Everbridge (EVBG) 22 Feb 232022 Q4 Earnings call transcript

Good morning and welcome to the Everbridge Inc., Fourth Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note that this is being recorded.

I would now like to turn the conference to Nandan Amladi, VP of Investor Relations. ahead. go Please

CEO, and call Anthony XXXX. everyone. to Brickley. President Welcome me President Executive Thank CFO and the good fourth earnings Patrick and Everbridge’s are for today’s year Wagner, quarter Everbridge’s and on Vice you, call morning Dave and With full

will Earlier of being of event. available can at our conclusion be accessed this ir.everbridge.com. our the recorded the Relations on This the which we release, issued is and website replay a Investor teleconference morning call Investor at our earnings be Relations on section website today’s of

well During from make the not events company call, in projections statements. such the results uncertainties. might statements of or certain forward-looking discussed involve provided regarding actual risks our with and views filings obligation as update as of XX-K, subsequent and Forms described such our are as in today’s future only our but of we be perspective that this our differences will on include, that The should outlook. considered of today representative any limited Factors subsequent disclaim performance materially the We as any XX-Q or cause explicitly those differ financial to, not other to company’s date. and forward-looking Information statements may call any SEC. the reflects

certain measures can measures. A Investor financial you GAAP financial our website. refer reconciliation non-GAAP release, non-GAAP in is included Also Relations to during our will on call, today’s our to earnings find we which of press

to our questions. the After we and highlights from and will for our open Our year we financial earnings in business outlook. fiscal includes results press addition highlights, XXXX financial call review our release

to the let call Dave. that, With turn Dave? me over

released everyone full XXXX. we Nandan. and the the this quarter earnings am fourth to morning. and for financial I very year results with earlier welcome Good Everbridge's pleased call morning Thanks,

of adjusted $XX.X quarter $XXX revenue million $XX the of of million, of year an quarter-over-quarter million achieved million, XX% of a an increase from recurring EBITDA $XX million, revenue is increase For annual the our $XXX.X $XXX,XXX year. increase quarter-over-quarter, which we fourth year-over-year; and largest of ago; X% or up

I that entered executed executing these and with headcount ended X,XXX reduction also quarter. XX% a results pleased the strong while am in the QX XXXX. with the team also We employees year

Our team demonstrated incredible resilience.

our addition against repurchase of $XXX of million to in we Each our our the the face execute by notes, million demonstrates in quarter. $XX In in we debt value strong to operational the discussed Day plan our reducing the completed commitment results, XXXX net at of approximately results these over December. Investor

recover is We running and Our by people XX-year critical the intelligent to a resilience. to long our automation We we technology but anticipate, enterprises keeping of on annual in all our them fully serve on ARR be $X term. mitigate, the organizations commitment and respond strategy safe will focus customers aim and of deliver to focused customers empowers leverage organizational digitizing anchored revenue that years with events. sizes, on over are recurring solutions achieving larger to driving for the with and our five resources the billion next governments from

demonstrates million to in Entering confident $XX for EBITDA. achieving XXXX, baseline we journey. steps our in in our and results initial fourth strong the rate X% Our revenue on quarter are adjusted growth X%

the Patrick for our quarter. after updated now and well on outlook full provide will commentary turn Brickley, call our financial details return fourth Before Patrick? our the I go CFO, year, as to XXXX, for detailed quarter the results I more over will to which to as further, provide I on

year business realignment annual place organic a the and XXXX of significant with restructuring in growth executed targets enter leaner we resulted programs build year fiscal adjusted EBITDA In exceeded and structure in Dave. fiscal profitable team and which we leadership an for XXXX, experienced our a and to long-term. reductions revenue for resources. cost Thanks We

