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spk06: Please stand by, your program is about to begin. Good day, everyone, and welcome to today's fourth quarter and fiscal year 2023 results for American Software. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and one on your touchtone phone. You may withdraw yourself from the queue by pressing star two. Please note this call may be recorded, and I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Vince Klingas, CFO of American Software. Please go ahead.
spk04: Thank you, Reza. Good afternoon, everyone, and welcome to American Software's fourth quarter of fiscal 2023 earnings call. On the call with me is Alan Dow, President and CEO of American Software. Alan will provide some opening remarks, and then I will review the numbers. But first, our safe harbor statement. This conference call may contain forward-looking statements including statements regarding, among other things, our business strategy and growth strategy. Any such forward-looking statements speak only as of this date. Forward-looking statements are based largely on our expectations and are subject to a number of risks and uncertainties, some of which cannot be predicted or quantified and are beyond our control. Future developments and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. There are a number of factors that could cause actual results to differ materially from those anticipated by statements made on this call. Such factors include, but are not limited to, changes in uncertainty in general economic conditions, the growth rate of the market for our products and services, the timely availability and market acceptance of these products and services, the effect of competitive products and pricing and other competitive pressures, and the irregular and unpredictable pattern of revenues. In light of these risks and uncertainties, there can be no assurance that the forward-looking information will prove to be accurate. At this time, I'd like to turn the call over to Alan for our opening remarks.
spk05: Thank you, Vince. Good afternoon, everyone, and thank you for joining us today. I'd like to begin by reviewing our fourth quarter results, providing an update on the current business environment, and sharing our initial outlook for the fiscal year 2024. After experiencing delays and deal closures over the past several quarters, we plead to report that we had a strong finish to the year. We had a strong closure rate, and our gross subscription bookings were at the highest level of any quarter this year. This was evidenced by our RPO expansion of 4% quarter over quarter, with progress in both short and long-term components. During the quarter, we had a bias towards new logo wins, which was not unusual considering prior quarters were heavily skewed towards existing clients as those transactions with new prospects faced greater scrutiny. We still anticipate that over the year, our new cloud bookings will be split evenly between new and existing clients. However, we could see a bias toward existing clients if the economic pressures accelerate because Existing client projects have easier and faster approval rates, given that they're typically smaller add-on projects. Although our new bookings performance was encouraging, the ongoing economic stress had a direct consequence on our fourth quarter revenue, most notably on our cloud revenue growth. Where we typically see only churn for small, non-strategic subscriptions and temporary projects, in the fourth quarter, we took some very unusual adjustments. Specifically, we were negatively impacted by a bankruptcy, and we put a few contracts into suspension due to delays on renewals and payments. We anticipate that a few of these may be recovered later this year, but we took a very conservative approach and removed all the revenue on those contracts from our fourth quarter results and from the RPO. The net result was a wash in the sequential gains we would otherwise have achieved in cloud revenue in fourth quarter. We expect to see an uplift in Q1 resulting from those Q4 bookings, but several of those projects started too late in the quarter to fully offset the cancellations. Vince will provide some additional commentary on the impact of these cancellations. However, we expect the year ahead to track along our normal turn rate. In the end, we were very pleased that our cloud revenue was up 18% year-over-year in the fourth quarter, and for the full fiscal year 2023, we were up 20% year-over-year. This is great progress from our primary objective of growing our recurring revenue, which again represented 71% of our total revenue this past quarter, exceeding the 70% threshold for the second quarter in a row. We also saw continued downward pressure on our services revenue. Specifically, the economically sensitive IT staffing business experienced significant decline and may continue to see volatility. However, we are focused on improving the margin within that business by adjusting staffing levels and by emphasizing higher margin contracts. Furthermore, in our supply chain business, the impact of our simplification initiative is reducing the overall effort from each project and we also continue to outsource incrementally more work for our service partners. These efforts will give us improvement, surge capacity, a broader market reach, and a continued emphasis on our more reliable