C3.ai (AI) 2 Mar 232023 Q3 Earnings call transcript

Good day and thank you for standing by. Welcome to the C3 AI Third Quarter Fiscal Year 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

to Gallegos. conference like speaker to now Reuben today, would hand over the your I ahead. go Please

Thank you, the Financial Officer; Chief Vice Ed Executive the year afternoon, Reuben the January on Abbo, of and good XXXX. Officer. Gallegos, third Juho Call Tom CXAI's XX, is our quarter Relations. for and Investor Earnings I of name fiscal My XXXX, am today President ended Technology and which is Parkkinen, Officer; Chief welcome our Siebel, me Chief With call Chairman to and

a After will quarter the conclusion at ir.cX.ai. market website section be press the both closed replay this release is well accessed call IR following as the This can details today, supplemental third Relations webcast, we through our which our our and Investor a results, issued available of of regarding website as of being our to with on results be our call.

obligation of variety uncertainties outlook. date. will subsequent as disclaim to update cause actual as to We of could or of materially securities should today's reflect only laws. that views views forward-looking make federal During be expectations. considered any our not of differ statements statements These any from subject any are These under and statements to a that risks to results we our may today considered looking related our call, statements forward be representative business and

reconciliation refer we financial and included measures certain will course please unless our on that the non-GAAP otherwise basis to with noted. a non-GAAP be to GAAP affect Before non-GAAP the our the also of release. after results, press figures to risks a of in Today, important further is discussion refer of call, discussed all SEC. could other material our today's actual and will factors And filings the

presentation to advised Please remarks of not or that our the into incremental get in may usual dynamics times prepared quarterly this we the or metrics greater your our provide in be the detail future. are results. may to that we to additional may discuss insight in our at to response business Finally, questions, continue our

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

joining and everyone, thank afternoon, today. you for Good our call Okay.

that of saw I July spoke significant. market of change customers a that recall the and negative quarters cycles, business lengthening anticipated August In two decision as might I significant and sales You of environment be headwinds, cycles, caution ago, prospects we XXXX, economic in the could recession. and lengthening with the downturn our

optimism we from enter seeing we increasing quarter, our applications address in an of to on as into improved what sentiment tailwinds set marketplace interest business solutions. are applying in This fourth from our broadening of AI experienced range a Now business and CX genuine across in increased is be change improving. for industries. we a the is to appears optimism a There overall the And substantially mid-XXXX. dramatic solutions

importantly, and pricing pipeline. the course the 'XX. we In industry-leading our by product cash And remain enterprise in We we the consumption-based ecosystem. of non-GAAP innovation partner delivered year expanded track our We fiscal transition become We a model. expanded to profitable end business AI. on to of validated positive our quarter,

a we Looking delivered at strong results, third quarter. quarter

enterprise million RPO ended AI we profitability. enter the Our exceeded We increased and million, we with as QX, growth cash. revenue through guidance. and while AI our expansion customers. quarter CX positioned well continue is to XXX which our in invest we total $XX.X path innovation Current sales believe $XXX $XXX.X was sustaining have in And to to to million, almost

our pilot uniformly prospects more opportunities currently pricing model not, XXX exceeding response Believe than The we expectations. from partners the have Importantly, has been validated we pipeline, or to have consumption-based enthusiastic qualified consumption-based and model. it in pricing our our

a in Our conversion fiscal quarter, last rates that and appears The increasing revenue year and you is 'XX rate will suggesting Juho track. growth in beyond. be substantially pilot pricing review minutes, production conversion with that revenue to provided we few consumption on to model realistic,

significant the third expanded and pipeline. partnerships. closed our in quarter. we with our Google expanded eight customer substantially partner made We We ecosystem reestablished new and progress deals Cloud, With go-to-market established, our joint

our discussions. enterprise Our combined pursuing XXX XXX in licensing currently teams of which over currently are engaged for opportunities joint are we solutions,

