Coupa Software Incorporated

Q3 2021 Earnings Conference Call


spk_0: the ladies and gentlemen welcome to the cape software third quarter of fiscal year two thousand and twenty one earnings release conference call at this time all participants are in a listen only mode at the conclusion of are prepared remarks were will conduct a question and answer session if you'd like to ask a question you may press star one on your touch ten pad at any time if anyone should require assistance during the conference play as press star zero on your touchstone pad at any time as a reminder this call is being recorded at know like to introduce her host for today's conference call mister stephen horwitz vp of investor relations the to horwitz you may begin or conference thank you
spk_1: good afternoon and welcome to put thought were recorded joining me today or robert young and cardboard remarkably include forward looking statements about and good results of operations market by products composer
spk_2: issue and group
spk_1: or actual results may be materially different world looking statements about restaurants or new and assumption that are described in our most recently filed and you were looking things are based on our beliefs and assumption today and we disclaims any obligation to update any forward looking statements replayed after today the information presented me not contain current or accurate information we have present both gap and on get my hands insulators reconciliation of certain of these measures including today's earnings release which you can find on and better relations website a replay of the score will also be available on aren't as religions website unless otherwise stated growth comparisons are against the same period of the prior year and with that i will now through the call over the world
spk_3: i see them so everyone of thank you for joining a health hazard and had a great thanksgiving adjusted the owners staying safe a it could went to the plea for sure that we're continue to execute against a massive market opportunity were doing so with consistent tenacity and unrestrained passion for delivering what with leaders indisputable values service or passes customers and prospects and look to cooper's comprehensive business them as pop them to ensure that their breeding increased agility resilience of course profitability to that in which aren't really cute retrench despite the persistent pandemic situation which are continued meaningful growth in our failed pipeline we delivered multiple global murky customer wins and go live of corporate and midmarket businesses are scaling and are cumulative spender management is now well over one point two
spk_4: trillion one point one two point one trillion dollars is me
spk_3: all that translates well to our recent financial results specifically looking up to three we delivered a record one hundred and thirty three million in revenue eleventh consecutive quarter of non gaap profitability and thirty percent plus calculated billings great so that let me dive into some deeper highlights from the quarter
spk_5: let's begin with some customer go live
spk_3: now corporate social responsibility is important to the cooper community and we are uniquely positioned help customers in this area without as a backdrop this quarter let me share some go live that highlights humanitarian companies focused on corporate social responsibility and showcase how working together let's go with world vision recently went live with inventory management will vision is responding to the combination of emergency by providing aid and essential supplies to tens of millions of people in the us and abroad using cooper world vision have centralized his inventory model to support disaster relief efforts around the world norbert sue partnership leader for global impact shared we know our full visibility into our three global inventory warehouses and a more efficient ordering process or disaster management team can see what's available across all three locations so they could deliver an order quickly order supplies like pp and how delivered communities and children where it's needed most world vision is doing credible work and my colleagues and i am proud to support them
spk_4: in terms of company size when the world's largest shipping companies responsible for delivering pp and ventilator during the pandemic went live this quarter in record time this is one of the fastest deployments we've ever done for a fortune fifty company
spk_3: and there's a savings impact nasty number three on a global one hundred list of the most sustainable companies also read my one live with cooper in their first ever have the option of as a cheap seventeen percent savings on a related subscriptions and services does well exceeded their ten percent target and the terms of speed new horizons in australia nonprofit that else it's customers achieve greater well being wet live in truly accelerated fashion or the a in cooper jointly we got it done in less than ten weeks
spk_6: of course these are just a few examples