I recap full will now our results year. fourth quarter the for and

For to GAAP non-GAAP of our and measures, to full please refer release. details reconciliation press P&L of our

stub of the year-over-year ARR our $XXX $XXX,XXX For approximately coming over year-over-year. up ticked to was quarter. XX% of customers XXXX September Revenue fourth from in XX% from up grew XX% quarter of Share ARR million XX% and the to reflecting as the acquisition, contribution from our ARR of of licenses and completed growth deliveries a in one-time $XX November, in services $XXX.X was Anvil well which modest record as of million over XXXX. million inorganic

quarter of seasonally revenue, we the than cost reflection and higher outset enter mix improving the a which perpetual and Adjusted at to $XX.X of license Adjusted reflecting XXXX early XXXX. million EBITDA which gross that the efficiency. of fiscal was adjusted little is we is streamlined mid-teens was an structure platform in EBITDA with guided margin XX% XX% or the year higher

ago. year was flow cash of restructuring. free flow Cash was flow for million to operations represents to This million. cash Adjusted $XX.X adjusted $X.X compared million from $X.X one-time million cash related free a payments $X.X

grew $XXX.X X% was million fiscal or profile XXXX. or in XX% purely For million. lapped made no million in XXXX. compared of all we having revenue XXXX, entered of made $XX.X revenue XXXX to growth year revenue $XX.X XX% Adjusted organic acquisitions the in to the having acquisitions year-over-year and a We of XXXX EBITDA full that with

adjusts from ago. restructuring was payments $XX.X our flow million in $XX.X compared free cash to $XX.X which flow, to one-time million. Adjusted year a was program related operations for Cash cash $XX.X million million

Everbridge demand satisfaction net customer Our retention continued or again base. for above combined rate tracked the at with expand revenue existing once customer within additional to technology reflecting XXX%

resulted in in deals were again XX QX ASPs were $XXX,XXX large a and momentum over record Our trailing that above transactions the that in annual XX continued quarter value. with in contract months $XXX,XXX

posted can in found website. be our Additional Investor our presentation business metrics Relations on

approximately $XXX recently are XXXX. fiscal principle to the Approximately amount to million, notes hand of million In approximately hand improved of a which in repurchasing X.XX% year or we by million. value. and expect approximately with cash $XXX our on cash million XXXX discount cash on of addition, ended structure of using of $XXX December debt still of capital on we before convertible our We $XXX face using outstanding, cash maturity equivalents their retire amount of principle

turn I to Now guidance. will

for XXXX the reiterating laid that in guidance Investor are fiscal out we our year We at detail Day. recent

We to $XX range XXXX. poised million that Rule the will expect approximately and EBITDA anticipate grow adjusted XXXX, of we margin to range of in of million, We towards significant progress to the with $XX in headcount XX growth revenue X% in we in additional XX.X%. X% any expect to be the don't during such, as a make

for is follows. XXXX outlook of first the quarter Our as

sequential We from to to range X%. QX attributable reflecting year-over-year sequential which is $XXX.X revenue in growth XXXX, of the expect in approximately represents decrease non-recurring $XXX.X a of This a million revenue. decrease million,

[Technical $X.X the of to of a approximately We expect in million, adjusted $XX.X million EBITDA margin Difficulty]. range

As and have QX primarily historical costs our performance, strategically. XXXX XXXX, payroll timing we've undertook taxes. seen In patterns summary, for in to of we restructure us profitability our headcount actions be related the to tends business costs, financially our our positioned seasonal pressured both and well the of by refocus in

to over With call let back that, hand Dave. the me

Thanks, Patrick.

recurring good our quarter our As ARR business. had increase $XX we a million in in demonstrates,

new quarter customers quarter XX total we customers, to in new From also CEM a customer which new added total perspective, bringing had were of enterprise and XXX. good both existing the fourth a our customer We from XX a count CEM customer perspective.

over Additionally, we fourth in XX XX the of in XXXX. is deals generated quarter dollars which period, a the $XXX,XXX from up

the to the had bookings one quarter. only we velocity, five The deal due is and strong This decline in quarter. quarter last perpetual deals the in deal $XXX,XXX $XXX,XXX had in we in over over primarily While QX $X to million lower compares over year. four

was Our in wins, new and win customers SaaS one in and in the were two the customers. smart the two government development. customers CEM security one wins in of in warning. perpetual vertical, customer wins top-five healthcare, new was one were Two was was the three were wins, and public retail, Two construction included of in quarter one

the a for led which expected. record year the level license As noted fact were the our in lower which lowered coupled the backlog earlier, QX. in we deliveries quarter perpetual bookings, This perpetual with strong to achieved

another we on quarter Moving existing customers, sales of expansions. strong solution had to to