with clients, the federal region. and Kurian, Cloud Google in held cloud prospects optimally in and a that made CEO Thomas all meeting of partners CX We've substantial I the a of perform U.S. products to the environment. ensure Google joint number progress

agreement customers our expanded the CX we on any Google purchase software marketplace. that partnership Finally, cloud our can with AI Google, solution so

the renewed for state and using also that of funded speed on in law with Open AWS, to and the CX enforcement CX enhance AWS ensure services enhance partnership integrating expanded to analysis AI quarter. quality AWS machine AWS to AWS. our it's learning application and for Amazon local and the We its AI go-to-market agencies optimized Search application

large AWS With qualified, and to we We've agency cooperated appear and we energy a large which a six of Azure, for successful pursuing and CX closed that to deliver mining defense shows opportunities, pilot U.S. collaborated technology very agreements company potential construction the company deal close European expansion. are major new a XX to in highly serving a super with engagement XX currently and U.S. the highly the sectors. quarter.

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target are oil accounts. a gas and engaged We opportunities actively have new company with and with generated large services several

needs are Washington, we of a the Veterans to the Beltway industry U.K. to the care in the address EY, Peraton, partnering modernization health into of D.C. entered teaming agreement Administration. With we systems address a integrator, With the

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term. The believe chemicals the has expanded beyond the Hughes the agreement gas enhanced with Baker term Baker credibility at partnership Hughes agreement enables and markets. also option current our in and to six-year its its substantially extend oil We of

both Frontier Baker Petronas, to of Baker Baker Hughes, combining Resources Hughes, partnership oil chemical selling Aramco, has ENI, the in independently CX LyondellBasell, including partnership ADNOC, Qatar Shell, our AI we sector, a the As date, and and and with others. XX Yokagawa, and Braskem, contracts Gas, ExxonMobil, closed result that Hughes, the joint sales closed through of have gas

fiscal have in recognized we aggregate million through resulted 'XX. bookings, of revenue of $XXX have excess these quarter year in in and in the in closing $XXX All of over our million third

the We've part our application, about Let minute for CX and that to businesses mature product million our This made is was today. energy measure, solutions. manage includes and which me application market in used greenhouse which quarter the sustainability mitigate introduced management, at footprint our significant X progress with and first ESG AI first to over of our XXXX. ESG talk of gas residences energy most a suite,

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continues AI our I'd property significant to investments in a bit CX like innovation. Now about technology intellectual talk to make little portfolio.

to date patents patents XX additional We have have awarded XX been and pending. an

AI model-driven the most is enterprise our inventions important platform. of of applications, architecture the the One for core architecture

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talk guidance. about Let's

million. fourth I the the our fiscal and We $XXX and -- revenue for between and year between fiscal the between Turning eighth $XX year we quarter million is this QX QX the for to range guidance, we year in that to the in $XXX the And quarter guidance a XXXX, expect to quarter is company, revenue everybody exceeded call million. full 'XX, public remind quarter $XX on eighth have be as revenue expect consecutive which okay? for will million XXXX which third consecutive

Bottom was line, solid. QX

the pricing Business consumption-based The is is happy. Customers addressable market model, huge. okay? validated are have We strong.

bright. Our is future productive the is highly workforce and

Juho our regarding And Parkkinen, turn for now, additional Juho? will my financial details this colleague, over I results. to

non-GAAP noted. some you, of a 'XX, Tom. conclude quarters the I recap basis, drivers now color by be introduced otherwise our end financial provide related to add with financials we the discussed some revenue operating results, will discuss and a ago. path will expected to unless our fiscal non-GAAP the two on model All consumption-based additional will color of figures I to Thank profitability our of

quarter revenue with million, revenue $XX XX%. Gross XX.X%. was Tom we and gross ended mentioned, of was was As subscription million margin of which the $XX.X profit

on life pressure mix I the of due during higher the a gross a phase climate to mentioned higher As revenue last customer carry update, margins our of cost a pilot short-term during quarter's cycle. we have of which our

improved a year. Operating million and the was above at due improved our vendor and to margin as to Operating period year-over-year payment. timing negative was $XX loss negative flat XX% loss prior of the significantly management expense same guidance compared in of

our loss basis, sequential improved. a on However, margin operating

we and were consumption XXX, count model. under XX XX X% increased deals customer Our which quarter, closed of deals to during the the pilot