spk_3: well it's charges to supporting diversity and inclusion where we are also make an impact today we have more than thirty unique that uniquely designed configuration settings and our platform to support diversity for customers by management program customers can easily find and engage with minority owned businesses on our platform and leverage the power of community intelligence to make selections that form lasting business relationship you'll recall that the litter own cooper doesn't just represent our open technical architecture it also represents our openness to everyone with inclusion of the guiding light to that end were recently published their microsite on cupid dot com highlighting our own diversity and inclusion principal including how we strive to attract underrepresented minorities how we educate our current workforce on these principles and how we advocate to provide support or diverse communities that would talk about our pipeline generation as was or recent sales or early stage pipeline continues to grow rapidly in no small thanks for developing customer community dell scale their efforts were using larger group virtual events thingies the entire community like our recent smarter together web in our series then we follow up with smaller curated events were card customers from similar industries and geography is sheer best practices and showcase the successes of their poop of the planet the cooper community and the customer advocacy flywheel comes to life at these events when you friends get with existing friends and we become friends the success of our virtual go to market initiative and community events is clearly evidenced by the fact that we saw more user groups training sessions click throughs an email campaigns and downloading of content by customer prospects in cute three that we saw in que one and you to combined what these prospecting customers are finding is that cooper's values as a service platform better position them to be resilient during difficult economic conditions while simultaneously preparing them to be highly agile as things improve
spk_4: now in terms of sales in que three we saw improve conditions in the us and europe as well as an emerging markets
spk_3: before welcome or long list of new customers let me pull out to which i believe showcase our extending our market leadership position
spk_4: the first of these is walmart
spk_3: one of our largest customers using cooper source to pay alongside amazon we are now providing our comprehensive platform the scene cooper
spk_4: two the two largest companies on a fortune one hundred list
spk_3: the second customer new prefer to call out is the united states house of representatives as we continue our pursuit and the federal sector it's it's wins like this that will propel or growth let's now welcome many other organizations vagina kinda community during the quarter including eighty be companies actual nobel casey general stores dhl global elevate textile j f international global logic i capital network
spk_7: immuno vontae over therapeutic
spk_3: pilot freight services safety culture sam's mark to roll united states the and survivability united care queensland university of bristol well built zoom fall and many others are excited that these and many other customers have joined are thriving community not a cold up sales we also saw strong growth in emerging markets in fact business in latin america asia pacific japan the middle east and africa essentially doubled over the last twelve months
spk_5: in terms of business updates let's start with our federal than
spk_3: as i mentioned a moment ago the us house of representatives has recently joined the could become indie adopting the cooper platform as part of the houses initiative to modernize all administrative assistant once they go live cooper will be used by every person in congress and by their staff as well by law we can't disclose which additional federal opportunities are crawl in front of us but we can't confirm there is a robust brought pipeline across several federal agencies during the quarter we also graduated into the next stage of fed ramp which is the federal government standard for cloud based solution we are now said ramp ready moderate which signifies the way past all the vigorous test and are ready for federal sponsor were excited about the inroads were making and federal let's not touch base on community intelligence community intelligence represents perhaps the greatest barrier to entry for business of the longer term a significant interest were seeing from some of the largest financial services institutions in the world are looking to read platform themselves for the digital features let me share what's possible the qb committee told him at our existing customer barclays barclays as want to largest banks in the world serving millions of businesses and individuals globally with a financial disruptions from covered nineteen barclays has played a leadership role in helping businesses and individuals weather the storm we could the community intelligence and real time performance benchmarks against peers barclays had of sourcing kill thomas and barclays procurement transformation lead sonia funeral were able to optimize their electronic invoicing and approval cycle time leveraging community prescriptions the p and cooper barclays targeted suppliers that the cooper community already identified as electronic invoice enable this allowed them to increase electronic invoicing by twenty six percent with can any intelligent sale for optimized a worthwhile to reduce approval cycle times by an amazing seventy three percent this is just one cup for example of the power of community intelligence were seeing in action nother a steady effect of are developing businesses cooper pay during the quarter would continue to strengthen our cooper pay partner ecosystem with the addition of american express now supporting virtual card payments in the united states these and many other partnerships we've launched are helping us build a foundation