CEM people development. and were growth deals SaaS they all Our in were three the in and Two in resilience of and construction all Two five and customers. deals customers. were operational were pharmaceutical, top-five resilience vertical, customers, one digital two finance were the

and Another Authority sea New New Jersey, was the of infrastructure, the one much York which populous airports, country. and regions including bridges, in oversees regional quarter most of the the tunnels, ports transportation of exciting for fourth expansion Port

gross quarterly ARR largest the ARR two our we of Closing out retention over strongest by our our on year, growth, rate commentary quarter-over-quarter years. driven growth in had

ARR the the with and million, quarter. total very slightly net or for both top QX growth more and agreements growth pleased XX% with sequentially, together, of ARR are Putting wins, in new to nice million of share our reached XXXX. from up in deals, coming well positioning $XX XXXK us We customers The existing $XXX gross retention retentions in to customers. reflecting

gain This our efficiency deep and our powered innovation deliver offerings product solution operations enables continue ops a increase we and to into focus order visibility an and IT time, go-to-market digital perspective, and satisfaction, our tool, helps service on digital to continuous uptime, strategic profitability. new simplifying making velocity incident awareness recently improve commanders it addition integrations to situational product insights service organizations bundle. successes, resolvers customer introduced in In maintain we to to save From innovate. disruptions, to AI and our solutions

informed the leader proud Safety December an deployed this fact we This Norwegian will the with location-based Norwegian very one we just system than countries and people. in time, nearly Norway to Along market. country in record perspective, were visitors seven in in five and an Norway's implement that public that September. From residents implementation solution we protect Government annual this strengthening in million and implemented and Public the successfully in more of and million is innovative help the awarded its inform emergency. as safe we of an undisputed the world first are the technology partners, reputation our System keep case our safety to of

and key quarter. to above team our the building profitability team and the future. to while of the our all this improving accomplished meaningfully several leadership our We past We Board leadership added individuals for

with Let me has of and years Noah Corporate for is to He and as responsible ESG and our from us. them. including over years incredibly leading time experience, Noah risk as litigation our board excited introduce at Officer legal, In I'm negotiating briefly security, programs have M&A. ongoing company, Webster our efforts. at each for compliance, as Chief together joined I've management well legal and several managing Noah and Compliance Legal and him Secretary. you the all compliance to December, known on XX of Zix, agreements,

strategy, Bryan RedSeal, Brian In January, McAfee Product appointment our Sophos as extensive is for global of development leadership platforms our our His positioned enterprise for the like we cybersecurity software companies and him working well Everbridge's our responsible Officer. integrating product vision. and and background product Chief strengthening to products. leading Barney positions and announced new Symantec, lead

our our extensive efficiency. we his last announced Officer. our spearhead at the go-to-market Zix John as on of in and his John leader the focus John out growth brings in go-to-market improving an overall Revenue new Chief is week and the John also of entire He Entrust. teams support At works and Everbridge customer. And appointment our together I teams customer to both who sales experience and focused motions to and align work will role. the brings international Di extraordinarily best organization Leo

accelerating Rohit growth. and skills two Executive Ghai. We Both Board track company and shepherd bring help its David currently our also be international Benjamin, Officer President Benjamin will our offerings experiences additional expansion added efforts. His Commercial go-to-market and in for public phase companies experience of the through market Blackbaud. is and members, new next invaluable commercial to Vice to David Chief record

further areas of product a one delivering Security and further as risk market appointments has brings deep to the top will addition. also RSA background Everbridge, board focus understanding strong Ghai us which scale, which and governance of These bolster strengthen of valuable us Rohit management to cybersecurity also board team. our is at leadership in a will be a Rohit CEO a management. technologies and

as In make delivered financial on QX progress our performance we in solid financial goals. continued summary, we long-term to a

Investor for our with we Day implementing are outlined a year during We the foundation and strategy are the December, XXXX. achieve strong to our in entering goals

to We annual are focused coming you way updating foundation billion look in delivering on the quarters. profitable in $X recurring building I a on forward to revenue. progress on our consistent growth our

questions. We're for open now to ready call Anthony? the

come question James. Instructions] [Operator Sklar from Alex you. Our with first Raymond will Thank

now You go ahead. may

I David X% for revenue XXXX think revenue you're how want to or that or macro part velocity we growth track Thank as bookings of that should Patrick, that track, given Thanks. should thinking ask should to about outlook, RPO of framework? X% ARR you. growth the guide to kind of that

that, that's question. So a good

first personally the its And retention QX I of the the these deals we're really was that, ARR the to year. with, seasonality, in terms years. a perspective, I think is $XXX,XXX really those recurring which we're combine velocity and about me, that and When know, highest two is in returning I generating is highlight quarter entering are gross think tends level be we're I You normal of But focused to our quarter that lower the from of in the the that about bookings. thing think about on it, below so and things that bookings the me for looking in rate confidence give velocity bookings forward.