recurring revenue streams. Although the economic uncertainty continues to persist, we are cautiously optimistic as we enter the fiscal year 2024. The remainder of this calendar year is the hardest to predict, given the headwinds from recent interest rate hikes, regional banking issues, and recession fears, but the longer-term trends all point to a strong market for supply chain planning solutions for years to come. Currently, the potential for a recession continues to create uncertainty in our core consumer goods markets. We have seen both existing clients and prospects carefully scrutinizing their costs, resulting in longer collection times and elongated sales cycles. The selection process is taking one or two months longer, but even more exaggerated is the approval cycle, which has gone from four to six weeks to two to three months, with a lot of pushback on the ROI justification and the time to value questions. This favors a prescriptive DNA brand, which consists of value-driven, agile implementations, prescriptive methodology tailored to each client's needs, and an off-the-shelf configurable solution. But it also creates more uncertainty into the timing of specific field closures. Our overall pipeline is still continuing to grow. It's up about 10% over this time last year, even with the accelerated closure rates at the end of the fourth quarter having offset some of the top of the funnel. Additionally, with the large install base, most of which is still on-prem. We have ample pipeline to support the accelerated lift and shift transition objectives that we set out for this fiscal year. Our goal is to significantly increase our conversions this year, potentially triple the historic trend of 10 or 12. First and foremost, these transitions give our clients the opportunity to take advantage of all the new features from newer releases. but also continues to build upon the recurring revenue stream, enhancing the strength and predictability of our financial model. One interesting transition is that the staffing pressure has been relieved due to recent layoffs in our sector, which will allow us now to continue to focus hires in critical areas of need and to backfill only those critical role vacancies as we see the need arise, as opposed to pre-hiring or having underutilized bench strength to hedge against the labor stresses. We will, of course, continue to control our costs and with a goal of maintaining a flat to slight reduction in overall cost this year in spite of some of the accelerating demand. On the acquisition front, first, we can continue to see positive momentum with our network design and optimization solution from the Starboard acquisition. We're still building that book of business with new wins from both standalone projects as well as part of an integrated transformational suite where it is used strategically to optimize the existing supply chain network utilization. Furthermore, we believe the recent layoffs at Coupa will result in accelerated defections from the Llamasoft community, creating even more market demand for the easy-to-use, sustainable model that we offer. We're making progress in our efforts to find new acquisitions that will be complementary to our current platform. We believe that it is likely that we will be able to meet our goal of ingesting one or more strategic fit companies this year, utilizing our on-hand cash for a stronger investor return while maintaining the quarterly dividend, which is covered by earnings from our operations. As we look forward to the fiscal year ahead, we remain bullish on the supply chain planning market and our ability to compete effectively. However, we're taking a conservative approach to our financial guidance due to the increasing economic uncertainty in North America, which is by far our largest market, and the continued pause in new projects in Europe, where some of the largest economies have already entered into a recession and facing continued weight of the ongoing war. Our guidance metrics remain unchanged from last year, but we would place greater emphasis on the guidance for recurring revenue and the adjusted EBITDA as these remain the most stable metrics. We anticipate that the professional services revenue streams may remain under a lot of pressure, particularly in the economically sensitive non-core IT services segment. For fiscal 2024, we're expecting recurring revenue to be between $88 million and $92 million. For adjusted EBITDA, which removes the acquisition costs and stock-based compensation, to be between $19 million and $21 million, and for total revenue to be between $120 million and $126 million. However, as noted earlier, the total revenue outcome will be highly dependent on the variations in the IT services business. In summary, we're pleased with the fourth quarter results in the supply chain segment during these uncertain times and expect to see further progress in the year ahead. We will remain disciplined with our investments in the short term but continue to see large growing market opportunity for our supply chain solutions. As we head into the new fiscal year, we're pleased to see continued growth in our pipeline, which will allow us to continue increasing our recurring revenue and provide the flexibility to achieve EBITDA growth by managing costs appropriately. At this time, I'll turn the call over to Vince, who will provide details on our financial results.
