UserTesting (USER) 7 Aug 222022 Q2 Earnings call transcript

Good day, everyone and welcome to the UserTesting Second Quarter 2022 Earnings Conference Call. Please note that this event is being recorded.

For opening remarks and introductions, I will now turn the call over to Erica Mannion at Sapphire Investor Relations. Please go ahead.

Thank you and good morning. UserTesting Chief MacMillan, Financial from and Executive today Pexton, Jon Officer. me are Chief Andy Officer; With Andy will XX, begin business results with a brief the quarter review second ended June XXXX. for of the financial Jon will by company's year for outlook for full second third and quarter, the quarter results the XXXX. then followed the the review

management's will that then that from involve statements open questions. expectations. could We differ forward-looking actual current call will to Please note and uncertainties include for the that cause results this call risks materially

For actual to other our other press important affect factors as a Relations the risks factors important in Investor of release. discussed and factors in our on section discussion of well results, the material our SEC's risks that could on as today's website SEC contained the and our filings available refer and please risk website

copyright forth information the ended the our in quarterly with all be report are XX, for in net includes non-GAAP Please non-GAAP reserved. net June webcast certain with also XXXX. contained GAAP. in rights note, including Additional discussion Form filed quarter to and prepared accordance property per measures material this share, measures, and the not non-GAAP loss will be set XX-Q on sole which U.S. loss All UserTesting is of

company's of as press have of non-GAAP and website. of measures Relations be the measures how These non-GAAP evaluating performance. means on provide issued understanding GAAP. this superior from, with evaluates measures regarding or with discussion found in release investors reconciliation as our U.S. company's section this was can financial Investor to non-GAAP We morning considered accordance GAAP in the included that our not for in substitutes operating be in they the prepared we believe to Information measures that the isolation should management

call Now, Andy. I turn like to to would over the

some headquarters our call and for today. Erica in Thank joining thanks our from the with doing on here our I our and you, today are Scotland. and customers. We're European meeting call of with everyone Jon to us team

in is quarter and international grew XX% year-over-year our XX% Our revenue. revenue of the total second now

Edinburgh reported this greater. our second we're spending This record sixth XX% and globally, revenue quarter to We up of with team. reached some increase of subscription $XX year-over-year growth with Our second year-over-year. or Subscription largest is our a XX% time looking year-over-year. of million, million, $XX office in office XX% revenue consecutive quarter represents an revenue forward of

as midpoint more the climate margin the XX% much previously we of provided managed non-GAAP guidance minus Our minus we tightly was expenses XX% uncertain operating than in ahead. economic better the given quarter

in were our was rate reduction and Our calculated did customers $XX dollar larger up second the quarter, retention our In retention expect, down Broadly our extended rate as among sales churn last XXX% the speaking, in delayed year-over-year. around was customers, but net Gross broadly most was million, stable of the deals. XX% to due we prior customers. smaller year-over-year; XXX%, and cycles. half quarter billings budgets, see dollar retention decisions would higher the from of saw their net among reassess which part you expansion we

likely interest about need platform, environment two for to macroeconomic the the and good continue we our will next While see concerns for quarters. persist

profitability. accelerate organization and efficiency, that every path the in years sales consistent over marketing XXXX. Coupled quarter rate our our company's been were sales late subscription has investments strong. continue Our to since past We nearly even revenue though over those two sales time, the to invest extended performance growth we able to heavily with

as will I'd reduce to to it economic global economic organization our thank the like sales uncertain the done will have scaling primarily a we our to support believe sales approximately and employees marketing Pearson, This a in environment, result employee better contributions expect the we by moment functions, our company organization. as all and our they in provided Picsart, Chase as we Brands, accelerate take July, reduction past. of When improve, an Trainline we to in the reduced to Central, their have quarter, transactions, base X% to position capacity for However, the Minute focus downturn. new weather Woolworths. to the customers. the and supporting and Specific of extended our conditions great to business but Rocket profitability Media, including impacted shift us economic path we and to a growth some Tailored wins second some Bank, in

have XX% to the In quarter from Insight customers as and which the now customers X,XXX spending total, customers, more $XXX,XXX Platform. excited than with which on large year-over-year. approximately increase XXX We one the of very are year up Human ended ARR, is categorize adopting in usage we expanding We a we ago. these our platform, XX% have those

behavior in leading and our decisions. it to platform is business insights invest driving customer understand We in help the actual deliver forces make platform to to faster today and and market behind the continue the believe companies smarter

to now key Our great by customer experience feature is Instant takeaways both post-test The insights Insights from in French contributors, important people also within in a included platform including French-speaking contributor around customers giving can test. accelerates enhancements, the some presented the release Tests French with and reach Instant analysis The customers which allowing customer automatically detecting their market UserTesting in anomalies quickly be to now and more world. available conducted narratives. experiences. the ability dashboard, for identify patterns, July Insights, are servicing video-based