Our remains in inconsistent more their but as timing. deals deals those large pipeline government perpetual you are solid, know, for

related of notification Okay, you're the CEM great. And you about or of growth Patrick, the outlook just focus increased that on question, thinking business? the can other guess in but versus given of a the XXXX of mass a kind CEM, maybe embedded I parts somewhat from frame help kind

Alex. hey, Well

which propel businesses really in driving evolution the resilience leader QX approach and You the approach in the more a in see helping digitized of is results ways CEM the we're space. the This from business. to is

CEM is CEM really we We're focused be also Mass as to adoption So that's of CEM quarter. great we important, the move we stack. a the and and had very on focus a CEM continuing to piece forward. customers on notification but platform moving want up

both. you thank Okay,

from Blair. will Stotler question with next come Matt William Our

You may now ahead. go

ads, about in Maybe terms Hey, that's growth year-over-year CEM know, there the to standpoint? on quarterly some structurally good the to on is above more first you prior attributable the terms cohort ability net rate. the the Xx QX obviously this and CEM of you've very morning. Thank working capacity color strong the acceleration grow recent think anything get We'd for the quarter taking in nearly questions. XX seen of in love you ads changes CEM business? seasonality more to then you what's on to with is kind something the of And or higher made this when the you've

you. Thank

question. good a that's So

You strategy. point the aligning know, of particular go-to-market solution probably the we're propensity into ads for XXXX, wins, are area to our up those as marketing existing as we're CEM expansions based account as new into our well driving models, CEM. Especially paying focus customers attention of

in customers I that things of worked in kicked noted program One QX of that migrations before, as in risk the the center well the QX. CEM, into

We steady XXXX. expect the that of to be course contributor a throughout

not into versus get new wins. concerned mature I'm more level, customer to as family, we the happens macro about so expansion related that the know a from customer experience they We resilient a once their strategies. win at then And Everbridge that CEM

remain about wins we that that grow also over solution will excited into So time. CEM point

it's a So indicator. important really

the I'm one things just overall were You won't the a delivering, And CEM we quarters if surprised know, you in execute continue kinds. but asking but I strategy. as of else's we of I deals bit about all somebody be question, around answering for deals that have probably is particular, think move little capacity to

theoretical from some that And reduction sellers to early that talked And we capacity QX. in sellers. we out in capacity organization allowing X% the did the about fact those for we highlighted some X% November, of take mid in

into everybody focused going of through course, the we retention that's really but we're expansion those and company, the retention on XXXX, As lean bearing in that to of quota tenure. reps, come capacity of

And on as kind so OKR progress midpoint making that the we're QX. good hit we of

help that straightforward a answer that's really question. long So to Matt? a, Does you,

super Yes, know, that's that. appreciate helpful. I I

end at the with of to at the look substantially restructuring mentioned far. As continued talked point on obviously side so at you technology platform timeline this moving on integrate about true towards that you the the and as then you're back front where this both the everything give least in model, and you and for and things completion a are done an updated the could efforts process that of update When continue followup you've maybe workforce you on front that kind well?

two in that hit I'll are, there Yes, ways.

who to along worked me (Happy) brief Day. Wang pleased pleased very at Investor I the You with in acquired that who that McAfee, really other teammates the Interim addition particularly so but where he's also incorporating know, His Haibei Also did with the Product experiences building recognition Barney much with pattern you I'm Chief Bryan with from with platforms, has at Officer leadership met team. one, companies technologies. he experience, those of the been,

I'll And platform, digging into journey, velocity. so further his you, impressed digging the tell and he's to he's already I'm how the team early architecture enhance with the really aligning into in technology, our just but