GAAP year. RPO RPO a XX% reported expected and from X% from We down transition year last bookings. of sequential as Trade basis. which million, to $XXX.X was is GAAP to we last X% turning up is and consumption-based RPO of $XXX Now This deals. million on

as We continue in to segments pilot bookings to QX. we nine see positive have six industry increased diversity trends in in QX to compared

$XX.X of this cash an million outflow in prior our this flow million headquarters, million Regarding cash flow million last the cash quarter. improved million payment, in $XX.X free of of which improved into our February. new $XX outflow to $XX.X for we quarter. to build-out moved free our the to compared to flow, adjusted down, $XX.X related Normalizing was an compared Breaking to

over cash the take additional outflow We headquarters quarters continue we to expand spend. additional we'll have as in following our and

we quarter, the the partnership. Hughes During Baker expanded

are to in flexibility consideration, AI the market. price changes provide increased the which to provide the Baker increased the variable mentioned, elimination of $XX.X CX to This resulted million. Tom designed BH transaction to solutions As the Hughes the by

outlook. Regarding

As Tom as enter as range have to are we highlighted, we more we QX. narrow our able visibility

to $XX for guiding to from guide we're And the to we're year, As $XXX million. million $XXX million $XX the tightening QX such, million.

loss For negative the operations million. And expect QX our non-GAAP from million, $XX to negative in million for 'XX, full from of the we million non-GAAP loss $XX we to year, range is that the of negative. $XX $XX expect operations

active the fourth target to In Please their run with in customer sufficient quarter. the time and of period, gross the value two accordance percentage that by software. recall CX to plan, impacted our during the support will engagement expect negatively pilots we quarter pilot number premium gain AI with have do from be margin unlimited successful be resources and

expect a of occurs. the be percentage customers margin revert pilot pricing percentage of elevated Over gross to our ranges consumption-based subscription cost to move we until this revenue consumption revenue. on period, During higher to will historical to as conversion time, pilot

Our the major the and conference expenses margin next and enterprise have transform customer quarter's we reflects guidance have related AR operating for that will costs. marketing fact CX this we premier world's events happening week, our

fourth demand our previously, increasing sales we In to to are we as quarter for sales discussed increased as result. the our addition, seeing count in have we're a pricing and the expect head consumption-based see meet expense

build-out continue next important will as that our we we expect year is headquarters. that It of note balance to into cash to the our fiscal complete decline

the cash around pricing, 'XX. expect expansions. quarters lowest and with customer relating coming over investments to be We some our to down as the and RPO its speaking, we result at existing Broadly at fiscal consumption-based to to of $XXX exceptions renewals million expect a introduction trend during

and pricing. in to Also, opportunity into making the before I plan some take end, to details we're the like shed our light our financial consumption-based with the I'd progress

basis, plan year a to assess the adjust quarterly we As in landscape Tom our experiencing of market. we're mentioned operating On track are end profitability by the in fiscal with what his our business on on based and achieve plan 'XX. comments, we non-GAAP the

as QX, We profitable end be his caution back in remarks, experienced FY mentioned and out operating and operating adjusted 'XX. our careful headwinds management downturn that to to team During the and we Tom plan could the market of build the by significant. a trap become then,