spk04: Thanks, Alan. For the fourth quarter of fiscal 23, Total revenues were 29.9 million, and that was a decrease of 14% from 34.6 million the same period last year. Our subscription fees increased 18% year-over-year to 13 million, but it was flat on a sequential basis. And as Alan mentioned, our fourth quarter was our strongest quarter of gross subscription bookings for fiscal 23, but that was masked by a couple of unusual circumstances, including one bankruptcy and several other customers that we have categorized as suspended due to delays in contract renewals and payments. Had this not occurred, our sequential year-over-year growth would have been more consistent with what we've experienced in recent quarters. Our software license revenue was 0.7 million for the current quarter compared to 3.1 million in the prior year period, which colluded a special $2 million license fee deal in the existing customers. Professional services and other revenues decreased 32% to $8 million. That's compared to $11.7 million a year ago period. The year-over-year decrease reflects a 23% decrease in our supply chain management unit due to a slowdown in project-added activity, which we've experienced over the past few quarters, and a 43% decrease in our IT consulting business unit, the proven method, which continues to be impacted by macroeconomic conditions. Our maintenance revenues declined 7% year-over-year to $8.2 million, reflecting a normal fall-off rate this quarter. Total recurring revenues comprised of subscription and maintenance fees represented 71% of total revenues in fourth quarter, and that compares to 57% in the same period last year. Our gross margin decreased to 60% from the current year period versus 62% in the same period last year. James Jensen, license or subscription fee margin with 68% for the current year period compared to 70% in the prior year period. James Jensen, Excluding the non cash amortization of intangible expense of 398,000 in the fourth quarter description gross margin would have been 71% versus 73% last year, which last amortization of CAP software of 366,000 the prior year period. The decline in our subscription gross margin reflected a loss of revenue associated with the client bankruptcy and suspensions discussed earlier, as well as a higher short-term cost at the end of the quarter for onboarding new customers we secured in the fourth quarter. Our license fee margin was 77% compared to 84% in the same period last year, and that's primarily due to lower license fees this quarter. Our services margin has decreased to 25% from 33% last year due to lower revenues, With stronger bushings in the fourth quarter, we expect to see seasonally adjusted improvements in utilization moving forward, but we will be closely monitoring our resources to ensure we maintain optimal levels of productivity throughout the year. Our maintenance margin was 80% for the current quarter, and that compares to 83% in the prior year period. R&D expenses were 15% of total revenues for the current period, and that's compared to 12% in the prior year period. And our sales and marketing expenses were 18% of revenues for the current quarter, and that's compared to 16% in the prior year period. DNA expenses were 20% of total revenues for the current quarter, and that compares to 18% the same period last year. So our operating income decreased 58%, 2.3 million this quarter compared to 5.5 million in the same quarter last year, primarily due to the one-time license fee transaction in last year's fourth quarter. Our net income decreased 20% to 2.9 or earnings per diluted share of $0.08 compared to net income of $3.6 million or $0.10 for earnings per diluted share. On an adjusted basis, which excludes non-cash amortization of intangible expense related to acquisition and stock-based compensation expense, adjusted operating income decreased 43% to $3.7 million compared to $6.6 million in the same period last year. Our adjusted EBITDA decreased 43% to $4.3 million compared to $7.5 million in the fourth quarter of last year. Adjusted net income decreased 6% to $4.1 million, adjusted earnings per diluted share of $0.12 in the fourth quarter. That compares to adjusted net income of $4.4 million or adjusted earnings per diluted share of $0.13 in the same period last year. Our international revenues this quarter were approximately 20% of total revenues. That compares to 16% in the same period last year. On the full year, 12-month period ended April 30, 2023. Total revenues decreased 3% year-over-year to $123.7 million. However, the supply chain segment grew 2%. Subscription fees increased 20% to $50.4 million, and that compares to $42.1 million last year. Our license fees were 2.8%. Our professional services declined by 17% to $35.9 million and maintenance revenues declined 6% to $34.6 million. Our adjusted operating