So I confident we've perspective. the journey Bryan's right product wood into the to moving of am into and right really journey chop, a platform we six got from team lot forward a things but and still six that weeks have my months

you very thank much. Great,

will come with Our Stephens. from next question Colley Brian

may You now ahead. go

taking for Hey, good questions. morning guys, my and thanks

today? environment really pipeline of not case kind impact So the the sales whether the the material characterize over And you was quarter? your and quarters and on messaging a suggested still how of curious how couple the the of throughout last or has the XQ wasn't trended I'm in macro having kind results. demand that today would

other indicators were, deal year really XXXk over that actually versus a Interesting that's from one the a range. the deals down the velocity a QX increasing was in the ago and five the XXXk script good quarters. to the me four me So QX, bit quite number question. key from To

a And in the number a quarter. gross retention get the was then multi-year the really, third piece to quarter to to me I'm deal larger So back to that of the highlight getting velocity bit slowed that high.

So X% not remain outlook the into built we XXXX. to you'll expecting forward days look we we overly X% an XX we as which later as confident growth, robust recall, baseline in really

end $X regard you $X ARR of are remaining the XXXX and it. assets for that I how was million of wondering on if where Got assets from about divesting of you've you how to then or And a that guide provide million XQ with an much to any lifeing just well? for talked or impacted update the and as full the followup, in XQ could you non-core revenue that including much those are year the and of

of Hey, Brian, impact was here few under the next LOI no do weeks, we couple in a to There have track ARR. it's execute and QX. of We Patrick. that's are shortly that divestiture on million dollars a over

execute of a we're We that year by the the have couple quarter we'll the work opportunities throughout analysis. continue and end portfolio the through smaller looking of to on to

of at guide revenue set all just is that could find bridge fresh mentioned, under we'll XXXX million from of eyes, small. the advantage applying as year LOI identified and today was $X X%. up relatively that Bryan that Day we've have homes but There Investor assets. related that Dave onboarding, of growth million half some our to for shy we've the of take part As That we'll throughout we to continue order speak. to ARR divestiture got a are headwind is X% are opportunities the in provided certain there I $X for that that and divestiture, of these of growth we potential anticipate to anticipate better be potential And of to guide of does the XXXX to

the Okay, time for got it. Well thanks guys.

Yes, Brian. you thank

Securities. next will Our come with Fargo from question Michael Wells Turrin

now may You go ahead.

the wanted Michael performed specifically XXXX. guidance taking under Hi, what dive got for for a the I Turrin. on is year fiscal the Congrats to tick into Michael in XX on what's you your just Berg you implied Rule there quarter.

whether it's on or pipeline cost us even from you. walk side macro any us level maybe sales maybe there's Thank through if through? or conservatives So of walk and the

Yes, inorganic so the acquired the biggest we so the the year. that in is growth contributor to had last revenue difference number revenue, that

XX% that, And walked so XX, rates. through ending not an that's growth of kind revenue on the where there's pinpoint but exact we XX, XX,

$X we big And kind purely just first a of off the about XXXX the which, million we're million under of been the built is, so we of that's out under it's And it's to organic ARR course and then entering X with growth jump number, the rate. well, LOI, $X it's or talked in revenue million of just has out of $X already guide.

to small. what as of those that the Patrick X it be come said, divestitures X would remaining, could So that in would our, future out be

so We then, lapping had the And back. Day and you I one-time customers, perpetual is software that waterfall SaaS for from large had one year-over-year. flat the detailed of that other the kind planning we Investor brings we're guess the

year's overall So of for factors from waterfall five have the that guided those to baseline X% the to X% last rate combination we growth together XXXX. brings

quick XXXX. set continue profitability our we And us the cost during XXXX. side, and actions just on the restructuring XXXX, profitability optimizing up that for will And on be we relative we took into to throughout will business as real the head expect to XXXX that improvement will improve already continued in XXXX we've,

So profitability, and we've improve that of flow, lot taken actions cash cost will a stated. as

with some we on We the see we're the revenue. have moving growth for ARR long-term. comps through to direction think But right you in do the work that

Thank a quarters the we up on ARR follow four last now. you. seasonality, quick And have

in throughout progression new big nice QX to In pretty ARR jump year? can the QX, QX of net being similar seasonality we levels of from for and QX? QX additions, typical Thanks. of it's the to So these think terms ARR type then

did printed, Those quarters, had are, those being and we have been, we last So going the numbers. year. are back pleased that going not seasonality into quarter, quarters the XXXX right? did prior a time good back with we highest level numbers" four ARR of quarter-over-quarter QX forward We "good recreating only into as go those the of has the back the the, So year. the we growth the are

we're bump the be would quarter, then level of the be year. steadily, to quarter-over-quarter ARR, bump we predictability highest the good as of know, move of stable be going it at beginning year. So but highest should pretty of expect of a as year-over-year of preparers to having next the QX you And upward course steadily indicator the throughout that business we the the the kind

Our next question will come from Terry Tillman with Truist.