We are plan. on that

prepared have budgets. And detailed correct responsible. track we make are sure plan, we there We hold variances, managers them that department to we that immediately. we order variances, monitor In of if

this our relative wanted you share Obviously, on our have our mentioned, a time. but we guys review the projected In at quarter, expense each operating basis. we supplement, as path path to detailed to current with investor I shared plan I profit

track. model for assumptions results that the quarters preliminary model. to are in provided ago clear model relates our pricing were that Therefore, results plan it of analysis and than consumption-based assumptions consumption-based or quarter the on summarize, for actual we better path guidance profitability our at expectations our are two suggest action above business, we our and well-understood As and to to is that

call remarks, would Operator? like I open these With questions. up to this for

of with our & from And Cikos comes first Company. line Needham Instructions] the Mike question [Operator

line Please Your is go ahead. open.

they you make just wanted I want looking start If the know at are deals off XX far count customer -- you dynamics consumption just customer I under the guys that those think that how remarks prepared Juho you I think of around had customer? a sure we're were in prioritizing? total But term category, count. the to comments guys I actually through XX like Can model. how have with Who customer do I'm when counting, I'm clear help pilots was CX things. some had discussed you become the goes us I closed to into on because your flat as would quarter-to-quarter think of as

for yes. Mike, the question. Thanks, course, Of

look we've a of So what well. as it provide at of if you our here our take filings, but quarterly a provided kind customer detailed I'll is, definition

So industries can about let's of use subsidiaries, various the departments, incrementally that individual or That ultimate or be we there or characterize within it which owners think would groups, -- say, in cases. those entity, a use coke customer. as could different of, either budget parent tool a customer you several all groups groups use various

getting hood closed existing XX flat looking being quarter-to-quarter. Again, you is pilots, Or customer were XX providing the there's If customer Is then deals with that just XX guess guys count is I'm what that closed, I you're if fair? all the in at that deals were and under the they I right? guess that customers. I movement cap the think that I'm at assumption you about

understand. totally Yes,

let So clarify. me

in which when period a speaking, prior our customer conversations, the period. if our model. engaged recall some in broadly And still production customers. old trial in the to upon them of transition the their of you pilot are trials of the turn So, in ending the arrangements, We negotiations phase trial pure we some into are to

not that into customer. phase, is a the come production falls calculation. customer considered the And back deal, they off would that calculation. During a enter It then when effectively they into

at are the play -- former still the a dynamics the because at those So still we obviously, during trial quarter. model have tail of

a those could new to then trial XX existing customers an new customer wants who us. have arrangements, mixture do a with are the also we and project pilot Now of

bridge the be part that that well. -- would So of be could as

one other I it. it. expectations. there could, two here one cited I And Got if obviously guess better the were profitability versus the And you Got guys thing, know but drivers. I primary of big --

we us as first The uptick had item the margin a gross the gross that in done. margin? you and think there any sequential services was was in, in as help that in higher think drove onetime the services that well margin. services is pro I guys plus there you XX% about what have large pro return benefited range, pro strong which revenue it that than typically much coming Can what gross Was

services projects various margin. are able So we and do a command we professional high to have where highly organization, a skilled we

kind at projects consulting of gross we implementation lower a do very be services would that historical more a standard hoc ad Our certain margin, margin. carry also but or high base then

to guys XX% previously grow Where XX% much benefited was I and know we lower the out headcount have question is, Okay. tracking the marketing and sales expense. the I was for to your sales margins the guess outlined thing marketing on year-to-year. And and that shake sales follow-up to expected other assumptions you that? marketing Are headcount And than benefit? quarter? did the What drove marketing sales that then the that it and for that obviously

That's on great Mike. Okay. that. Thanks, question another

it at marketing. your So sales the benefit for you and if between look a supplement, broke again we investor out take

there how kind track into So how of we our you relative see can proportion plan the profit. plan on current and operating to is

we very To to amounts brand perspective, we answer we of no prior we high spend quickly kind to calls, longer and for or marketing are have very increase a in the historical value, to question, sell sales your the side, and targets on best we believe type the because hiring candidates discussed gain slightly to have a that from as targets, behind value. products we those of our look but secondly, services. aggressive And have

next. one and our moment Thank for you

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one and you our next. moment Thank for

