a buy it, carte a either is pieces is in with you buy or that size. in but those represent over we of would likely happen you're bite and time, way still to don't it expansion packaged means a of bookings, getting the carte how hit it tell capabilities, it, capabilities advance customers value need, all but can a up Obviously, buy la you a part different going second The which they you the the capabilities that they these buy can deal package, is smaller bookings. buy la you're The compression. if

how out. that's play expansions So

in having helpful. or a majority Great. budgets, to year's historically then able you terms do IT growth? out Okay. you it of of How revenue a to meaningful That's I next Do expansion? attribute year. guess IT come you line a down just top kind impact on playing are see budgets if decent as the IT growth budget of And that see next

funding. and business See So in it. who they you have if buying are budgets our people dealing there. hundreds are I in with as There would thousands with of are that Remember say much folks that it of buying department. line as the budgets for enterprise one IT you're isn't -- of and this are purchaser X people

it think in I of fairly budget. So based is terms broad

of with from line next Suisse. with Fred comes Credit question Your Lee

quick market change any held their in competitions, Very your particularly investment behavior privately expense that. nice specifically a were companies be you might after quarter, and that seeing was this slowing environment. I in from if follow-up then in wondering

median transaction for and player No. which the a is in really time. do Even helping still the isn't of in if CWM getting first thousands status quarter, from their into grounded given progressed the quo, we someone transactions CWM the

grounded So we be us difficult speak patterns for these to to well huge not it's to that really It will us speak. see. for

-- We ways in of some are terms definitely in have less. hiring you sense it other those companies you that get seen itself a manifest do see

think I in obviously chatter would companies, talk such people the think some less community, let there's I have now to joined people going of to been considering go, companies. who the around and people

coming more think I the the of one will companies that's benefit established things from that quarters. in

heard on front. that really what seeing from we've nothing customers terms In market, that in we're of

quick XXs sequential I by retention on in year, the if metric could end the a follow-up the of metric? in the the just to you And little net was drill the down contributing what's decline eventually on wondering a bit

look back. So Fred, year rate retention dollar the net a full is metric

over you at if the what will. So year, look we happened full

So out strong be to when the expansion into what was need a is a of calculation we replacing something very different that the macro you at different, with macro comes QX, report very was when think phase. in going quarter that you're very a of without end different that's

you So quarter swapping see we've guided. look dropping and other, to expansion full back you're for where where in year of one just rates out the a that's

further back There turn no Aaron time. the Mr. are at call will this now to I Turner. questions

Well, again we will you and thank with for quarter. speak you Great. joining us, next everyone,

today's This Ladies and gentlemen, conference concludes you participating. call. for thank

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