self-service alongside launched comprehensive We users scale enterprise so governance user new sorting sign-on card feedback more a and capabilities, sorting a to files public. video contributors' for deployments, single launching media of allows more assets models, give interface and audio provide before gather feature can native to unreleased video and understanding to and new mental and the metrics test also gather sensitive better testing new on companies that asset a them media feedback like card

help needs. make templates sample available customer over confident repackaging can decisions loyalty on bolster now Organizations include released understand on customize also templates XXX test pre-built higher their on product reaction around decision or is how in inflation. second, by focused to the as to pre-built market; focused the their customers inflation a specific use and in or testing service pre-built is feedback at The customer platform. on plans bundle priorities have expectations template changing customer proactive preferences, UserTesting's changes. are customers, new collecting one, our companies and the and address consumer templates business habits ideal that for makers We We still questions

and They speed store greater and human and of and these external use research tested used campaigns an certainty all into processes completing and for virtual desired allows We'll the also increase receiving UserTesting. large insight marketing insights incorporate the house of speed The fashion A on better workflow cases. of outcomes. try-on research to luxury rating insights quality is projects. achieve helps initiatives and part regular a to to Turning achieving testing experiences them feature in through personalized and in processes large app app now content experiences best a to insights a highlight building a prototypes, interactions increase XXX% their of global the platform companies XX% other that clothing to saw customer a our of company increase and their meal X.X. they are delivery ensure testing estimate to that's and

can things have to So, we customers quarter by delivering climate, on the control. we expressed customers I've hours me. past energized with and broad been value despite the and satisfaction our over economic have continue to the they many focus spent to the

feel Now is more than that companies and why. important ever, how their it know customers

driving human on so optimize gain so actual help smarter make results to customer faster Platform they what is companies are to more With helps that, over We in detail. Insight our use insights and it decisions. better they adapt our the business to can discuss to insight companies innovating platform the market. financial behavior can The Human I'll and in Jon turn of changes continuously understand

everyone joining and the today. Andy thank you, you, Thank call for

Let's begin financial highlights. with the key

mentioned, revenue year of the an to second Andy increased compared period. XX% As million, record to increase $XX Subscription million compared year prior a for $XX the prior quarter revenue of the period. was XX%

dollar-based in quarter, net XXX% second XXXX. down of revenue quarter second retention the rate was the from Our XXX% in

economic average rate dollar then year. improved was much our in which XXX%, was a of retention a context, net XXXX, what in better year, economic was average XXX% in XXXX For to and tougher an

range the were billings Calculated million, more year-over-year. XXX% historical have an of XX% challenging economic is during increase seen within of what the So, environments. $XX we

was wins. what lower more we concerns and As the around Andy with in ratio And again, among past. new mentioned, this in economic customer smaller believe close our seen the closing have than customers a environment pronounced we resulted

Operating I minus minus to non-GAAP gross the which which in period. prior margin about year otherwise is was to to operating million referring loss quarter cash XX%, period. free margins in year to the the $XX.X measures $XX earnings favorably expenses, GAAP measures operating ago be second today's compares press reconciliation unless included talk million, was release. non-GAAP The specified. of XX% As compares in loss, in A flow, I'll and

cash the quarter with $XXX in certain rates some flow changes show to the quarter's with flow our minus large over cash. minus was free our and a economic capital. the discretionary the We impacting as we few $X.X free on than and We've in profitability, quarter collection ended were some cash environment. to our million with volatility in of progress in original expectations margin payments tightening meaningful a quarters working X%. had cash our with in continue Free restrict We to results quarter better path flow this million started spend past

the more a I representative first of measures flow trend. So, believe free are normalized cash half

also XX% ended non-GAAP are the minus first up period. have margin in to was year to profitability. months the show on we compared and XX, the The measures flow margin minus second six-month roughly free basis closely aligned for XX%, XXX operating gross For was our prior to ago margins XX% subscription path our with six points quarter made compared the the period. year margin more Gross progress June cash was the and XX%

Turning compared the in expenses. revenues year was in marketing to to XX% of and QX operating prior XX% period. Sales

economic third we XXXX. have increased team, still capacity more fourth but make in help environment, with restructuring our leverage the to employees spend expect of have in-person changing and of large most will focused our it in have in area. will The of efforts efficient. reduction We We planned now, couple in reduce in investments quarters, been see and made to more events the area believe some this a for the years sales this we we but have

of XX% in was prior leverage We continue some compared in period. in period. was year of expense to the in XX% prior second which compared G&A see in to XX% quarter expense revenue XX% to the second R&D quarter, revenue year the the

Now onto guidance.

lowering are million of guidance growth the new XX% full by year rate XXXX to a revenue year-over-year. to approximately XX% our $XXX X% representing $XXX of million, of for to range new We a

we quarter, rate a third to the $XX.X or year-over-year. XX% XX% million of For of $XX.X expect growth to revenue million

basis improving the we new are expected operating XXX XX%. minus a points to of full range year, non-GAAP our to minus For margins XX% by

For quarter, of non-GAAP range minus expect minus XX% in operating to the margins the third we XX%.

