E2open Parent (ETWO) 1 May 232023 Q4 Earnings call transcript

Good afternoon, everyone. At this time, I would like to welcome you all to the E2open Fiscal Fourth Quarter and Full Year 2023 Earnings Conference Call. I am Dusty Buell, Head of Investor Relations here at E2open.

Today’s call will include recorded comments from our Chief Executive Officer, Michael Farlekas and our Chief Financial Officer, Marje Armstrong. After those comments, we’ll open the call for a live Q&A session. call at available investors.eXopen.com. this Investor the of website Relations replay will on be company’s A our Information in which on today’s access press Relations to the release, is replay also is listed Investor website. available

we and performance, statements like full I’d risks year quarter and regarding everyone today’s forward-looking begin, we are for known will and our unknown to making financial Before be events and forward-looking subject guidance that to XXXX. remind uncertainties. during These call, including future first statements fiscal

that stock. recent caution not our we to or any And obligating of our EXopen risks ourselves may complete statements new or these guarantees other to and light results not and finally, the that results future our a future are affect you encourage are revise discussion our forward-looking events. review information performance. factors, of applicable or XX-K, of statements reports We amendments for these future our in these most of including market price

today’s included Also, and Relations are Reconciliations measures information additional call, financial from press viewed investors.eXopen.com. which Investor at and downloaded certain can to measures. our certain of release, be non-GAAP non-GAAP today’s website GAAP during earnings in refer to we’ll

over we by that, will And with CEO, turning to the begin Michael call our Farlekas.

of our then creates that our fourth ‘XX, some Marje broader quarter full well as call afternoon. FY to turn results, for for our Thank I’ll year, detailed I’ll demonstrate and year as and XXXX. last our focus the year didn’t few strategic year comments recent thoughts our you, discussion also our XXXX. as well what well, I’ll with with more on highlights a for performance share Armstrong begin as quarter went have share good Dusty full our we and over guidance on liked. on fiscal and our CFO, the go a fiscal I’ll clients. including close our fourth and results for platform my would what discussion value for some

revenue revenue. quarter million, XX% subscription $XX quarter, fourth total million was our delivered XX% fourth with margin. of representing $XXX EBITDA Beginning adjusted EBITDA or over We

year Fiscal of $XXX a XX% basis. For as increase and on EBITDA our Maintaining a was currency million, representing revenue. adjusted of company. total XX-plus fiscal ‘XX, over $XXX subscription FY XX% status ‘XX EBITDA also constant representing million, pro full margin, revenue our a rule XX.X% forma ‘XX

EBITDA, organic while We improve continue necessary our engine. doing work increasing growth to focus to on the

uncertainty, generate to moment. particular, lower continue high-tech cautious of at in to companies, we are our headwind by combining While for perform us prove shipment for perspectives, economic a the volumes, margin spending and which well a quarter revenue,

solid Our top performance the environment. ‘XX given in line FY was

subscription than revenue our we ‘XX lower ‘XX our was Our was and FY potential growth in in be expect ‘XX. FY it to growth, below however, FY revenue

selling We ‘XX. expect rates increase QX bookings we in subscriptions, clear, and very of are QX, be FY lower in To of small sufficient growth rates remain a down lower sell next in a retention year, high. our and lot because

enough. selling not are While we

were on at Now fiscal the provide and FY organic We focus million to I’m determined drive finish outlined business invest I’d less I’ll we And FY a in system are And marketing scaling a robust build long-term efforts. through year for on ‘XX. integrator thoughts $XX network. the growth, but plan a to roughly and pleased with ‘XX. highlights. These progress. that began organization very namely, acquisitions, strong our we to specific up our like two further commercial are some foundational to when year important were functions fiscal ‘XX strategic EXopen

growth brand, to top two organization programs several functions have as client strategy. reached one-time our for number needed wholesale for Marketing position target sophisticated of make, within leverage rapid and broader to organic to we these account-based we expansion on and phase. focus three, do not increased completed category now these in of from refresh quality our additions our months. We can year, the a But important now voice last simply costs, for acquisition and we incurred was a a critical increase share execute prospects an base. position prime Having our made EXopen of effective to high marketing the part last our

integrators early are a chain growth built this required system not supply access our screen. have Building play On the time, benefit working rate, role help these radar network purchases. increase would opportunities in to dedicated been in scale as previously EXopen. critical is partner they more Partners right process. our to partnerships critical the to front, we specifications in our have of technology they the ecosystem of see that clearly the seeing on with client’s large purchasing Over

handle responsibly process. a we initiatives have investment time. to In is is a us. materialize bookings demand currently significant These That large even ecosystem the line. We to community and to partner time take through at that progress and more made partner time two more building will particular, flow we as revenue this behind said, can our upfront from the three-year