Turits of Michael comes KeyBanc. next with the line from Our question

open. line go Please Your is ahead.

product it's makes generative and story wrong, talking is a existing obviously not on of Tom, on think unless that about, lot that's because that's to I'm lot you, today, market which but that the enterprise sense name on in market. the there's search of for product. basically front guess the is with the But then combination I and itself, or question just it the and had to product you're that I the players unto you you're before a the of two had product a was question a I continue DoD. a

So of developed that? having what's the history

What of an the market? in enterprise product example is an

sort that the and a the Even AI allows right? you does for interact of So are to of how people, generative lot -- Elastic other people's what's like -- models? with then that what innovation you

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why you it there? Ed, up pick don't from

Yes.

Tom of large Elastic modern of systems, the techniques using from using interpretation BI So across documents, enterprise say, information language than, the basically, do cetera. said, questions as et we're dashboards, models the the retrieval then more to information and

And as a approach so leverages enterprise to we've to entire language leverages is tax, past systems, developed Tom large the networks, able cetera. the decade integrate images, said, search et and able this all generative sensor and across all an be that AI, to of unified novel over be the the and of models corpus to capability data a, these

and it's this traditional much different new, So it's than than is for more effective indexing. approaches

then Baker Got sense. it. Makes on Hughes. just And

get to the that? if our -- anticipating just think you it's change know but not, that contracts? $XXX quarter? amount it update another from expecting about And I to I you're don't each but million model, wanted the we're $XX So know I that, if so had quarter did or do And don't million you what add does I we Maybe right I in think this in them?

Good Okay. question.

effort. model Hughes the we Q to in and I answer at I'd to both $XXX.X and the we But your -- million. our release supplement, RPO, the think short that Baker is So disclose need is the RPO the look have

for to to we've model. check mean what as So got on that maybe your offline does

we results income As related for million. Hughes on Baker the quarter was it this in a quarter the of $XX.X showed party statement, amount to face relates the the

the think Okay. extended maybe of amount extend also it amount paid which Great. said it same through the period the missed over it's And is does length? it being so but the extending I time? dollar adding you it, I

the this schedules. part agreement that Actually, the one payment is really extended of accelerated seas exciting of we

was eliminated the as $XX.X because the actually Baker price, to of relates And So increased consideration then so deal. faster million it the Hughes. we're collecting part expansion accounting price the from as transaction by transaction cash variable

in might bit might I I there, source of And little think have a confusion a be it Michael. --

is the years terms. should That they it doesn't for extend That the period add unilateral choose agreement so. amounts of to of do cash. to a mean have predetermined the to means pre-existing extend of okay, term to option more Another they payment agreement, the

Thank you our Morgan and question. one the moment for And Singh question our with of line Stanley. next Sanjit comes next from

Your ahead. Please line is open. go

of declining software Tom you like still So, notable gloomy. then environment take Tom's I from and speaking And pretty his to think if demand the that actual the of some sort versus these is is right of better comments predicted what revenue sort is I model a thought, through I going Juho's line and now, consumption script rest around are try transition. together pieces I year-over-year to put in because comments the coming business in with you the obviously,

before the growth. quarter something seems that is like your another business you from optimistic that, understand better is, of does something achievable revenue I'm to so -- go where and to I expecting below sort but Is big view? QX, know XX% go it Is revenue is. have more Street what the guess guys I your that? that just still than where of sight And question The growth to? trying line

for year fiscal Juho if not this for greater Sanjit, 'XX will mistaken, record, will than be revenue not fiscal year but just I'm less. 'XX, the our

So decrease. not Okay? will our year-over-year revenue increase,

of So, rest it? don't misunderstanding I just about listing. there you Juho, any the want the to why be take

course, of Yes, yes.