$X.XX non-GAAP outstanding. net million loss year, be to minus XXX per between full $X.XX, the shares assuming minus we average expect share weighted For and

XXX.X $X.XX we and non-GAAP per between minus weighted the average million third quarter, shares For assuming net expect minus outstanding. $X.XX, loss share

third good to to related non-GAAP financial cash treat likely incur our costs expect to uncertainties for until quarter, severance. from as in quarter. restructuring environment plan the conditions in measures excluded had we the subside. will uncertainty expense us those the results approximately some quarter last of and, weeks We Overall, the and $X.X an of believe guidance. million impacted We to few restructuring around is We adjustment the therefore, macroeconomic that the continue

critical the for experiences for We a the Insights to UserTesting greater the year-over-year believe ahead. with to way and better have opportunity or six help growth questions. pioneering prospects, in growth shown subscription great organizations do of operator still It and is to with our I'll of potential over companies have XX% customers, for turn Platform. consecutive market quarters now that the platform employees of Human is others. our call

your Instructions] this [Operator time, is a Stanley. be Elizabeth Our will Morgan At with session. with from proceed question first we Porter question-and-answer conducting Please question.

Hi. Thanks question. for the

And of where then from you a mentioned low-end those high does are And from? what of dollars to some just speak specifically, at you're of comment and more UserTesting fit greater Thanks. -- you be demand, coming of the funnel are the IT second, Can coming top by. some terms may of just the scrutiny within IT defensibility be of of First, for the under level, may where prioritization customer you those segment. really come given budgets more for spend kind can kind kind budget UserTesting? User of seeing in the dollars the harder customer on and churn of to new

Sure. get kind of team, job we leverage or UserTesting the ops we a lot teams either by to our see R&D team efficiently. I actually tools, saying, the think IT for of to through as to to R&D team done of Thanks budget Elizabeth. research some I primary especially spend. design, often the come start through one UserTesting would be design more their for an And that is what the and tends opposed traditional tend research

So, people and established enterprise in roles tend dedicated more sort tool we pretty roles, of I those think to it of for in mission-critical see is those customers. a more

a And speaks a I think this the so, in where aspect, some versus a see have as organization, might of numbers. we shipping in scaled research key churn with reflected of that for environments, or you smaller we being which sort research of that the it companies, those sort somebody team doing of to sort mission-critical have in the mentioned, time workflow is their a of team design this where that's and product part

the second top funnel the see demand point the I for product. of to think strong demand, your at continue we to on

think mentioned of your is if impact as behaviors. product. you We customers' we increased launched around understand changing some inflation call, I an need, to your understanding the there template, on view will, on of customers'

our what continue we getting we channels. of of just budgets our demand so, the organizations true of strong about was in the working a we budget the we overall we'll to review specific half say review. UserTesting. heard department budget cycle, and doing And lot And the to with, approved, we're most through that is funnel talked whole -- with And evaluation go see once marketing generally point. not at that We our the found really were deal folks at that slowdown second the through with to a be budget of that and top

funnel continue we to demand. see of good So, top

for Great. Thank color. the you

Thank you.

your Securities. is question. Truist Our from next with question Terry Tillman Please proceed with

Hi, for taking Joe Meares Thanks is question. Terry. everyone. on actually This the for

customer this curious weakness? revenue talked of the but still macro part less Thank is performing? bit the the You more about in business driven And a is remarks, is And less prepared you. emerging outlook just the ARPU versus impacting new how or business? the much how by your activity international of

SMB really, the the really would way an to -- it's sell to call biggest every What I versus about in as in We one world. think companies, customer far is of think we on small say, enterprises acquisition, sell by the the the unique we that our the as I I things mentioned driven segment. business ARPU less segment ARPU issue. is all

it's cycles. economic at the spending smaller think company of dynamic a might companies who as lower a end lot of true for and market survive. I life death matter their the typically It's of more restrict to with

be a of in segment, SMB, tougher will we there for all think acquisition And in software that acquisition so, kind business of kinds particular, I of small think logo products.

of impact business And And as degradation And kind that's a overall. restructuring, reduced our in we investment where driven it's, of team segment performance think we out opposed and more to actually point, a of so geographically. as of a by on see impact why the ARPU. that's pretty bigger again, that international We saw second I than our part us. saw our for strong your geography driven similar we our