build around want most implementation of SI our strategy services larger investors or The half require the timeline. work. revenue that I a track should the pipeline, services million into opportunities, this $X pickup transition our investments solution, of growth of our and to in previously us exceed practice and are retain Based simply meet We meaningful community. bookings communicated to the XXXX our we portions plus in remind gradually integrator incremental XXXX. to if second or these also to of SI generate on we SI-attributed cannot our that the on

our the growth subscription forward, two decoupling financial margin subscription business growth, from on of subscriptions. organic Over for trade-off negatively long cash growth. the begun. margins This profit will near-term performance services has flow. nature trade recurring lines services long-term, duration of these good this is of and a the EXopen, basis communicate given and of profiles The growth will therefore, And impact and and free going the relative software increasingly has total revenue we

pleased with the initiatives our have ‘XX, are did in many FY two challenges. we companies, we progress our of While like

importantly, exiting we What FY during large saw more carry of year, the FY ‘XX not customers Most spend of issue commitment we we environment. momentum ones. and economy, than was bookings uncertain ‘XX, and A into in was particularly did a the macro small scrutinize that, saw lines key volatile ‘XX. second half the here the in FY

slightly expected, show million of of pace this But The second run came flat rate deal closings $X up. off large significantly. results to Our smaller bookings were over clearly. in half as

While FY slower it conditions, it to is revenue will closures our impact potential our changing adjust our the below for job keeping year. growth, negatively ‘XX deal the to business large

also below While on businesses we integrating par were We commercial responsibility put the the us. macro at two for for headwind performance. aware same environment must take us, strain was a that would time

challenge with we This lower we revenue expect the we done our reason be impact integrated It We backdrop to along greater FY at and had environment high of however, have where integrations And ‘XX rate is a size accomplish performance of in we commercial is as the fair a bookings in acquisitions. performance drove to FY complexity to I them net these speed why our this past, against say, growth which an the economic ‘XX. proved challenging that a to organization year. a than expected. primary the

It is where we short amount time. EXopen useful of remember to how rise a are in

million. increased our network size integrated seven XX of supply of nearly assets last the grown we’ve EBITDA the companies, driver rapid acquisition, one chain $XX connected XXX,XXX our one from the XXx cohesive of negative increased and years, $XXX been million A has the platform, this nearly a from Over key over integration into in to XX,XXX to market. and of revenue strategic growth one

fast by last We have our months. XX over business, scaled the XX% particularly

With of and acquisitions the Logistyx. BluJay

We pure chain supply Company now the the are largest SaaS space. in

network. most Well, an operational the many We the remain M&A serves core of backbone platform brands companies a in world. And as supply creation chain the engine. element value are will well-known and for our our of largest largest

integrations business and to now enter we through focused heavy for rapid business scaling largely ‘XX, us, the primary As growth. our built a reliable lift is organic on robust of one focus to behind FY from recalibrate acquisition with our

this adoption growth upsell and increase In to The clients. respect, penetration and is our opportunity sell organic largest important our most organic growth to within enterprise to our model. cross XXX and is ability fundamental

a this We demonstrated repeatable basis names. can we have household on large with strategy organic clearly execute

We have ARR to in several from million proven few client a hundred a thousand can years. several dollars in develop we

primary that much focus now activity scale proven we platform larger our which to FY is organization, our our to have within need ‘XX. While a across scale a client, for we ability

a is To a engine now well organic build repeatable that growth to is effort underway. scale companywide

we the have time for consistent has spent ourselves team Our factors make years strong, changes organic the can evaluated analyzing control, ahead. business, considerable the high and position growth agreed profitability need our to to we for on at we’ve

we four build applications product industry, data will customer by supply efficiency. connected so, excellence, guided and strategic combines Company the to value. is one experience, goal operational be doing that most SaaS Our plan plan the chain engagement, In pillars, in and networks enduring and delivers

More now, steps to are taking there concrete our growth. are reaccelerate we specifically,

relationships, can and support increasing closer core are coverage so We headcount especially we our sales clients. with better enterprise sales build

processes go-to-market and become scalable. disciplined. We our more are repeatable We refining remain

can We we business. a margin run proven have consistently high

and all opportunities make our strong We balance profitability environments. choices in to the investment to economic high are revenue and willing able costs, and cash free flow commitment hard maintain to assumptions to realistic

over through enormous have we In a potential past strategy acquisition. short, enormous rapid the value through shareholder seven years, and created scaling

and to reliable we potential are to building reach our capabilities scale. need at We for the committed growth robust