income for the current fiscal year decreased 4% to $16.7 million representing an operating margin of 13% compared to $17.3 million or 14% margin for the same period last year. Our adjusted EBITDA decreased 11% to 18.9 million for this year, and that compares to 21.2 million in the year-ago period, representing an adjusted EBITDA margin of 15% compared to 17% last year. Adjusted net income totaled 15.2 million or 45 cents per diluted share compared to 16 million or 47 cents per diluted share the same period last year. We exited the quarter with remaining performance obligation, or RPO, which we refer to as backlog of 124 million. Our total RPO was down 7% from the prior year period due to shorter contract durations from recent deals. And we note that both our short and long-term RPO increased 3% and 5% sequentially. Looking at our balance sheet, our financial position remains strong with cash investments of approximately 115.5 million at the end of the quarter, which increased 10.6 million sequentially. During the quarter, we paid 3.7 million in dividends. Our day sales outstanding is at the end of April 30th, 2023 was 86 days for the current period. And that compares to 62 days in the same period last year due to some delays in collections compared to last year. However, that is down from 101 days in the prior sequential period. And we expect further improvements in the coming quarters. We remain confident in our ability to collect our outstanding receivables due to the high quality nature of our customer base. As Alan mentioned, we're providing guidance for fiscal 24. We anticipate revenues in the range of $120 to $126 million, including recurring revenues of $88 to $92 million. And adjusted EBITDA, we anticipate in the range of $19 to $21 million for fiscal 24. Although our pipeline continues to grow and our close rates improved Our revenue guidance assumes that bookings remain volatile in the near term, given our ongoing economic uncertainty. To the extent our macro conditions improve, we will adjust our outlook as appropriate over the course of the year. In the interim, we will continue to prudently manage our headcount and cost structure, which we expect to remain relatively flat compared to last year. Finally, we expect to incur about $2 million in expenses this year related to our first earn-out payment for Starbird. of which approximately 0.6 million will be recognized in the first quarter. As we do not consider this a normal operating cost, the related expense will be excluded from our adjusted EBITDA guidance, but this will impact our GAAP earnings for the fiscal year 24. At this time, I'd like to turn the call over to questions.
spk06: At this time, if you would like to ask a question, please press the star and one on your touch tone phone. You may remove yourself from the queue by pressing star two. Once again, to ask a question, please press the star and one. And we'll take our first question from Matt Pfau. Your line is open.
spk02: Great. Thanks for taking my questions. First, I wanted to ask on the clients that you categorized as suspended, Some more detail on what happened there would be helpful. Why haven't these clients renewed or stopped paying or what's going on there?
spk05: Hey, Matt, this is Alan. Good question. Thank you for joining us. There's a mix of circumstances going on around them. There's a couple of them that actually got caught up in the banking crisis, and we're just on the cusp of getting that sorted out where they've kind of got their feet back under the And they're off and running again, and we're in the process of putting contracts back in place, amendments back in place, and we think we can onboard them here in the first quarter. Others hit some financial distress and just really are struggling. We had that one bankruptcy one that was just flat out down and out. We may be able to recover that account if they don't end up through liquidation, but the others are just struggling financially. In some cases, have agreed to put them into formal suspension with a renewal date. In other cases, we're actively working with them trying to get them back on board, hopefully get their financial position in a place that they can continue to fund and pay us for the services that are provided. But we're doing the best we can with them to work and take into consideration the stress they're under and maybe be a little more flexible than in the past just to bring them back.
spk02: Got it. And then I just wanted to understand the comments a little bit more around sales cycles and approval cycles. It seems like you saw some improvement towards the end of this last quarter, but that you also sort of called out some of the timelines, the extended timelines you're seeing there. So are you still seeing longer than normal sales cycles and approval cycles or are those improving?