Super helpful. you. Thank

Our Hynes next Genuity. your DJ question question. with proceed from with is Please Canaccord

curious coexistence how point you are spend in but guys. there around you're kind like remind know solutions? Hey. those Good much don't any is enough instead us consolidating firms morning, of And signs customer high-end close the that sensing this problems, I'm platforms bigger you solve can market, the of of Andy, environment. you if at have Qualtrics? same thinking buyers with I Like the any

Yeah. often doing an their tool people type of some with I We Those mean, like are analysis, type coexist tools, of in often clicking with a apps know that. for things coexist analytics so kind and on teams kind to we by organization. used folks want often even tool. of in quantitative are survey some what different or measurement

feedback with research lot which by do not to even We used primarily our production design not of get see on that be going UX on research team team, just testing interact might UI a production. platform, able you're how is analytics. be tool prototype really Our to to again, people in a a a with

So, about for before. never base customer your example, you can't they've a seen survey UI

we of so don't a a standpoint. And displacement consolidation risk from see lot

it's in research companies product going for that invest their those UX us, that think to really supporting around teams just the organizations. continuing are on in I are efforts

sense. revenue, this forward? then, spend for sales business think marketing for a That's color. do level Jon, is the look And going at you helpful right If a and Makes Yeah. follow-up we of what percent as you.

for until line more it recently. really couple X as But period were last that all added up just these years. kind path we've Well, we're as as the in long-term well profitability model we've to efficiency XX% deck of of get revenue midterm on we outlined over that in more IPO. back to invested to our of investor so have the a our path into a seen a over metrics of in recently quarters And our We've We yes, that model. time. slide increased the of

We we in want about quarter. our made said bands model. we that the the softness efficiency at We over look saw to midterm XX% are march now this outside come time, So, of those to for we're adjustments. But filing comfortable line outlook, us. is we that of revenues of when

it. Got

guys. Okay. Thank you,

Thank you.

from question Arjun proceed next your Our question. with with Please comes Blair. William Bhatia

Thanks guys for the taking question.

Just like customers purely going pushed seeing the existing from is Or any Is where driven you to signs that are verticals, curious seems weakness deals by if specifics back point that the that, that coming. are a in NRR out? expansion some down-sell being renewal? that of of it there? differences as there's any if terms follow-up reducing customer out you're existing at seeing of just contracts any would and And there's point I'm to you

Yeah. To part set quarter. the saw the don't that of right a sort verticals, first, I last we difference nothing end think the at in any take out least of jumped pronounced specific of at

there. nothing I'd So, say dramatic

was of Much expansion NRR, second revenue that terms half we make because question, In the think the we're transactions that from where bit those kind tough it's heard a lot heard on our a teams redoing we like restructured UserTesting to delineate at impact our did what for customers we I half. of of we've budgets, what second didn't say.

those telling redo our teams basically UX obviously, tools. as the to like And those us, budgets, doing are require so, we things research tied headcount

or the a for feasibly impact expansion was it there's that. But be just on largely on of seats needed some headcount impact could something if So, number part, decision. delayed most the deals, there like there,

executed. a we're once back into to quarter, ensuring of only trying this in those our of of few budgets sort that of they weeks these through a new cycle the get deals, We're and evaluation those so, projects into but And deployed. are cycles understand go an purchase ROI most

of of say any spend. decision I kind it's versus So, largely would delayed atrophy current

the And Jon, guidance. for just Got Okay. very then, maybe you it. one helpful. on That's

and that's back the As more gets bit macro QX that on baking terms into could budget of that the half what -- Are saw in love in you're just you worse little for of in in the you this back gets some are I'd into that a you're hear going the restructuring to push your color what anticipating assumptions. thinking maybe half, half? customer the worse happen -- we at back terms in looking of continues? the assumptions we as And

Yeah.

softness in a came quarter -- we meaningfully that the saw started When when weeks had we our the few world team do the assumes deals. guide sales the end last was our we last Our the that different really calling the shifted that quarter, of kind number, we month in, most the and towards of of of of the quarter.

the So, budget? year we're the to what built carrying current that of -- as And that through then, guide. part was the end we've that other question of the softness of the on into the our assumption kind

-- yeah. think I

think you in just answered I but terms of mostly it, --

there's wholesales got team together lot optimism, to and there's purchase And we our What are years, we a and And of we sales QX are -- worries people that last on were first the decisions heard just Like in again, a yeah, time and got lot of was meeting really kind deals lot in about closing, we've reevaluating. feedback the environment. in than of week. sit of anticipating held was kick-off thought sales budgets. discussions. of confidence macro of is, that I annual a reevaluating team It half a believe. I And companies then, so more I pausing a the our two our kind the lot

again teams. with that was I was at those the enterprise that So more level sitting and global in

hear their So, I their love focus and need. to the confidence,

we economy So need potential and our -- made -- plays assumes these this the during how customers be softness with year. see our the see to out guide but that we'll And decisions customers. with

it. Got

Thank you the much very for taking question. Okay. Perfect.