We very be to are a ourselves. hard business be work for while and margins there operating know energized free won’t will flow. easy, created double-digit growth, opportunity we high We setbacks, it that we have cash build driving produces will by the

focus drives Our and immutable. are

Before Starting visualize highlighting better I with utilizing the sales EXopen’s demand global customer turn decision-making. is call Marje, for a positions trends and to inventory of the updates. recent want technology I application close by platform, company publicly-traded to and our to channel side some over

double the EXopen’s involve nearly their This deployment and our their supply On for suite. them world’s deployed Supplier platform. companies entire to on side, which packaged supplier solution manage the longtime cycle order largest Collaboration amount of allow connectivity additional delivery has good consumer cross-selling an a one supplier client

seeing a as annual the times adopting cost Transportation Management logistics-as-a-service automotive adoption retailers In and CPG process like Supplier in this Moreover, American Collaboration the in an This beverage. one for us, customer new solution. North & our a nearly and employ of industries and of result our XX savings and food of we largest product client in are Solution would uptick EXopen’s logistics, estimate subscription.

And evolution technology finally, continues. our

Quarterly application As described in family XX.X our disruption, made improve and productivity, solution across potential in quickly suite real-time each enhancements on we in clients our have Technology based act AI data. risk and identify help Update, to

you other their want As these celebrate and innovation to success X,XXX to thank EXopen excellence. I our continued team commitment members and for many stories,

call our to Marje, our I’d like guidance. and time, results to this turn At discuss financial the over review to

Thank teams new start EXopen and other you, fiscal collaboratively reporting, the by want Michael. operating last our all the thanking to I finance cycle plan. And year-end afternoon, earnings us months ready over good that to everyone. for get worked few year organization our and

and Michael tremendous XXXX FY year reviewing plans then close that of company the ‘XX needs support its fiscal quarter building the discussion and made progress have our We that our organic finance full start last strategic by our guidance fourth a priorities year and I’ll future capabilities outlined. results, to in the growth with over

rate constant revenue growth from million, exchange on fluctuations. negative, $X.X the reflecting Subscription forma XXXX an and fiscal currency year-over-year organic basis. adjusting $XXX.X a was for impact of on million in a basis, When pro fourth X.X% quarter the foreign X.X%

subscription came range. million our to million within revenue $XXX in Our guidance $XXX

on basis. For full grew fiscal million a X.X% currency XXXX, on forma $XXX.X constant was year pro and revenue and subscription a X.X% basis

at model, expectations XX% business our fiscal element original fiscal ‘XX. set to year subscription of which solid in at critical growth, is growth short performance, this a our of versus XX% of line year our While XX% revenue the came beginning represents overall XXXX top

see FY than a delays exit. deal Following through a strong closings to to planned large FY we as year, leading we ‘XX exit started the in ‘XX weaker ultimately move rate,

represent and in attractive the this As run Michael that EXopen. some sales was larger delays to still behind rate projects push spend macroeconomic out key lower factor we procurement a led we decisions projects. than temporary, particularly sector, these noted, on We cautiously and opportunities experienced largely that uncertainty that believe normal have customers, the are believe tech more for

has included demand In spending away. as the sell many more our volumetric quarterly increase saw fiscal large of in will XXXX. in year which meaningful adjustments Also, cases slightly in subscription combination an summary, project on that trend quarter, growth earlier, fourth mentioned impact other the main the we scale metrics, the impacted and right. A pushed and were and customers have is macro-related during factors during to one-time not out gone been drivers. have of But down churn revenue the a

the impact turn Timing we by to reducing We had acquired the spend. project during some high that clients when also In cases, provisions we a as during M&A some small customers cuts tiers compared at customers with adjustment respond to the through pandemic. sat legacy COVID we we to knew experienced select shipping saw budget related volume-based them quarter. volumes would that lower had

our and improve revenue. organic to growth we as of retention deliver As strategy Michael strong remained maintain part to noted, intend in metrics them our overall and double-digit subscription

this delivering of cornerstone described results. on to commitment strategy business go-to-market remains yield start Overall, our growth that model Michael a changes is the operating and

‘XX. driving for negative path negative negative foreign reflecting currency exit have acceleration fluctuations. forma growth growth we impact on fiscal difficulty] fourth and and FY year-over-year other to a quarter was of [technical rate in services an million, pro constant X.X% adjusting Professional $XXX,XXX We clear $XX.X a organic a basis when from exchange X.X% an as

is revenue of in subscription on our more the to expectations. quarter While our performance focus our fourth services a key professional below strategy business, fell aspect business place

projects. macro services same revenue down that scale affected large factors Weaker longer business, including purchases, and driven by our typical than the was cycles subscription customer sales for

strengthening services integrators towards impact. partnering sequentially effect system the had These quarter proactive also be to in softer revenue with year. will some first ‘XX continuing in likely Our later FY before shift early have forces with a

part mentioned our strategic We a as have recently to faster our our changes even of partners integrate go-to-market means us our help into services new our larger brought leadership subscription continue adjustments work organization, to future These maintain services franchise services we to growth. as profitable previously. pivot to drive as shift

constant million, revenue the for exchange reflecting organic basis. currency for fourth quarter negative, forma over After it X.X% total X.X% Putting year-over-year a impact together, prior all pro on $XXX.X the adjusting $X.X growth a fiscal year fluctuations. quarter was and foreign of growth million from

on fiscal For on pro year XXXX, constant and total grew forma organic currency X.X% X.X% full revenue basis.