for good the pay success over the long term in the near term we're proving to be especially important in today's work from home environment where customers need better ways to pay suppliers virtually as the overall offering fans so to the the customer base it took nearly two years to respect one hundred kushner milestone for cooper pay their shared with you in june and now that number has grown to over one hundred and fifty inch of the last two quarters in addition would new customers were seeing a cooper pay attach rate of approximately thirty percent this growth comes despite the headwinds have a difficult market environment and the fact that are most recent offering an invoice payments has only been available for a few quarters terms of invoice payments couch base a leader in know sql databases recently switched to cooper pay from a legacy payments provider
spk_8: while using a legacy solution
spk_4: couch based needed to toggle between multiple systems which created room for error and complicated reconciliation process
spk_3: with cooper pay cut bait now make their invoice payments from the cooper platform in one seamless integrated experience that provides their financial organization with increase visibility into their payments raider data accessibility and a streamlined approval process as many goal director accounting for couch based put it is now one source of truth in addition to the value of having one platform catch rate leverages are ease of use configure ability and flexibility essentially our user centricity or the you and cooper they are now crossing approximately ninety percent of their payments to cooper pay and are planning to take advantage of our cross border payments and virtual credit card said now let's move on to emanate immediately after the end of que three we now star acquisition of law myself in a i power supply chain design and planning software company this acquisition represents our continued expansion of our direct spend capabilities and is very much in line with are declared vision of comprehensively managing all
spk_9: no business spent
spk_3: supply chains are being rewired globally three it's all about agility and the ability to design transact learn and optimized very quickly
spk_4: combining law off data driven platform with cooper's to plus trillion dollars of community powered spend data rates of synergy that can build on itself
spk_3: introducing that amount of new timely and relevant data to what is already considered the supply chain design and planning platform of choice will help customers make to optimize supply chain decisions those smarter decisions will drive additional direct span to our platform which will in turn yield additional valuable data this cycle will our newly integrated supply chain design and planning technology to continually improve and yield greater and greater value
spk_4: for our customers
spk_3: of courses deal is very consistent with our stated emin a strategy of a adding technology components to maximize and enhance the value of are organic transactional poor engine and or augmenting this engine with key events power applications that optimize the value of these transactions
spk_4: as always in making the decision we considered culture first we considered by vs bill and we considered whether it could be integrated into our platform in several product releases
spk_3: i could not be more excited to welcome our colleagues from mom us off to cuba now let's move on to the cooper business spend index or be as i before getting into the cube or outlook i'd like to once again reiterate that the be a data is not necessarily indicative of the trends we're seeing in our own cooper business
spk_4: the of queue for be a sigh indicates that business that sentiment is continue to recover from a sharp drop in que on as companies grow increasingly more comfortable operating in the new normal
spk_3: however despite the positive adjustments made by companies in most major sectors are analysis shows the confidence in the economy is below is likely to remain below trend for least the next three to six months
spk_7: sector data indicates that the health and life sciences industry show the largest quarter of a quarter improvement while financial services retail and hi tech shots a modest improvements spend sentiment for manufacturing though continues to decline
spk_3: for a closer look at our cue for be a sigh where we share more data on each of these trends i invite you to visit spend index dot com now let's talk about our people i'd like to start by recognizing a few of my colleagues that have made outstanding contributions in alignment with our core values let's start with funny or more was recently recognized by peers for exemplifying our number one value of ensuring customer success camille of accessible on top of issues and always aiming to provide better service is always positive and consistently exceed expectations simon devane was recognized for focusing on results he's got a leader and a great team player is well known for his ability to write the new challenges and share a deep knowledge expertise with members of our community and finally michael shanker was recognized for embodying or core value of thriving fretful mike's colleague noted that he as the most genuine approach towards inclusion and collaboration simply put he makes and already strong team ten times stronger congratulations and thank you to for neil simon and mike recently we also made a number of key leadership promotions they let me highlight the promotion of our very own rob glenn executive by vice president of global sales