Thank you.

question. Please comes Bora your with with proceed Our JPMorgan. next question from Pinjalim

or capacity, that when associated sales is why sales the improves I demand macro understand talked thank capacity ready for improve? a pyramid? maybe of reduction sales taking is largely and question. want Trying the to low-end you Hey, with as to I you there the about close the understand, think reduced the in rates

and to a in make quite be last the capacity able and quickly. rates past, productive the up management up just shown an team mean, bit ramp driving I ability it that. take as growth little to things sales Yeah. like to We've

will, of again, the second a your in the thought second as that be of So telling ramp was capacity starts, up budgets, to and of difference one, certainty, have shown knowing terms our we will people, the the a committed to those on path ramp have to into said, profitability. last went us will the -- have we have But it's profitability. that's and recognize, as more sorry We of into we that selling being first defensive, month that you they half wanted a we different we this the be last expect were think Jon that ability was back as QX, point, I to be QX, if important -- that I that half up a little we very of maybe think up, demand process important ramp -- very do sort always path it demand. that, it's budgets. to To half team of than to replanning which on different, year. people to can year the

the market. to what we have showing trying productivity, us led dynamic a of for kind what we're we best aspect can And to that progress that that profitability, have of that our and And the so, the lower is sat said, to -- strong manage we path of sales defensive down end ensuring path. we can along strategy where do

second at market through we of how comes the that the end half I lower that -- or changes the much of see don't as know deals of year. demand that in So demand the

time we we hire lower that's when easier that to And ramp and so, reps. the sales end actually where faster see again, They for ramp us of up it's it's capacity. easy -- the value until have happen, times, to market

back the And profitability, see was solves that, reduce the so need quarters. we productivity strength approach end at the to low-end of we path And we're team position to and market, for through real already Jon great ramp again see of path of we of our can as see the that us felt of that couple be exposure manage at sales we that go some like our end capacity to have defensive that we it defensive If that market, dynamism the and I know to we our can don't the in a happens market, then in where to a what product as to and we next profitability. of the a right up.

follow-up MDR side expansion. Understood. customers who a to the metrics based using understand there between flex And on I one versus pricing on expansion pricing the difference seat if want the Are model. is seats should a little number different? flex pressured a I based, model in based discussions guess, are that bit but that. by are those affected I and understand not little all of -- that, might be there if layoffs bit is be

model truth say, bit seat. chunkier historically, little a high would to the was also I definitely was because that. pricing seat-based some a there's -- think it I priced that's

coming of a sort of a doing another And versus were a what to add little of customers dedicated that if decisions model. easy small so changes more seat point. of bit number testing like the that seat people people flexibility were higher our you've the part sort new on what at to some price another or being Those And a a add with lot is, team think just lumpier capacity more, of it's seats model a got little board. add is bit step if of much two testing

but based little I a necessarily it's and that say the one model, wouldn't itself to seat lumpier think with I so, expansion the model lends And other not. does

historically, under and revenue I have think both in models the will We that enterprise good had expansion continue.

Thank it. Got you.

Sandler. Please Brent with with Piper Bracelin is question. question next Our with proceed your

given reduce just kind and Good June, what XX through the us It's take slowed you're April of are still tough saw cohort me thing you. really strong. Andy, But clearly, that and all-time dynamic adds sort the out surface, imply enterprise maybe of momentum up wins morning. an little walk came I and stance seeing that more maybe a in in. decisions One of over quarter ones those XX% May that, through at defensive net decision headcount I year-over-year. the to you the to lot make. enterprise, July we're is what Can to the a of new stood to the record. bit? environment Walk then looks Thank us enterprise appreciate know in that Does was this specifically linearity? you in a though

substantive that know linearity revisited we Yeah. given. expansion got that to necessarily there were some think are I again that are These specific imply was definitely those did I to deals I QX. that even push deals into are that even the decision -- don't had late quarter. going decisions want there. the this get quarter don't in

was happening. think definitely seen to I of slowdown the hadn't some an opportunity that rebudgeting we the that in if was improve So, number there

a a frankly, I reflects, the it investments the think lot it's consistent we've trend we're seen. of making product. And in

engineering on, resonates on environment. ROI these productive kind building of as evangelical early now message point, of enterprise these based can think can I providing thing headwind while the large frankly, how selling about by tie for we sale we're decisions. tie teams unique how think development companies workflow as really make I a a into, terms a economic with do this And a in more that an right into real makes an what we've that is been in at type that sort and even solution platform of thinking organization to

lean we'd business And to to where, we less have frankly, on those making, so, seen think an of our continue and improve headwinds even line forward. going to that's I we're area decision sight into enterprise on going I numbers if think

unit stronger that even really think represents economics. I

end the upsell retention that to market rates. rates, always of stronger Just gross have inherently, tends better

just comes just on at budget I our think success so, the some, space being to of that defensive our we're the more have spend. that path we've our approved -- of focused Maybe really and there mindset is again, reduced sales meeting to point, capacity can that inbound not part some leaning profitability a SMB all. We exiting small the And on demand into enterprise. make has in

abandoning end not market that pragmatic of more either. being the we're certainly So, but there,