You ahead. may go now

migrations thanks XQ. you that and Yes, kind taking terms followup. on have my center and risk was us sense the opportunity or be we benefited something for of more center sounds could unfolding the question a it the little the KPIs XXXX, in Dave, is that of positive progress of that through kind way scope that just going and bit give in Maybe risk a help strategy for to as how of newer migrations, may some of XXXX, Could was like you a play lingers size in on just and that XXXX? into a

that's a question, Terry. good Yes,

That's number into that quarter, of entering pace couple as retention them with XXX are for successfully the objective cost them population as reticence migrated getting more talked the move focus quarter goal goal had total we so gone customers. the next two, number We're those the little a and last expect There's customers. cloud from target about one, savings, three. digging growth And XX about was we We expected. on than that last last number on-prems cohort we we quarters going to to moving quarter. to

customers that the then expect also So I to ARR it and pretty linger those to XXXX. do steady drive as of to moves course XXXX growth that expect a through be into I and move opportunity

it. the of really what's in got simple of in opposed Patrick, assumption XXXX? for question, what is and to simple that's happened as maybe you. it's missed total the this answer, And business XXXX Thank Okay, I perpetual mix terms but something a license,

XXXX XXXX up from about relative anticipating to XX% Terry. we're in and Yes. Right was now XXXX Hey, flat XXXX. about

it services amounts new we delivery of record setting which lot in non-recurring. specifically our as as anticipate well We records QX. had So a was non-recurring We as XXXX, the in are licenses XXXX. enter don't of

Okay. Thank you.

question next Ryan MacWilliams come will Barclays. with Our from

now ahead. You may go

in and for the growth in should as we good Patrick, ARR for the wins sequential about improvement in Thanks ARR. CEM the guide? strong the it larger see taking to think relates question along to revenue XXXX customers with how year-over-year

Well ARR, and hey, but Investor we into that's and Day double the to up of we to we through a XXXX we want we with critical We to guide move our take management terms that. don't of stack. as we to XXX greater headwinds Ryan. revenue number through going will sort as customers, in growth, as in have the mentioned existing at the to are, on of business of quarters we CEM pace of see ARR continue translate them ARR We event and getting of focus our growth similar all on, but and digits, work on working lapping non-reoccurring our revenue, work anticipate that that base

about we or as versus line could move just XXXX? maybe structuring the Excellent. of think cash to side, differences just any on past workforce the out how flow And free anything play cash flow in free XXXX the

we was and wrapped anticipated full differences of will our happen relatively and cash operating the Yes that grow. no, will in typically capitalized something compared and QX flow XXXX static we XXXX cash free that no to almost that we the between than will that's have major flow clear The results it. in timing XXXX of was happened operating EBITDA line half QX, the in beyond QX sight as first But XXXX the things our higher. what be grow in but terms unique grows, entirely in but The out will adjusted operating in and in differences little in up more usually remain to we a and will And lot outflow flow major year, continue continue free QX. a -- you so had had call some in in do cash XXXX. that restructuring that, the would cash will that of we'll our and to cash development be to software be

the appreciate guys. Thanks I color.

come Lane with will Stifel. from question next Our Parker

You may now go ahead.

outcomes? Hi, into expect [ph] decline that gross reducing questions. for you mentioned this for led is To that combination despite rates I'm start, Matthew Kicker to do you what just seeing right headcount. you continue retention are a and to record my taking Thanks not wondering of kind Parker. that, in of on And XXXX?

you. that's Yes, a great Matthew. question, Thank

but execution point an in is So material renewal, legacy of arms M&A full pause the really Everbridge Board's our leadership piece of the every all-time then to the I years. and or it primary around newly record, two customer the team acquired. to highest getting whether our that not was decision really

do And our it. and third I so is piece important using liking that retaining are think that's the customers the I expect, solution, it