spk05: No, actually, that's good. Thank you for that question. Good clarity point. We saw a good closure rate in the end of fourth quarter. There were just these projects came to the point where they were ready to move and we were able to work through the contracts with them and get them into place. But we did not see an acceleration of sales cycle. We saw a better closure rate and success there in the April time period. But those deals that were going down, they went through a longer sales cycle. They'd been out there maturing for some time, and we worked hard to try to get them in that fiscal period and get them started before the summer season comes in. It was really a mutual benefit. You know, projects slow down a little bit during the summer, and they wanted to get started, and we wanted them to get started as well. So we were able to use that timing really to help us get that closure rate up. But, no, we have not seen a shortening of the sales cycle yet. A lot of move afoot, as I mentioned, our brand, our approach, what we're recognized in the marketplace for is really value-driven projects, which is very good, very high ROI. And we're using that more effectively now, recognizing the pushback on funding to make sure when they go in and ask for the approval to seek funding approval, that they are well-prepared, they're well-versed, they understand how to defend their position. So we're more active in that effort with them. But, you know, to date, we're not seeing the sales cycle short enough yet.
spk02: Got it. One last one for me. You mentioned that you were hoping to see an increase in conversions this next year. What's driving that? How do you anticipate increasing the number of conversions that you're going to do over the next year?
spk05: Yeah, we've put a conservative effort into that initiative. We have a few folks working on it. We've partnered with Microsoft to get some benefits that we can share down the line with our clients to help move that forward. So we've got a few incentives on the table to make that happen. We're also just seeing a migration right now where there's an acceleration of companies realizing they should not be in the IT services business, that we as a software company supplier or subscription supplier are much better served at doing so. So we're seeing a natural demand lift on their side as well as their willingness to move forward. So it's a combination of market momentum and some good hard work from our team and a few incentives we're putting on the table with our partners to try to accelerate that process.
spk08: Okay.
spk09: Got it. Thanks for taking my questions. Appreciate it.
spk08: Thank you for joining us, Matt.
spk06: And as a reminder, that is star and one to ask a question. We'll take our next question from Zach Cummins. Your line is open.
spk01: Great. Hi, thanks, Alan and Vince. I appreciate you taking my questions. Alan, can you just talk about what sort of assumptions you're making for the recurring revenue side of the business going into this year? It still seems like a little bit of uncertainty around closing cycles. So just curious of how you're thinking about the guidance that was set and the assumptions that were made.
spk05: Yeah, in particular, our greatest uncertainty is in the short term, and I think if you listen to the economics minds that are out there that probably know better than we do, we think the most pressure will be here in the shorter term, the remainder of this calendar year. I've been through enough of these cycles. This is my sixth one, exactly, since I've been here, and what we've learned over those Time periods of thrashing through those time and time again is that the supply chain market is an early indicator of slowdown, and they're also an accelerator out of a slowdown. So I have a belief, we have a belief that things will stabilize and really probably just get back to normal as we get into or past the Christmas selling season this year. And for us in the supply chain space, that precedes us going out shopping for our presents. They're putting that product on the shelf. Our brand owners are putting those products on the shelf in the late fall and ahead of the Thanksgiving season. So we feel much better about the back end of the year than we do the front end. We haven't given up on the front end. There are good active projects going on. There are many companies in a number of segments that realize that they're in an inflection point in their supply chain and recognizing the need for supply chain planning capabilities more than ever because inflection points cause uncertainty and how they should staff their inventory, hold their inventory, move their inventory, what products to get, what's going to sell. So they need all the help they can and they're moving forward on these projects. So we're going to get business done in the next six months. But how fast and how quickly and the timing of it is tough. And then, of course, from a revenue standpoint, the later you get in the year, because we take that revenue monthly and report it quarterly, obviously that impacts the year-over-year results because later you are in the year and you don't have the accumulation effort from earlier months. So that's why we're being pretty conservative. But there's no question that there's a lot of demand. Our pipeline is still growing. There is more and more need for supply chain capabilities. And we've always seen it in the past that strong companies will come out of it even stronger by making these investments.
spk01: Understood. That's helpful. And can you talk a little bit more about your strategy when it comes to supply chain professional services? It seems like there's more of a concerted effort for you to shift some more of that project work over to system integrators.