Totally for then, makes you. sense. And I Jon, guess,

been different NRR trends enterprise consumption in the about those Is color impacted to reducing it mostly NRR relative and quarter, two cohorts? capacity seeing SMB? all just at that As Any platform? all the there think this maybe downtick in you're you customers by has on

Yeah.

of We we've had right. all-time our But segment, you churn. the enterprise S-X, SMB over smaller -- customers XX land was with remind the have softest come the really the in disclosed top then We And top I'll you're of our expand the of prove that those unit record us median beyond expand worth we'll us let well is that a in and exactly ARR, increase. progress working as mentioned, of those in our the ARR today, happy $XXX,XXX. area. land let a that. and though, median XX We're But that again, area. really, area. $XXX,XXX in, our and The we customers $XX,XXX. So, expansion customers the economics are lower customers, saw generally large level, more

let show So, the then let you in, us come us expand. value us let and

flex at is in model the give level. them. for work right But the with the the customers idea to yes, continues flex that enterprise model, our pricing So flexibility what pricing of to well is

to they so, to be up in in easier up markets. is going down markets And to flex down for it flex need them as and

unlimited we situation out there. still We than, better it's so Andy think but still exists, use. of both plans And model that a that chunkiness license the a pretty said, we as have expensive

the particularly customer, is they to it's Most because people expand right the them flex So, on it with can enterprise, moved value. for and pretty for model, grow down But and we're I'm how plan. be kind that annual space to have contract up set easier particular. flex happy the whatever them for of the an to will also in enterprise easier in choose

Make the Thanks for comment. sense.

Thank you.

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

for Thanks gentlemen. question. morning, Good taking the

some sense is how in of Or other some companies more it challenges I look Any maybe for much I'd have the you pipeline. be as customers out? taking budgets. of may that broadly, that spend? terms certain evaluating amount that more a VC-backed customers We're a sort pipe wanted is at may there structural just and curious, double-click how maybe So, Jon, on be hearing lot pause? to from the little with struggling a splits just a bit of

and there quarter. But we in saw of kind specifically. that not the towards yes, pause again, was a surprising Well, of end reevaluation the shift

the action concern but still pipeline was look Our again view, have We're SMB larger hurdle, out make a decided the harder the in through, that as our uncertain. at might more and enterprise we more why capacity to that pretty SMB get primarily. the it's reduced comes quota-carrying segment we side optimistic the time to that's restructuring that over

team, deals We confidence our of good QX sales from are deals. have more but looking like those

is this Andy. And Brian,

this for now our on more used or sort they're Just we out SMB UserTesting demand. that our a has are great as double-click they essentially point. the of right People already, manage to add to Jon's been on us accounts inbound to to have of us. see being funding have of conviction have reaching Part philosophy size team like what before,

close better have rates, outreach. outbounding. lots funding market What doing come faster a lot that with booming in We of in rates, frankly, mindset. had with been cycles, that kind renewal a of customers We VC of with were was better we sales doing

be start pitch sales second trying like, yes, could UserTesting, anybody is forward. recently are sledding thinking and of we'd a product got We're You our going going launch call to funding And figure sense. market a and tougher that's product, lot fit, and whatever, makes a out who that them cycle. they to,

you right-sized So, we kind will. the reduced if team, some SDR, that of We infrastructure. of outbounding

our need. they the think and a goes pick to budget, they're to that the are up an projects, right got projects, and have salespeople think I well qualifies, funnel change I mentality, new close to got just start-ups make have can have in we're Crunchbase there on you deals. got they and have those start phone and think So But funding that's just ringing big they that up when got I going We've to spend SMB up and they funded, open that that through idea shift.

know Absolutely. time together there's user But catalyst. expansion but I could conference of we're or think looking any And That in I forward now a a get guys. a maybe terms of New all conference between follow-up. thoughts prospects lot on ton in-person makes mean just a in your or of products? October, to just to what sense. thoughts Thanks getting I'd potential love an Orleans. and on the user Yeah. as

New like our we in It our It's wanting it was Human but Orleans. in call had get I'm works the products conference also make user We planned upcoming We the really for They We space the driven the the Summit. to point Insight It's get events. customers for about rest while. the extremely about really mid-October. lists. to Yeah. had the ways, UserTesting, as in hit demand both XXXX had that, waiting we've smashing excited to something in understanding. a user established our were do best when for delayed and that had sense the conferences from leader many that. run people and that a of sold-out The us. They was about a decisions COVID practices first-ever three our global of were all obviously, it year, was of in conference space, there and got lot at prior regional we success at together, because to in desire together. share

insight of to We're to think on now demand I be -- important. our there's so know will level And really people pent-up looking an that lot like forward industry I so, excited. and what happen. the human welcoming is feels conference it why team is event a really for

bringing asking for about it. up about thanks it We're and excited So, really it.