our the gross and forma XX.X% basis. Turning X.X% profit in a constant a basis quarter quarter. on million, was to currency the fourth constant to or pro a basis in profit. compared pro basis, the margin on In increase forma currency fiscal a fourth quarter was year XX.X% XX.X% organic increase XXXX, Gross a on gross of reflecting on $XXX.X prior X.X%

experienced revenue effective cost quarter line generation reflects efficiency with gross Our This and margin drive ability when consistent even leverage tools was the the roughly margin, control we during performance year to operational in profit our quarter. than as softer gross to profitability. strong our for full fourth expected

EBITDA. to Turning

XX.X% quarter constant margin million, prior $XX.X year the prior on compared forma, and fourth EBITDA a XX.X% an in currency for a XX.X% to on constant year to quarter, $XX.X Fourth pro EBITDA of margin adjusted of XX.X% Our quarter EBITDA currency on basis basis. forma was increase adjusted compared was the million pro basis, quarter. or XX.X% a

a pro year basis. was on or XXXX, forma, EBITDA prior continued versus XX.X% X.X% million expansion constant bases, margin EBITDA was $XXX.X increase fiscal fiscal fiscal currency growth. from up on XXXX reflects focus full the in with and fiscal profitability balancing Adjusted year, of an XX.X% This prior full For currency the margin $XXX.X year. our million compared constant the on adjusted XX.X% a XX.X% for

$XX slightly strategic EBITDA, fourth below Our in full million our of build investment XXXX. to $XX announced quarter beginning plan the million included fiscal improve system million of ecosystem. our approximately and year totaled marketing spend capabilities spend the integrator $X The

and dividends over and will software that we of by investing of Accenture at Michael form integrators large in through stronger strategy pay confident As future into time, managed projects EXopen as mentioned, go-to-market of such staff IT KPMG remain integrators. pull leading the our these in resources enterprise training

For testament able we top within expected than FY A ‘XX deliver guidance to including line, our the were a manage bonus EBITDA to compensation. despite and incentive lower range. effectively to original ability variable costs,

as strong to forward, Moving cash and flow. we will disciplined balance commitment with investments our growth-oriented remain we profitability

realized and remain of benefits leverage. operating will goal growth Our the

$XXX.X was GAAP. was Finishing in on net of $XXX.X loss fiscal a net year. quarter charge The full the goodwill were million up year made and million full US non-cash accordance net XXXX million profitability, and the fourth quarter, loss impairment impairments These figures million. for with the loss include fiscal $XXX.X for during of XXXX $XXX.X

part value using the evaluating and offering $XX As declines conditions. a triggering carrying share. market as goodwill events, value reminder, goodwill by price to EXopen’s of transaction as companies potential price carrying continually was in per reset monitor requires such GAAP of our changes share IPO

Now turning cash flow. to

cash drivers, full interests, M&A such cash in GAAP includes discussed adjusts we have view to our cash one-time of call, provide as starting approach taxes, temporary net cash cash quarter presentation third or but in recurring generation, of the order our operating our flow. cash range integration. of changed key on flow capital including to adjusted a normalized As our revised spending cash This items flow earnings with and working operating clear

we fiscal cash fiscal $XX.X fourth operating million respectively. $XXX.X million this new quarter presentation during of For and flow, adjusted XXXX the generate full and year,

as flow a cash source with flexibility metric capital growth. to growth. the and we cash our strategic fund financial level view improving strong our optimize of We pleased structure as performance as flow to cash key We’re continue both prioritize and conversion

result of we As quarter. of completes flow fiscal strong results. sequential our This XXXX my of a million with the $X from year $XX cash fiscal our QX and million a financial full equivalents, third generation, year ended and on cash cash increase remarks

our and performance. our to provide ‘XX I’d of thoughts At first guidance, this and point, key FY like forecasted quarter financial introduce around drivers our

growth to We drivers slower large $XXX macro to challenging ‘XX. that ‘XX. year-over-year, This the growth are of bookings net as the FY the revenue softer in target and expect well FY to $XXX million X% the mid for represents through key projects our than late of levels X% in of million subscription range FY continue as timing momentum ‘XX, customer the will environment purchasing view impact of

subscription GAAP of ‘XX to first be prior year quarter. growth to to X% quarter $XXX rate revenue compared the expected for first million fiscal a the million, is range representing to of fiscal of X% in the as $XXX