spk_4: lol robbers responsible for approximately seventy percent of our sales footprint you will officially be taking over one hundred percent of the effort from steve winner on february first twenty twenty one
spk_3: the evil nonetheless be available for cooper during twenty twenty one as he moved into retirement let me say the stephen i have been planning for bugs for motion for number of years as we jointly supported robs professional growth in cuba watch anime take on challenge up the challenge and deliver in tandem i'm extremely grateful to steve but incredible teamwork and camaraderie with shared of the years and i wish him a wonderful retirement so causing we are crawley well into our forty eight quarter of execution we continue to focus on delivering unprecedented value as a service spain for each every one of the customers and are growing community and thus winning the business management market in the process this success is going to bring us together and we are on the road to that success with that let me know hand the call overcharge chief financial officer taught ford law review our que three financial results and provide our i'll look for the third quarter and updated to school twenty twenty one part
spk_10: thanks rob and good afternoon everyone with represents or fourth earnings call during the cold and nineteen pandemic different quite a journey of we've continued to build a great business during these uncertain times and in a remote working environment as we entered covert back in march or poppers without we would face significant had one thing turn three and that thing for generally begin for open up and queue for in this environment to to results were very strong and i'm a man from continued into que three especially given to three the store glee weaker quarter for us the que three result exceeded by and of the range of potential outcomes we analyzed from providing que three guidance the strong reason for driven by fantastic execution i go to market team as we look to queue for it's deja vu all over again right now i feel similar way to i did when we provide a gotten from her lost earnings call were entering the quarter would significantly stronger pipeline than this time last year both on a growth dollar basis and infirm for what we can consider later stage qualified pipeline we are excited about our new business prospects for the quarter and momentum and our business or enthusiasm is tempered by the uncertainty of the coven nineteen situation and the reality that the pandemic is at it's tipping point which makes it difficult to predict the timing of when deals will close as we look to f y twenty two the progress made with vaccines coupled with the resiliency of our business provides a favorable set up going into next year without as the backdrop let's get into some details today i'll cover our shooter results are albert for que for and details regarding the financial impact of alarmists hop acquisition please note since the acquisition closed and queue for lama off results are not included in our cue through result but are included in our cue for guidance let's begin with you three result total for the revenue grew thirty one percent year over year to one hundred and thirty three million dollars subscription revenue for que three was one hundred eighty million dollars also up thirty one percent compared to que three of last year comprising eighty nine percent of total revenue calculator billing for que three were one hundred and forty million dollars or thirty three percent year over year increase compared to the twenty one percent year over year increase we saw and que to for the trailing twelve months calculator buildings were five hundred and fifty three million dollars up from four hundred and sixty million dollars a year ago also representing a thirty three percent increase total deferred revenue at the an a three with two hundred fifty six million dollars up from one hundred ninety three million dollars at the end of two three last year a year over year increase of thirty three percent looking at margins and results of operations are third quarter non gap gross margin for seventy two point five percent above our guidance at seventy to seventy one percent the bow and integration will soon be complete in all material respects so any gross margin drag from ballon should become a material as we enter next year however with respect to lama thought this acquisition closed on the first business they have to for and due to it's size we expect it will create a meaningful drag on gross margins for at least the next two to three quarters which is reflected in our guidance which i'll provide more color on and a few moments as a reminder after completing an acquisition which hypocricy a dragon gross margin for the first silva quarters primarily due to one immediately post acquisition we carry the full board for burden of they acquired businesses cost the don't recognize one hundred percent of the revenues because of the right down have differed revenue in the person's accounting and to the take several quarters to complete the full business integration to the point where we can take advantage of expense related synergies looking at que three operating expenses we continue to assertively investor business in hiring employees the mere amid the pandemic and we also had our first full quarter bell and expenses despite this the scale and leverage in our model once again showed through and are strong