Andy. Thanks

question. Oliver Baird. Please question from Rob with next comes Our proceed with your

you for Andy, use you as case checks success our come a been has guys, expansion, of cited UserTesting stories, which your morning. accounts. Good up in I often the of have one guys. for some with Hey, guys think, -- biggest

and then, and there recognizing any sales that [technical is look the follow-up most expansion deals? accounts kind at -- that the of customers, some majority And those curious, slowing Jon. of there's of when quick Just and for your perhaps SMB, difficulty] feedback within you here the of maybe of those that perhaps is use a among weakness rationalization case of timing a pipeline, some on or

Yeah. Rob. Good question,

of I been value. think that use they It specific like feel scenarios. tail evaluating about several a don't less does deciding cases and different provide really it's

the maybe more play. SMB case again, than use As our we most challenging initial in an mentioned, sort of area. new logo And was selling acquisition of that's kind expansion

use growing, of your we process, do even was to use case I strategy kind tie thought how think UserTesting the about what of thinking cases. a the kind your several of are you saw individual overall actually that beyond the development in that might process, customers product and expansion existing and lot moving prototyping involve into of workflow

nimble however, a companies which world others if our able And that to I so, we're to the flexible go I demonstrating and users. are templates be we mentioned inflation where being we of like we power think the are think cases the that's that, reflected of the many We strength be on are of relative part launched want that enterprise tool changes, saying, And what to I hey, and the continuing about see in we are. use again, do, sort there to understand to platform, in continue SMB. was saw we

we're So, we put out those selling. use in cases what front of

Great.

And headcount. a appreciate Andy, or the sales that. -- the then, just Jon, question mechanics the on -- of of marketing impact the Okay. and headcount, sales some

about to salespeople So, are you get there's half XXXX, saying, speed sales early folks and to [technical back where -- existing really fairly Thank you that into be of some I going and that up be realize I ramping color base delicate, the but to and of cohort guys would sales you of be we how pockets these thought weakness? at there been and or meaningfully. had curious to rationalization going Were more in marketing geographical sort the saw it looking it's ready you Was a Can helpful. think And newer difficulty] was marketing. sales. of you. the to as we're just Any folks? and okay,

Yeah.

biggest the the some company. quarters, The hiring we've two of of QX right, quarters had last were the Rob. history So, QX, in you're

getting So, going really optimistic we good But really And to were started we first XXXX, maybe and and head big through. again, the we in a soft, get for the things really the positioning February, again, curve. probably demand and then the were for the had really quick. growth, company started of war time,

sure set we sales we teams sales thought, of team a we're the right different the top that, efficient it in the in was is -- done up about that other that any probably that up spend then geographies segments so and the But was in more what the and more to U.S., geographies. different space, that space to be the different lot the some down, was make our As to had think of SMB our and successful. in reevaluated than is as certainly size more both bottoms breakup. and I remains And lesser of with international

just the that is to have we these The salespeople -- we add I'd good answer, think Yeah. also it's that thing Jon, a about when only it's making not changes. -- quota-carrying

folks have like functions, every We SDRs that. solutions in consultants of reps, development of and sales one most ratios roles supporting these like companies and

changes, made And those keeping of ratios sort so, we the consistent.

for have taken So, impacted SMB our were too roles of space, some there might other supported that we function. out that rep every

saw space. we And dynamic where of some of as so, Jon the it's sort -- SMB and pretty market aspects the focused, more said, of in

adjustment absolute expect have QX the relative spend to We growth to and is to in our in in that rate. to the to sales really relative and still And spend an dollars models QX in QX. QX sales decrease increase marketing

rate our we categories. within posture continuing little had conference that in productive. but our in-person that's And two bit well. to that defensive growing. So, event still then we big the a pulling kickoff have -- held we're that QX, and first sales QX. sales in that And our It's in years hiring in was very are as customer more all first back, of sure we efficiency spend. range, some we a partly, also We're had really we'll We're a grow because QX investing making really is growth still again, then QX,

the part also spend the of profile are those of second year. half So, for the

Thank okay. you, color. Good guys. Appreciate it. Great.

Yeah. Thanks Rob.