FY We expect be revenue to $XXX as compared million to of ‘XX. FY to within million growth total $XXX year-over-year FY of the range ‘XX ’XX, X.X% in to representing X%

Our integrator shift includes Business Services Subscription total business forecasts, partners. strategic our plan system revenue and which Professional services on focus to reflects revenues our our our our to

we for than rates year-over-year the exchange to FY ‘XX. on revenue basis FX growth rates, expect our less impact current XX Given point have

our the drive demonstrate growth. We value of expect to FY ability range to unit the margin ‘XX our underlying Year targets flat Overall, attractiveness gross XX% subscription for is and achieved a The of of through and to profitable last economics profit for year. is this margin what software our basis offerings the core New strong gross to be we midpoint range within XX%. roughly

expect for $XXX margin of an year. This to ‘XX on XX% EBITDA adjusted ‘XX. be over to FY implies growth X.X% range the to profitability, XX% prior $XXX FY Finishing adjusted million X% to this of within represents of the we range million, EBITDA off

would for in on the generating some In comment cash its strong drivers placed given flow, to I FY addition, key ‘XX. importance like of we

expect to FY working CapEx to to as significant FY capital growing which approximately cash in We in X% a include use working in M&A-related typical improvements for to X% expect be ‘XX of normalize company. FY year-over-year revenue ‘XX versus revenue capital plan of an of a modest We CapEx. and ‘XX, drive

projection the interest the of rate Cash make expected X%. is to we range beyond year do assumes to interest term range interest floating within to in stays $XX loan our a amortization. expense, million on that $XX And the we loan any during required term that net be prepayments million. of of on not debt This income X.X% pay

were expect lower FY M&A substantially $XX cash in to be we ‘XX, Finally, one-time costs, FY including ‘XX. million which in integration,

In strong conclusion, targets full hit flow growth achieved cash growth, we our profitability while XX. did We for and revenue performance. solid as not fiscal well as

FY capabilities. large Looking support continue customer they supply their ‘XX, as our base will advance ahead and to we chain to growing

confident supply our unique built strategic strong given we in We M&A. have chain software remain strategic the positioning, through platform

our gross achieving revenue of mid EBITDA higher XX% profit We have remain committed long-term and to growth future clear subscription XX% a and margin. to path goals XX% plus plus plus growth,

the connecting prepared And remarks. want that, I and up the as the year. are session. again us everyone Operator, concludes questions. open line look our With ready to thank you begin joining we for That today. with to Michael please throughout to Q&A I and take forward proceed your we

And is Instructions]. Hotchkiss Adam with Sachs. from question Goldman first [Operator our

think And your think near-term us? for about organic to does you have challenges are things when see macro, what long on right of that for go that have you you outside growth call, 'XX materialized go term? about the of impact just you back XX%-plus that view you fiscal to could getting just growth the revenue you as of that discussed improving the growth some on the some for the When through and guidance how

unique into to our for assets good platform. have Yes, hear spoke We've business. by through, Yes. about, X a scaling unique asset in created rapidly Thanks the voice. your confidence question as enormous listen, combining we we and

it's a us to last in XX% of about year, from the think down our say combination business macro along perspective. increased that environment, slowed this the the fair commercial with by I

think we're hesitation around don't we more long-term in have fact, confident ever. any growth So that outlook. I than And

people have macro some of we kind and as happen, train to one on of do our some to have we things internally that our scale do to this more from than calibrate We the scale. to work to do that will and we've that clients. subside, only at But business solutions our our and sell seen have challenges we

on better a happen commercially is people. continue training to So number I to us and part for our think large at of to needs business of get what just work

Integrating companies I little I doesn't cost. say, a And complex quickly growth kind a more combined that, will X more as come was a in -- great that than it's without think And the year fair this one said, to seeing these are of around with business. macro, green shoots normal. make FY really for revenue little the a lower we're but 'XX,

as confident we're ever, Adam. So as

throughout worst-case think hear. the just the revenue mentioned what's see base That's outcomes on the perspective the year? that call, guidance? the great you we And then vary sort scenario that I case fiscal could from that's of the what when a volume into is scenario, sensitivity percent versus best 'XX to of that baking about on the you're your exposed churn of And

revenue Yes, it's But of of comes in our little the a have Remember, a which QX, nearly we bit see QX, not uptick in subscription. had timing we that our annual revenue. of little a a bit drives from churn and all there numbers. lower was little more more overall because in -- much, we and

for year. have the you year, your it's the churn to if going increasing an to earlier outsized revenue in So have impact

on of don't all. informed like, change good fully But in range that by have think of in dramatic a I that's and outcomes, handle a looks terms respect we what pretty see our So really at that we guidance.