-- try The to Sanjit. let me thanks, So your question. recap

a of seeing assumptions good. at annual then results. first Tom on promising very model actual are total signs results all, that year-over-year mentioned guide as on that that basis, our even seeing the the the quarterly be And yes, or are increase We're we're would annual So the better. model

certainly previously, are that -- would to actuates at is we we be around interest And provided actually. certainly XX% it really the growth, Street Street growth I I'd achievable we say have as expects XX% are the early model our a saying least we onset XX% so growth. what around know and targeting outlook that higher some that plan it's to

No, I optimistic it let's explains is struggling coming tech sort your really I where like, mean, I you a on way a from, there say, you that can that's your guess, year Thomas, their to the of super to lot like view seeing talk in just more helpful. ago, from appreciate are now which is And perspective. kind of thoughts. weakness. a selling companies vertical versus, other are companies, of what that a A a of are the lot base? But follow-up customer

the in you number I industry obviously good we us. happen if pretty a That's economy, out the healthy of you and working can't the only segment overall one, in be the very at right place but time healthiest oil Maybe segments right But there I is right to gas for show us, with well one question. partner. The diversity, the the mean, the for show guess slide. -- right? you it's So

at places I industry because look segments you it's U.K. pilot saw kind the we I all to diversification the mean -- can the all if in talk Davos But really like is Juho, to go go of like that projects Sanjit, the D.C. to economy. we or to York. figuring the in please or I hunkered say, of how when last summer, world to mean the down to and slash Washington, in everybody like I I going I New August, is the was they out basement, the survive get recession. it go seriously mean, expenses July end to were or I of

a okay, recession, to get be think, kind of let's it's it Now and business. on get there's with going and over fine, everybody

the -- a we maybe just And in saw pilot there's diversity Juho but really you sentiment -- because remarkable. quite was it it's can dramatically comment improved that the the so there. of And on out

Yes. Thanks, Tom.

you the the Sanjit, in check if and diversity on have that show supplement or our diversity show then XX, So out total supplemental the website, also Slide the we we bookings. on we bookings, pilot the of

excited we that have during the So very deals we're quarter. pilot nine about the industries

fed got have state telco, services, we've gas, got high rattle we've goods, to we financial then and off, Just we packaged got services, oil and accounting tech, consumer them manufacturing, and local.

here. So we've got a diverse group

guess I is point that... be the Yes. would

software remains of business, small slice companies. unlike number lot our very The a a of

fair diversification, the past are I Yes, be to like of right. just the right? related no couple and is that software the they would yes. you're people with a cloud just spent base detecting in the investments in But is public a respect And specific would hesitation because lot across of the that saying particularly theme of are that point sounds such be you last customer that their the CI conservative within like investments, for investment they quarters I two what mode That's not characterization? with years. a guess, It Juho guess lot -- are

perspective, certainly and my to Ed, light but there's base From that there's seen believe customer our value our provide from I could or I and customers. some Tom efficiencies, more productivity. products think have maybe shed

interested industry become you cutting costs when more market, have whatever we So there. and whatever have, right in you are more efficient profitable, everybody is become

helping very Our want to quickly. you do stuff maybe Ed, them get business is shed that? on value Maybe, to something

many. of deals how In It's the Google was we're process pilot the a alone with to working opportunities that close member. it in big trying and qualified were

We discussions. of opportunities XXX. have That's mean, from we're something and licensing okay? We with currently Sanjit, we in Google engaged I Cloud, it. are have engaged, changed, July XXXX. XXX over Well,

next from one Paper The with Thank next moment comes our question. Stanley. question Ramnani you line and Arvind for of the

ahead. Your Please line is open. go

sort wanted to you lot relationships, ask the we these good and these we to of the continue at the measuring and to and investing are out commercial saying you How When these figuring or have the success, a approach relationships look are in. have of right? ROI your of of that partnerships continued have in and partnerships, Because Google how established and sort and that like, you like -- let what's commercial need in partnership ROI forward about the greatest AWS. kind are where -- I with resulting looking expanded of expand but kind are success this partnerships and investment? of is you also