spk05: We are. Actually, we've had a couple of things that are under play there. I mentioned both of those, but yes. We're getting more engagement, more participation from third-party integrators as SI firms. And through our distribution network, our value added resellers, we continue to build their skill sets because they provide some valuable surge assets as well as local presence. So we want both of those parties to play a stronger role going forward. Both have a broader reach than we have independently in the marketplace, and that builds that ecosystem. But we're also seeing the impact now of our three-year-long initiative to continue to improve the efficiency and the timeliness of being able to get systems up. That's come through practice. It's come through development efforts. It's come through just attention to detail on making sure that we work projects diligently in our prescriptive approach. Don't go in and just wait for them to decide what they want. We go in and tell them what's best, and then we debate with them a little bit on maybe the scope of that and the approach to it. But it's just making for much more efficient projects. And that's a good thing. We're not a service company. We're not trying to be an SI firm. We're driving these projects based on client value and return on the investment they've made. And a subscription provider of planning applications is really what we want to be known for, not a services company.
spk09: Understood.
spk01: And final question for me is probably geared towards Vince, but how should we be thinking about the progression of subscription gross margin as the subscription line continues to scale here in the coming fiscal year?
spk04: Yeah, we're anticipating right now it's at 71% if you take the amortization of the cap software. We're anticipating kind of towards the back end of this fiscal year, 24, we should be at we're near 75%. And as we approach the next fiscal year, which towards the back end of fiscal 25, we should be close to 80. So that's what we're targeting.
spk09: Understood. Well, thanks again for taking my questions and best of luck with the remainder of the quarter.
spk08: Thank you. Thank you, Zach. Thank you.
spk06: And once more, that is star and one to ask a question. We'll take our next question from Anja Soberström. Your line is open.
spk07: Hi, and thank you for taking my question. So, I just want to follow up on your commentary about the softness playing out here in the shorter term, which gives you confidence that there's just a short-term softness.
spk05: Yeah, Anja, thank you for joining us. Yes, good question. Definitely, we're going to continue to see some volatility It's not about whether these projects are there. It's really that approval cycle that's out there. We've got active campaigns going well into the cycles. There's a lot of potential for our Q1, a lot of potential for our Q2. And then, of course, we're into the new budget season for the new fiscal year, people spending money at the wrap-up of the calendar year and new money at the kickoff of the new calendar year. So we've got a couple of selling cycles that will help us here. It seems like we get some good news and then all of a sudden we get some troubling news and people take a big deep breath and pause for a moment. So we're doing our best to accelerate those, to not allow those delays, to give them confidence to move forward and seek approvals. But there's limited impact we can have on getting that done. So we're doing the best we can. So we'll see some volatility the remainder of this year. We'll see some ups and downs. Overall, those ups and downs will be mixed in with the trend of growth. We're confident of that.
spk07: Okay, thank you. And in terms of M&A, what can you see there in terms of the environment and valuations, and what are you looking for specifically in terms of acquiring something?