The from next with Loop question is Schappel Mark Capital.

of that unfavorably to to around you integration the impact if details was provide bookings additional impacted or starting just could Michael, wondering coming I with year. acquisition that related bookings internal you the expect issues some some the you, -- in unfavorably

Yes.

think it's macro companies saw as we challenges the economy -- and year the brought some as in we softness together. last of those more, Mark, I the

in impacted the and rate expected contributing pushing said, our come the now, they're the SIs but right bookings to, the run larger think push transactions. some have I the larger And the from on results, larger of we as are to and about to where did because right some ones transactions more. I them specifically

in In bigger clients sell lot to the of companies. it's a about into terms of integrations, from the people And And that we our kind more with much a we impact of need have our say having to than get of and sales set X to larger of it's learn down generally, engage solution acquisitions. how fair we and have work build to for organization as that how we to them environment we increasing our into now. already and we work are on scale train a the do headcount has do part more mentioned, begun, how repeatable are -- and we That -- sales of to the our sell group. have Marje

in the of this expect year. we So and second back that to kind get half of normalize

built of part like other So business. our to just to we of additional the build our parts business it's us,

a think X as the nature acquisition. So the impact broader this integrations, BluJay but given that's large the and we was an terms complex in we the progression. kind of of more bit how about have Normally, of don't larger

terms in with add broadly, integrations to of we've said before, BluJay as the integration. just we're done more And the acquisition

work, $XX total integration, of rate In are where the approximately projected of the be synergies of just integration the terms savings of are it logistics run XX% of the in million. we give you where we the actually still stand to latest now. was terms realized over to sort And XX%

Logistyx talked improvements. integration the in expect And as as of we as by well second seen but before, about We to well gross 'XX. We've improvements half we've of have complete do seen FY revenue also Logistyx margin with side. of sort be fully

terms at acquisition in we of timing couple churn, on coincide of the some of what other a happened it's knew churn-related impacts. think to also of time the mentioned we already the just churn integration I the impact just of the

just it happened time. same all at So the

So make want that sure full I to just have you context.

Great. That's helpful.

could Just coming for just you just thought lower regarding it year. was and growth some Because of Michael, sales capacity? sales its the subscription on your building like wondering, of prior comments kind force the year, -- on, in and looks through there's process plans the this go revenue adding then I expected

decision. think Just talk the you right sales is about this time why capacity adding at

Yes. more we we can created And more we have solutions. is spend X adding that a lot The potential or more found that we the of time amplify subscription having their with them, a -- the what X is quickly. clients

that's really thought clients. with engaging how about -- So really thinking we our

We kind X.X we new If increased -- ago, we team. a XX% said we build of you our to to sales bookings did mid-teens years percentage from remember, logo that up. needed we went and and

that So was successful.

throughout then have, now think know engage clients. increase year the in drive more our our in the adding done of engine potential which full And for salespeople allows business. that's those kind that what the and growth do of into to we suite today, the given adoption us to we past the the we we is primary And we've

make margins. our it's we all train meter But opportunity. our in how So that's we effectively at and do clearly, sure salespeople them pace about we those biggest that can a maintain

The comes next from Jeff question with UBS. Hickey

and and maybe now end volatility, since seeing February, mainly. just some more the March financial of understand there's into to of namely April. Obviously, the been love volatility Would you're recent services trends

the and changes X versus the in up around brought curious frame. what last saw even behavior X in sector, in the if but any time December January you seeing weeks you're tech You the commentary customer to

Yes.

what's talk customers the towards And used and help. think be really I doesn't a mid-part to let future the about our just there. people I issues kind Marje, normalized sure I'll right Marje things around I I'm engage. half, It's maybe very like in general, of is uncertain of last of are see clear it Marje that. drop? And thinking now. of Obviously, I I kind part But said, late we're banking banking think Maybe, next talk to on year think of make and exposure people think we're like, seeing the okay, issues, kind back view think year part some about where early the we'll settled. our in getting getting are general, of that.

great And Yes, absolutely. question.