In closed. measuring the on term, pilots we're short

term, and have customer and The partnering words, two us or Looking not okay? CPU hours. they're doesn't medium consumption, the in we're on with consumption. consuming are supply in us measured building medium reason a building because are interested might in in measured a or partnering is at others we are with they're the to Google pilots, hyperscale cycles the other be it these in, application and accelerate spend consume measuring lot which whatever okay? that term or the CPU fast. what In the hours. the ML it years application is time were and interested storage risk and term BCD guys That's cycles of also happen They're or long These short AWS

could of a of kind where kind again, signs have things that then are of kind kind talking headwinds into about on commentary, of direction? of you -- the some and we're talking you things say turning kind it are certainly tailwinds. is Do in you're still enough go of you And early Or either at confidently about the seeing of just Terrific. point of kind macro -- those to around? turning headwinds,

that time to and else -- Well, I is really doing say on but going market. telling now there. dramatically the else can pump then what's layoffs, what is what then was that And I everybody I the on ugly you're we're market, And filed I'm just I All guys an stock out the seeing was was was XX%, telling price. to think, say were a didn't Sanjit. and yet. you we of expert mean, the different. at one over call in at our okay? I in you going I XX% we're X%, aren't not, it But this everybody earliest those really started on, really

going femoral to sooner off to or is way When its or whether a to okay? take brakes, This be be will Now -- going takes off positive this looks this I that think going is be is the -- okay? me is know is this And the off to going I rapidly foot Fed races. this the I but the the whether is the this brakes whether to to foot don't cash later, business, growing a think sustained. Fed we're its

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next moment one for and our you question. Thank

Our line the next question comes of with Cannaccord. Kingsley Crane from

open. go Please line is Your ahead.

But AI would drive product work Tom, so generative primarily just second, we do the customer for base, the is of sort trials? I or outside within a you this appreciated applicability to typical basin? your new the of product as on fourth that potential the think AI of best third base. generative product the Or customer think comments what about the core is

describe. Barcelona, demo. I get And I tell I at a go plane just from the somewhere. People awfully you, look know look a I Barcelona, where to pretty got back it. okay, And bunch got came just excited about from of And off it. it's you product. just exciting It's a a shows hard at new. it and I. to brand Ed It's take people, to something

in change it I handle applications. easier products people And which think for use, is to will will enterprise make attractive. make it easier everything management, to our It more

XXXX. something Cboe the and -- think, the that version differentiate I a user Take substantially what of which interface copy I SAP, this Salesforce very be market, it so market. compared look and embedded at cheap the appears will, different, Oracle, in a And the of to and everybody to palpable. has excitement this architecture and us And in kind else Ed just in X of is is the

the we're by seen impressed demo We've definitely it. really

are the conversions just of next customer balance deals, year? want the bit one ramp new year in expansion growth the much factoring about Wherever into then customer growth of ends so a like net Juho. how trial 'XX, in little up and more think fiscal we for And to existing next

Okay. Great question.

idea provided based good that actuals and happy rebates additional to the on consumption-based So, look model the you you have I it you business a And it. take where that chat to if questions on with as the and we to would be you give you just out as have that that provided. of a we suggest kind we assumptions any should at

moment with Pat Securities. Thank one the question. for next our line of And Walravens you question comes next JMP our from and

go Your ahead. line is Please open.