operating margin in adjusted free cash will result for the quarter we delivered non gaap operating income a fourteen million dollars or level percent of total revenue as well as non gaap net income a thirteen million dollars or eighteen cents per share on seventy three point eight million deluded shares i'd also like to know that gm expenses and que three included more than two million dollars of consulting services related to the lama soft acquisition that once again closed and que for moving on to cash and cash flows the strength of our business mission critical nature of our platform and claude of our customer base continues to evidence itself in our cashflow result q three operating cash worth were nineteen million dollars and adjusted free cash flows were seventeen million dollars or thirteen percent of total revenue these results included a cash outflow of approximately thirteen million dollars for prepayments we made to our primary hosting provider to optimize long term hosting costs for the trailing twelve months operating cash was were eighty million dollars or sixteen percent of total revenues and adjusted free cash flow of were ninety six million dollars or twenty percent of total revenues as a reminder we define adjusted free cash flows as operating cash flows less purchases are property and equipment plus repayments of convertible senior notes attributable to get discounts cash a quarter and with one point three five billion dollars up from one point three four billion dollars last quarter we paid six million dollars for cash and que three to settle allegations from our first convert or twenty twenty three note now let's turn to guidance with respect to guidance there are several moving parts in a substance for you to consider first as we previously noted due to the ongoing pandemic many customers and prospects continue to operate with caution making it difficult to predict the time in a when deals will close also from i compare perspective recall that you for of last year with our last pre pandemic quarter and we had a record quarter across the board the fourth quarter and for your guidance we're providing today incorporates our current assumptions with respect to the uncertain effects of the challenging macaroni macro economic environment based on information available to us at this time around new business renewals timing of corrections and various other inputs variations from these assumptions may cause or results to differ also or guidance once again assumed know buildings or revenue contribution and queue for from cooper travel saber formerly apta as you may recall and during the year we expect to twenty plus million dollars and buildings in revenue contribution from cooper travel favor but since the pandemic hit hard and mid march we've essentially record nice no revenue from that business since then and finally our guys today includes our current expectations for a full quarter of lama soft in the coming weeks we plan to file the required k a fcc filing related to the acquisition from that you will be able to approximate that lama soft as a standalone company prior to the acquisition ad revenue of just over one hundred million dollars per per year as part of the standard purchase accounting we do in every acquisition while most off acquired deferred revenue will be written down significantly it will take approximately one year for the impact of the circuit to flow through and for us to return to the pre acquisition lama thought revenue runway gross an operating margins will also be effected by be impacted by this as well because for one year we want or one hundred percent of the costs a look at the full benefit of all the revenue without of the backdrop we expect total revenue for the fourth quarter to be one hundred and forty five to one hundred forty six million dollars this includes and a contribution of approximately thirteen million dollars from almost up before providing the breakdown between subscription and professional services and other revenue let me first share some color alarm a fast revenue profile leading up to the acquisition the majority of long as off recent new customer business with for hosted fast arrangements however from a legacy customer perspective while most op did have a five cohort of on pro licence arrangements which are subject to different revenue reckon mix recognition treatment and fast i'm from license revenue is recognized up front at the time of sale including for renewal while fast revenue is recommends radically over the subscription term going forward we plan to sell the hosted staff solution to new customers and to the cooper install base customers when sold as an ad on not be on prem for the long sought to install base customers with on from licenses we can to transition the majority of them to the cloud over the next several quarters from a p m l geography perspective we report on from license revenue in our professional services and other revenue line prior to lama thought we had very little license revenue without as a backdrop we expect you for subscription revenue of one hundred twenty four point five to one hundred twenty five point five million dollars which includes approximately five point five million dollars mama thought we expect professional services and other revenue of approximately twenty point five million dollars including approximately seven point five million dollars from mama thought for calculated billions on a trailing twelve month basis we expect to execute for at a year over year growth rate of