we exposure, from as customer to sector to that's no company, very, turmoil EXopen financial So also perspective, have a the none we a happening. financial but have to little exposure then in very terms exposure really for the of sector

terms a impacted that rule, of as the point, data terms QX, that, And now slipped I would of we the were closed from in banks general. of mainly turmoil also one enterprises in that already they customers in a more have less broadly, QX. in large just deals our regional again, large the general say as by are I think trends, in

regional sort making banks nothing we're turmoil. changed of So the progress, from and materially has

comes Obin question from next Lynch. Andrew of with Merrill Bank America The

clear, historical I are is be to this Ridley-Lane fiscal the for have second to on improve just 'XX. but 'XX This And the revenue? year What David assumptions compares just slowdown particular I'm cyclicality. macro wondering bookings how in expecting you Andrew. fiscal are half misheard, behind the subscription may of to

Yes.

our let in own outlook kind break into that think terms then X business. it's of macro own I categories. of is our down me One and

as XXXX my is as terms I not it's going beginning significant or significant. as macro, In think to of start as, don't of this think my obviously, XXXX I back career. of COVID and the significant

not So events. other it's it's I but significant, think significant as as

In ability informed and that we deals churn to regard, really overall are our terms that, to see at visibility I kind visibility we're that's have kind have informed up what of metrics of terms into good kind see working, from pipeline informs of the we into the last our by downsell. sequentially the more good us, and then pipeline, penetrate and of what year work see large of we start, and pretty in in we more In own think what we terms our at. of how that in by of

get realistic than kind I we of for some we of driving would -- think we we it's year, half back of our into view normal as think kind getting the We rate things year have I think growth 'XX improves of do. I a potential And So our think rate and the Marje said, and what to a of what think us, lower as back run -- what's to like that's FY that 'XX. kind is. kind of the

early the start right the as in through timing in of guidance, say has sort the year, an of the go-to-market we and the internal to just growth detail in from some that, the taking the terms build normalize of us plan. two, reviews of that had pipeline about year in proactively kind that Michael And to the year, go our number changes we because what I impact to but can, we churn would as just mentioned, are add of one. also timing control assumptions will allowed that we of Number the pipeline steps to sort talked Michael the of and and has has

working our discussed that say we've on call. items on wouldn't I together that all It's macro So hinges guidance these different improvements. this significant

bridge maybe the magnitude I nonrepeat year are X the for How 'XX additions I'm Because in fiscal the underestimating EBITDA? sales you the of Just $XX here of think planned fiscal have million but you 'XX. that investments, the do more. strategic

Marje. constantly we ahead, -- mean I Yes. go

terms so look support you So also of the investments, integrator well brand up and as do year at million last $XX ended as a Michael, was being for marketing investments. $XX that announced just in system these million and year, of the of bill combination then and internal the add, please ago sort to staffing a then that numbers, it when we

off. tail to will as the think was think as So drop brand And you sell as going and about side going well side. go is still SI on the and The there if spend, then we've we forward. talked these a the about as investments of you are on the but will investments there, the part that's previously. onetime investments, go-to-market we've they discussed some rate, additional the about way investments forward, marketing that run new lower be internal again, be of The

So that kind investments about going I the and the would trajectory is forward. of think how new

Yes.

lot that long in our trade-offs try reliable this making to every And make to I just of kind discipline, a more no year. choices different making producer think single with means matter on term, focused a we're And as need year revenue. expansion we become it's that organic we we a us and we of need those grow. think and margin to operate things that's as we and a I build business bigger of next the

from Nick comes with Craig-Hallum. question next Mattiacci The

Bennett. I strong Michael, or them on for maybe if competitive but comment It you overlap This just thoughts SCM the environment. the your despite peers to on environment. is rate results exposure, have not post maybe adjacent Nick your guided of the could of on Chad your what continuing to are seems like same are growth same product relative the And know vertical all industry? some

X we X our in very strategy is then And accomplish front past of distinct growth. And overall really Yes. how us. at tailwind a Listen, we long revenue strategy. expand margins. been we about unique. very, years. in we potential huge have differentiated And we category have think there's and think think do to the we've from position That's -- and have stated high the amount the is and subscription what are we other to a industry duration of a strategy a product very strong in able That I that's right

which And in with the puts different of we bigger months. then takes ourselves XX grow work And other we have clearly, have our X business. to a kind and has as did to lot been the integration and also, we of helpful. area, in year have a companies, did we high-tech past combine exposure going We're not we

think and in I which things between our have them. number XX%-plus of we clients the of And in gap differential those would kind see. front of our long-term we're potential have strategy scale at us kind that winning a that we of we're of of what and and kind we larger long-term mid-XXs are large as for the our can see on and we our opportunity focus terms what in our that we others is kind that's know between so with us, we moreover, about deliver growth why of guidance that's what kind And is what fill opportunities the But doing. excited at So of EBITDA.

to about revenue you could if And Rule framework get the relative going growth into share year you of of what of back appetite next? forward. the to EBITDA margins it. towards if mark and your think back remains challenged And growth your Got kind in that XX half on just how is

Yes.