I be going I by execution pleased some cohorts. mid do its execution there acquired great had command expect think M&A the team saw a has I got cohorts the the expect core the maybe to real basis success company to improvement, for in off year. were about lows and just material that couple years a us team be customer really the paused the of then, specific around we they us last of some So that points but in there. I'm XXX in We as able to motions was gather back used don't

extremely number, last we obviously QX QX with and to QX the improvement year and from leave pleased I continue. expecting were that So where

portfolio? specific it. growth or the want the in kind general product quarter, was to then just to secondly, of in CEM excitement And out Got there in call that portfolio any the it is you led

new resilience and bubbled and up strong by performance five digital broader you of quarter enterprise But I core was portfolio I customers that's the existing digital when side portfolio, quarter. new, those I, on the the resilience in to top CEM Yes, inside was But and I pleased a the that the top had with the five especially the that pleased overall know, digitize the the need so win and one our resilience, gave driver. that.

much. Thank Terrific. very you

Northland with Latimore Capital Markets. will question Our Mike next come from

go may You ahead. now

right, yeah. All Thanks, great.

new but In given for you terms CEM look CEM may the new the of customers? what then, versus have And pipeline many kind does how from of existing this, like I deals, versus existing? came think

don't question little back that RC we a it the a from towards to X I CEM on give kind of did Terry's migrations. XX versus break new moved lean those We, existing. to

being we're So real intentional.

We you If we but had Day, existing that that those customers then now were size left-hand cohort in so CEM two wins. second lower the the on quarter Investor have of being are which is our migrations, still the And next remember XXX wheel from down wins important. top-five side, new great. quadrant, that

I think that's good.

expecting the Obviously the growth going be tend that would But the range a the with level through that that large that momentum also going some be acquisition. coming and Over deals perpetual if And of around was deals big you average, existing, we at Investor but had are again, be Day customer hundred new velocity in that to vary wheel, will, bigger remember the be that's we the the the the wins, we're quarter-over-quarter, customer to contributor. in high in two expecting. pattern calling XXXK remainder XX% thirds of course, top-five. out in of that to we'll to new deal a five-year -- CEMs the nice again, time

good maybe record and sequentially could so the you get saw they as these you CEM in revenue reflection quarter? growth then know, And as okay. quarter presumably full in deals first quarter, does that first the fourth ARR what be Yes the suggest

to I want sure make that. I have

closed do they the do perpetual relatively quickly. out one deals can strong ARR in the And that a get was rule, example really the snowball we fully more, amortize go begin it's so they probably relatively that's, So into and implemented XXX days not Norway and of December, it's more September have, CEM those the where perpetuals. the and quickly it's do kind had on deployed exception, it but that's by that to deals,

SaaS around time. businesses been all long have guys a you -- the yes, So

CEM are revenue little and ARR out You know, with the is the into going into to come ones delay. to go going very ARR

about lastly Okay. change sales reflection just and And sales maybe deals then cycles? in perhaps. the What about cycles as macro fewer of just the generally you XXX,XXX talked a a of

the a, number, it's five from from CEM and a five down over the a sorry, one in a I'm four. strong, velocity year deals down was quarter to the number huge XXXk over velocity. I deals not it's one were quarter X, and that, the we quarter like but XXXk in No, of ago But down, XXXk to we number, the and this so both at underlying I said, just look indicators as were over so oh

retention, so just in velocity good shaker really lower deals. good, the and all that in in that, large quarter, larger this deals again, a very I'm And the on good, mid-sized in still gross good the and little the putting

Thanks. great. Okay,

will Ikeda Bank question of with from next come Our Koji America.

go ahead. may now You

Patrick. Thanks the wanted question taking Hey the I for a earlier. guys. questions. hey sales or commentary followup to you David, a ask on Hey, capacity

was this just it in capacity sales demand affecting and mind the in sounds taking reduction year, know, year pretty You growth but like in execution last the CEM strong.