Please Schwartz with [Operator your with Instructions] question next Brian Oppenheimer. comes Our from question. proceed

this for decisioning you Andy, Yeah. the you're seeing. just wanted taking double-click Thank that to the delayed question on I morning.

think, that, Is we're as more fair America? in it as pronounced North I the Q&A. assume that well the to hearing it commentary was in

I A little again, more was think bit. largely But segment-driven it than geo-driven.

we pronounced you, So, America, business also North the what's North -- number more maybe -- America. in our slightly it's of but in we gave XX%

of a weighting of sort business. the you there So, of do, a up end the it's anything bit with in because we majority

But you. Thank pricing new that then, seat you think, still model? is Jon, ago. I And know for -- the follow-up one based pricing a base changed what couple flex years of pricing of you. Thank percentage the model, you. left model the on the I versus new

more enterprise base. people then choice. of giving been it's the at the And adopted a we're SMB, Brian, account more heavily Yeah. global

license people to out to Some just switch and then over. people capacity not at and unlimited about to bite figure some want an worry usually want easy trying an have

still we're offering both So, models.

to say, company, majority flex think I the that the is it's model. vast I'd the of on XX% XX%,

you. Thank

Brian. Thanks

with Please Our next Yun your proceed Kim comes Capital Markets. with question. from Loop question

Hey, just reduction network you capacity, Andy, the in on strategy? you. us can sales given partner Thank the update your

do starting work lean think opportunity see working different agencies. We're We're Yeah. to for of an signs to early areas. continuing We in us. definitely of that partners to into success are as with couple some of continuing a and

public we And the a feedback to areas platform more kind they UX partnership they're us and think work that's hope marketing in way agencies also where assessment. of wins that part of out rights work to actually like ecosystem hey, for I some do be want getting area get are of I of feedback call have build work to in really those using team editorial out we're marketing on, a design on progress -- ways. design that opportunity we And that then, really something as is of having an two call, we for that. seeing a agencies using two interest that continuing or UserTesting content. in future working able see early our workflow But specific we something, to of work of on companies this we some think and you've also to to part doing. tech needs of yet, share heard One mention something, we're so, me don't And any do saying, the kind to to we some but in well. with person the do the can I some to way to couple times, want the something at that comment and test agency look that in more is we agencies want think want the that a there's from way part we're

they're the can tools looking how about so, that workflows workflows. at thinking and they to sit And use UserTesting orchestrate those inside those

to that on fruit And so, think work those are but in will also partnerships we future. bear the continue I

bullish building earlier So yes, ecosystem, term. that on very to of we committed something much out stages still but in and over partner long the the remain

higher charge it in update prior seeing audience their before, cost rates then, about one any any guess the on associated customers? the the of give we network. I today, then talked Great. Okay. you that could terms new us contributor the to different on topic And number think an for Can growth more trends the value but like there costs, with in network, the acquisitions? contributors, you're not trend of number And to contributor contributor but that Thanks. plan I certain command targeted

continued to things. those around payments, kind We've economics contributor our typical of kinds of see contributor Yeah. acquisition, around

So nothing unusual or there. different

engine all with it long might happy perspective a and in what not performing very like think line, little be be with things That you the the is a continues network see think that. range running We're plan to margins expense. margin if perspective in from we that above well. the numbers I a as from contributor

to the We continue invest growing network. in

more making We're contributor we doing a in bit a ago, out of available now network building quarters sort French. our Germany. in was were mentioned, little in little that the two of being So, bit investment it with I think we

So, you'll see some sort coming additional model of on network. again, contributor regions business naturally the those in structured happens that around we from that But folks have speak languages. that the

that our make to network investments more made that the technology and platform have also We dynamic. supports

released the a let to One model of of the The behind customers which which shorter ago our contributor, made a make investments a things concept that payment test had test, few technology flexible different we was us doing us five-minute it. payments. allowed run ability more the that to quarters we a gave in

payment in to, choose future, upmarket for would as we design With remediation. contributors kind we that want we at either a expert other people is to their often what looking is go we to been into models to want network they though, they for are rewards that looking can. if are know or feedback, what the heard different versus find for I kinds they've more get know they doing that, say provide of different incentive we the areas, of team find, So,

different on to interesting that's near-term models long sort we term, ability built So, have we necessarily of take contributor the types opportunity to a continue into over the with but networks. think an different technology, not of our focus,

so much. Okay. Great. Thank you

Andy Ladies MacMillan over and gentlemen, to session. I closing we the question-and-answer remarks. the have the would to now And for call like turn back reached of end

call you to at mentioned you thank call the we call. time excited the of Jon the to and everyone start Scotland, to for today. from Well, bring join were Excellent. I taking as the our

interest what to Europe lot also there, great. and is a a efforts August seeing in want roll Just thing exciting attending We and been we're it which our customers of investor compelling in building to UserTesting success our energy, conferences that really I continue you September. we're with your the for you right here. look and at forward to and now, thank meeting I to has of in think and in some that

look forward at progress So, in you and quarters Jon and make we our the you say, events, of ahead. to to all business updating those hi, I, sure if on please you're

So, everyone. a Have day. thank you, great

This concludes conference. today's

lines your for disconnect your may you You Thank this participation. time. at