touch you Great. first. million much XXXX, a of with you Tom, us to overview of signed the business the sort an of is maybe one that, that the the production How for DoD point $XXX do give much how other agreements. million as December of going? actually in $XXX And guys they you just is the spend? DoD taken transaction down? Can How

know don't good and A the I answer. question, Pat,

two can We not have two There's hosted, agreements like that. there our for they on National all very is lots I hosted Marines, looking And office. one million. sure Cyber And Army, you Navy, Force, some tell very going DoD we -- significant I'm on -- Spacecom, I discussions the One think, projects. from I Air is very $XXX like had in A that of I ago Command, DoD Ed are promising. about is million $XXX were think our Guard, for we CIOs -- weeks business and with large of number

have And don't we of agencies But a what that of looking deal of how And very of happens. so promising. it, consume the in much front out. is DoD to I proposal the will and that lot see answer we'll we've taken know a one

each I I right? there. your for I TCV math done. gets that get on look I right. I chart, then a quarter it I All you number if to take But the -- XX it total multiply your by Juho, Hopefully, the And have average simple of was Slide deals your bookings, and at that mean just very wanted if

Yes.

Pat I yes. right the math, that sounds think about

seems That reasonable. Right.

had you deals at XX million. So in $X.X QX

So bookings. deals $X.X you And in basically ago, $XXX right, million at that's million. year each, had in XX a million $XX

that Is cut more a going of what's So on? been by really booking has than half. fair assessment

million, answer $XX this, million, the $XX $XX put also year -- Juho million deals $XX million, $XX this deals. I Let's in but understand let million, were ago, a I'll

the pricing, consumption-based trials. to result $X.X a as quarter, million This

as So then explained. this gets into, Juho

a be do model a lot used not deals. But anymore. $XX $X.X quarters million, okay? take old million, them. different more $XX $XX We and those forward, in we're million, all we're so from there, million, million, $XX see $XX million. completely you closing the $XX million $XX Juho? closing So But don't in deal, going our you'll doing of to million, it kind of We're

Tom. Thanks, direct summarized Tom perfectly. two Pat, is pricing quarters the totally Yes. This I is shift Yes, result it ago. this think and a of expected, consumption-based

us great don't their give total right? transparency, mean I companies it's bookings. So Right? Most

be start as we're math. keep the going you When guys that we getting seeing think able doing go do to keep So up? you to as these slides, long

I'm the three and if hear that the go XX, to have chart kind consumption versus provided you -- ramp-up. quarters that same expected the now model of glad since So last to it, Slide see ramp-up what you revenue open, subscription Slide you is chart shows to the on we that XX,

see. outlined, we've here out So this as to from can of to should when of is we we are And ramp an kind start model indicative would up. we outlined what expect I've our we you guys, so seeing figure believe that we in the

And are through? where Yes, quarters we seven now?

So would two have ago. started quarters we

for are first So on at the -- second, this, three. based we're quarter quarter, we on

Thank our one question. for you and next moment

Matovic of Arsenije comes Our line the with from next Wolfe Research. question

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Should two above one we think brief positive macro suggested, initiative. in more faster were given in relative coming This pilots And this your communication I quarter? progress for the these for that had the is expectations first initially like quarters the Arsenije communicated pilot to of now seeing then on Gal. outlook is in seems initial It you're coming than about follow-up.

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the helpful. looks margin? $X.X the like for? quarter? Hughes contribution is XX% revenue can was million. the to That's associated Did then contribute Baker from It service COGS accounted with caused us it. remind Baker what And it above Got And services large in services this you gross Huge how

Perfect.

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just we'll one quick call again. take Operator, last

the last question follow-up KeyBanc. Michael question is with our And of line from Turits a

line Your is Please open. ahead. go

than I you Any both come can for get subscription we sense and And Thanks, $XX you follow-up. services are gentlemen, me to million letting faster have the that us the flat for into for in down, services, $XX next the back next trends trend quarter, guide a quarter for subscription of think give to the what which big might services seem have expected. have million, bump high? to

XX% I think and nicely. we've historically provided that target to in be going quite is that range think XX%, and our between I we're

Juho the back conference to hand like further Thank any for you. Parkkinen to further And I'm showing And no I'd remarks. questions.

Awesome.

thanks, look third and all time. So for our forward future your call, you we quarter with chatting everybody, for really joining the to conference guys for you and in thank

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