created be another efficient in line. EBITDA to the always the and -- ourselves being then we've I because think down EBITDA while is guiding for terms every year make I Marje, to from large every we principle And the of And kind to a have. the and margins, it's XX. right can think our rate we growth, part generating we opportunity organic thoughts we mostly an year. translation to go the will of sequentially that of I build can chase our I and And add also lot it And there, our maybe, believed easily the high as Rule we've generating and economics in okay, think even matter growth increase on business of what it's And steward we your high to capital. think margins. have what a more don't will year balance. our unit margins right think investors responsibly our We permanently growth literally those drive trade-offs are the spend of and given be we business throughout but ongoing of of, the our money support potential ourselves, convince

exactly Yes. No, right. think I that's

our cash a and leverage generation, result, to think revenue as costs to And that. overall, to very proven strong onetime shown significantly FY below decrease investments even net to our if and the revenue expect 'XX accelerate digits. supporting growth even growth and, profitability take really cash I free flow flow. but previously, double Mentioned ability costs aimed organic but and in M&A-related or 'XX, generating we've helping already our remain we back FY moreover, already to to squarely balancing slows, strong committed we cut are also current naturally our further Xx our

produce to So continue our will down growth also to strategic really leverage we us subscription also flow optionality allow set importantly, well growth, very for get and making the business a that and to to lot very top revenue we ensuring very, up that focused back in as strong really sure we balancing compounding and to continue line margins continue free forward. us on are as cash take that going of invest double-digit

Credit Fred question The Lee next comes Instructions]. [Operator with Suisse. from

margins, if A weakness. revenue imagine quick 'XX? what were I those question gross Marje. you way, and which to Can you room there's levers maintain were despite talk the due sequential able a performance, cost through to further improvement solid by fiscal levers for some was for about

Fred. you, Great Thank question.

of working -- of different the gross terms couple as right, look at together. so things you a when In margin,

I would cost of staff margin. as but take revenue action year, subscription and in increases terms as a help services revenue just forth. total revenue our to we pay within also including own costs external and gross subscription natural revenue sort then to so cuts that as we say vendor our did last So continue growth also growth there's emphasize of percentage our the our over of a growth,

to closely drive continue we make our that growth. really monitor we So revenue with costs profitability along and sure

for on that building second. X Just

of deploying doing that solutions, our strategy years. we've we been have a for a have and we So where XX literally method hybrid

grow that us as our margin we the unit terms of long over economics a gives in our that so our expansion we linearly increase term natural So don't revenue. cost

more to I to to advantage kind use advantage rate. really up the more a set same software without So to have think our be costs able able and deploy of we be strategic take incrementing of at we're

that's steadily time long now. one confident we're a has pretty at a so of at been margin level, level think which I gross for unit our reasons economics the this solid in

bit appetite quarter, your shifted your little reasonable. pause look in weren't M&A acquisitions in has Got it. bid-ask today and a Can spreads about direction? Michael. on talk because spreads you for question for mentioned how the you, quick then targets Last and And either X if radar for the you

our ourselves generate much we lot a for was larger we unique integration highly rapid we unique a cash to business. base. and But felt very fair thinking it in platform M&A to generated complementary growth. that it's were very organic built assets and that's about high long business literally to being we as term our to Listen, that our so can for we think potential I for grow client company, of through the by business, a flow your now, grow from that say X had efficient built way X to retool to a X It's

building to something built And I it's to look every our optimized we've business and it literally mean X business, of at I we months, as acquire business, next business kind the this for that. growth the it just now half our that's growing is of have at a than orient our to -- proposition it ourselves which you around do a different organic size. scale, differently. We're doing

now, So Fred. that's on what we're taking

bid-ask in the spreads, So still need to I they think, are general. of be really kind not where

size. our our and X-point little that to build build smaller is biggest Remember, of think I the of were much at organic that have by combining XX% grew engine growth an we opportunity business, takes moreover, we kind a time than and solution right. for which of piece get by companies us, next us to our bit the But business

do which level, next. expect in next do think then that, year so, can next I do focus to okay, now. the have and And of we -- at to primary at point, we now the once right that's about we or we think our then that it's we're like, kind what

a connected create is But our on completely core parties. mission platform it's unique built because XXX,XXX is that to

the have really size we a that network Having set we unique. clients unique. Having is that having of is the unique. have all is application our So

look front it's a while. as That's much we've to forward us. that the realize kind And And matter will that proposition for So in able now be building for our opportunity focus, organization now opportunity for the that being see potential. we of of next ourselves. that's of primary it and created we the to

in queue. questions We further have no

participation. time. end lines may the Thank this We concludes today's for session. you your disconnect This the and you have your conference, at question-and-answer reached of