demand where what So, year the sales I guess expanding the you for question a perspective capacity are you here? of may looking this from is, pace from accelerate

team so Yes, is team. the as you and that it I a and a we're really leadership about a, a good way thinking it exact that's you're yes, asking you're, go-to-market know, think that question

reps impact I number sizes in caution and so with took generated quota with out sales intentionality as potentially end focused bearing largely And we, for quarter-over-quarter. smaller we those reps new who were on deal would comes pipeline which especially the with reps subtractions customers, were out the guess of and the

the And we're which, and planning good real weeks expansion year, the address. the that rep beginning into retention, improving whatever opportunity to July rep retention, one really that as from first on that now we'd we progress are making all for. well last as arresting be is, But that's six the here the thing quarter capacity half of departures of in provides

we this later look into going grow we next, year QX, sales we to carefully want back quota progresses page into how capacity, forward, as turn on we're based bearing be we efficiency those the throughout decisions evaluating reps QX. that so QX, to hiring As into want and our when be and that's

one just at is David. down it. sequentially. revenue followup guide, the And looking it here, XQ Got Thanks

us all particular Yes, retention highest help a takes in the be of sequentially, of two revenue years. perspective? planned and to gross call I mentioned a XQ mentioned that, thank understand to yes, from divestitures, FX to anything beyond you. but couple puts cause, out back maybe You additional that any so understand also down that would

beginning a strong details. Patrick part split revenue at the I When chart million the disclosing, perpetual. QX you strong take that had and we really been and nearest in the QX, between a pretty We've and Yes, QX. let look to between think rounded I'll quarter, the recurring stacked at

that's the difference. And so lower perpetual QX combined with and that biggest the

You're going seasonality our recurring in see revenues steady to the and growth in perpetuals.

Yes.

the well and -- the is revenue have In Patrick. one-time just hey million in QX anywhere was Koji, So in not there XXX QX amount. there that this near over is $XX to were, of going

week see to this you filing is that ARR set of but one-time in continuing XXXX, in by to And XX-K revenue $XX that very that grow, one-time over that the end we subscription, the revenues the million. amounted with is business the see anticipate of growth So the recurring that lumpy. you'll

million transition of XXXX saw lot land in in lumpy on they but percent, from as times create of noise. a QX one is it's, QX. it they the and a $XXX it out deliveries, land in million, $XX it those to some QX one So can huge don't creates, XXXX just time you hand, QX the and it's not And

one So decrease we'll and have a into we had another into XXXX. sequential coming XXXX coming

guys. helpful. so you Thank Thanks That's Got it. much. super

Okay.

Our come question Sachs. Kash from next [Operator Rangan will Goldman Instructions] with

You ahead. may now go

been you, since strategy on for conduct been enough what path stuff. eight to That's David get That's CEO. and expect to and clearly as the working the seven, are take and good on in old and time by what, outlined? Patrick. thank implement to to much so were Hello that the you months joined in, curious extensive quarter, elements the very way. probably the that and you you the you $X to review David, revenue a elements will an you congrats it's of your I'm the of hope Thank invest new have harness that get much. that you that strategy actually what question billion

is smart out remain say the There's I portfolio. strategic Those to I the the really, you, creation security thank value. and that it's the fantastic coming mean, shift synergy me, that that and I that we've definitely bullish. really recurring building on have the and through value yes, really on this it's made. bullish warning, our loud revenue public of Yes, or I key clear comes that with Kash. hopefully focused from is and public products. safety really remain really rest difference

recurring is the that is of make that's two way suite So, right thing together bringing one and focusing on focus, sure revenue the strategically in thing our full products. the

that X with the drop be everything to the I'm well should we together modest to this the to about just to the thing LOI CEM retaining hangs thing lot under how company which of able me solutions The broadest close is the thing, seeing a with set has bad so, M&A synergies. or of with in bring the we're good is talk our together, about X.X to And good we pulled what customer going customer this done to together. position X, divestitures leadership the relatively demand, And, X that that this out. space. the

yes, to focused wheel growing cross customer and on $X So that. and new anyway sell, really big just ads it's those customers billion and that through me migrations ARR staying

much. balanced so model. Really well you Thank it. Got business

over closing Wagner to session. concludes any would our for turn I the Dave question-and-answer like back remarks. This to conference

and all you you Thank very participating with look forward Well after many Have of again, quarter day. updating QX all to a today, you again and I speaking I the thank the much. with complete. of you is for us course great throughout our

for concluded. today's has attending now Thank conference you presentation. The

may disconnect. You now