spk05: Yeah, we'll talk about what we're seeking for. So we're going to stick to our knitting. We want applications that are complementary to what we have today in the supply chain planning space. Our strategy on that is driven by the fact that we have an install base that knows us for supply chain planning to the extent that we can provide new and expansive opportunities for those clients we sell back in. We're looking for things that would allow us to send people to do this lift and shift we were talking about. That would be helpful. We find one of those in the mix. We want technology synergies. We want proven capabilities in the marketplace so that we can put them right to work. We don't want to have to go be the test bed for new ideas. We want to find proven opportunities that have some revenue proof points behind them so they've got subscription revenue going. So, we've got a number of things in the works. We're very active in the dialogue. We anticipate that while we're all contemplating our summer breaks here and long before our kids go back to school, if you have them, that we will have tucked in at least one of these potential opportunities that we lie ahead. And we're not going to pause there. We're going to keep going. We intentionally, with the starboard acquisition we did last summer, We put a conscious thought process into using that as a template for acquisitions and ingestion and how we would manage those acquisitions. So that one went so well, and our template worked well, and we learned a little bit from it that we've modified now that we have no reason to pause. Even if we pull in one, as soon as we can find the second one, if it's a month later, two months later, or three months later, we'll pull the trigger on that as well. We know we can do acquisitions in parallel right now, so we're very comfortable for that. So we're a full-court press. Relative to valuations, much better than they were a year ago, much better than they were two years ago. The other thing that's very interesting is, as we all know, the financial markets are pretty tight. So if companies are in growth mode, even though if they're not profitable, in particular if they're not completely profitable right now. There's always synergies for an acquisition. Their ability to go to a bank and get funding right now is closed off. That's not possible. So they're facing some sort of transaction, and we are a comfortable place to go. Our strategy on acquisitions is that we buy the technology, but equally important is we bring the people in. We want them to be part of the long term. We did that with the Starboard acquisition. All of those folks are still here. We did it with all our prior acquisitions. Those folks are predominantly still here, even some of them that were 10 years ago. So we have a home for them. We can let them fulfill their visions, still see their product and their strategy they put together play out. Only we give them comfort, we give them the strength of a very viable company, and we give them momentum and more presence than they have at their current operations. So We're a safe home. When they have to go do a transaction, we're a safe and comfortable home that they can still fulfill their vision. So we believe that gives us a bit of an advantage in this still relatively competitive market out there. So we're finding pretty good stuff. So thank you for giving me a platform for getting a few of those points in, Anja.
spk07: Okay. Thank you.
spk08: That was all for me. Thank you very much. Thank you for joining us.
spk06: Our next question comes from Matthew Galenko. Your line is open.
spk03: Hey, thanks for taking my question. Can you talk about how the pricing environment, in effect, is changing given some of the elongation of the sales cycle? You mentioned, I think, requests for justifying ROI from the deal. How much pushback are you seeing on price? Does that result in you know, more competition or more competitive, you know, bidding on projects? Just what are you seeing?
spk05: Pricing hasn't changed much. It's pretty much the same landscape. I think we've all – this is a mature market. Even though there's new technologies out there, it's a mature market. The value proposition challenge – so, really, no change there. Our average discounts have been unchanged for several years now. And, you know, we always get pressure. As soon as you get to the procurement department, you're the highest bidder and you're the worst bunch of folks that are out there. And we're trying to fleece them, but that's the job of the procurement department. So we get pretty comfortable and have a good chuckle about that every time we hear it. But the pushback, Matthew, good question. The pushback that is coming in isn't so much that the price is too high. And even the teams know they need to go in with a justification, but they don't have a solid backing behind it. They don't have the confidence in the backbone to show why they're going to get the return on investment. And what's the assurance behind getting that return on investment? And is their organization ready to make the investment of people and resources? And can they really pivot? And will the user community adopt it? Those are the kind of pushbacks. the financial folks, the executives that are making the approvals on these projects want the confidence that the return will actually come. And so it's probably more of a debate about the confidence and risk of getting a return than it is about whether there's a number on the table that justifies the funding that they're going to have. Because they know they need to have a multiple of return on investment, but it's that confidence factor. So I've Hopefully that adds a little more insight to the kind of pushback and the challenge. When times get tight, they push on every lever. You know, do we have the people? Is our data ready? Are you sure we're going to get that return? Is our user community going to be able to adopt it? So they're looking for any inkling that, well, maybe I can just keep that money in my pocket instead of putting it out there on the table on this project right now.
spk08: Does that help, Matthew? It does. Thank you. Yeah.
spk06: and wants more to ask a question that is star and one. We'll pause a moment to allow further questions to queue.
spk08: Thank you very much.
spk05: Okay. Well, thank you very much. Thank you, everyone, for joining us this afternoon. We certainly appreciate the time joining us late in the day, and we encourage you to have a good evening, and we'll talk to you again soon.
spk06: This does conclude today's program. Thank you for your participation, and you may disconnect at any time.
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