approximately twenty seven percent for que for and f y twenty one we expect long for calculated believed contribution of approximately twenty two to twenty four million dollars moving down the income statement we expect a queue for non gaap gross margin of sixty seven sixty eight percent a non gaap operating loss of six to eight million dollars in a non gaap net loss of seven to nine million dollars this result in a non gaap not net loss per share of eleven to say thirteen cents on approximately seventy two million weighted average basic and deluded shares for the quarter or non gaap other income and expense guidance contemplates potential currency fluctuations and tax liabilities as well have lower interest rates on our cash and cash interest expense of one eight and three eight percent on the notes from our second and third convertible that offerings respectively also after continuing to generate meaningful cashflows on strong collections and que three weeks back adjusted free cash was for to for to be breakeven to finally positive for the fiscal year and in january thirty first twenty twenty one weeks expect total revenues of five hundred twenty three to five hundred twenty four million dollars this includes subscription revenue a four hundred fifty to four hundred sixty one million dollars and professional services another avenue of approximately sixty three million dollars we expect a non gaap gross margin for the year of approximately seventy one percent net operating and that income for the air a thirty four to thirty six million dollars resulting in a non gaap net income per share a forty seven chance to forty nine cents on approximately seventy two point five million weighted average deluded sheriff for the quarter we will provide provide apply twenty two guidance on a next call but as you roll your model forward would like to remind you that we recognize revenue based on the number of days in a quarter and since our purity think you want you to february steady state subscription revenues are lower and que en compared to queue for that concludes are prepared remarks as we move to q and a please be mindful that we have a long queue of folks waiting to ask questions in order to accommodate this please limit yourself to one question with that we would be happy to take your questions operator
spk_0: thank you mister ford ladies and gentlemen if you have a christian please pass star ones on your touch turned our hands as a reminder you'll be allowed one question pack color your first question comes from a line of it i guess my went west goldman sachs
spk_11: headaches much for my question was i wanted to ask about lama office is obviously a very significant acquisition at apple financially and strategically and disturbing you to talk a bit about that the integration work has been going so far we might expect to see that fully completed and and also from a shelter spike and how's the feedback been so far on it and and and that as you think the thing about the impact of this acquisition kid your sizes and time thank you
spk_3: sure thanks for the caution so the integration work as well underway as whatever happened recently down to date we look at it from of people process and technology perspective my monitor that very closely and i would expect by the next earnings call will the very very are far along particularly and people on people and processed and will be able to recognize some the key tax tax energies as well as the impact is very or meaningful year in many the conversations i've had personally involved members of my team of had with of joint customers as well as was on both sides and as a clear understanding of the synergy that our we can unlock between what lama soft came to table with and what what the has and we absolutely into space that to be contributor to continued growth in a are pretty of the we've had for virtually i in virtually every quarter of the last forty seven quarters
spk_0: your next question concern line as stands latchkey with morgan stanley
spk_12: perfect on think you a much
spk_13: good afternoon german and i'm like i said there's from corner of made from my and on you mentioned are very impressive number of one hundred fifty to pay customers and i'm thirty percent of the pay tax rate to no new wow those are maybe to dig into that on the attachment a little bit is a thirty percent of
spk_12: that attach on i just logo bases in an anti china on the spend on that's flowing to the system and just your overall an uncle the pay you know at the offices lot of on disruption as happening in this in of well right now we are how are your customers thinking about ah cooper pay and are how we can integrate with your all lama soft you thank you
spk_3: sure sale at all no adequate has ever let me just a target from the way and the what i heard it so yes that is in terms of logos in terms of their a planned tax rate we'll tell you that amongst the customers that have signed on with us their adoption rate is accelerating and he had a step back and look at all the modules we've launched a little been at night last decade plus of of illness company this is our our fastest growing new module what without a doubt and our were taken out with the methodical approach to running transactions to the platform books are adopting the solution they're seeing it as a
spk_4: reason to streamline a whole bunch of process is still ah he often either paper based on phone based and does it require them to be in the office to conduct or requiring them to go a multitude of different systems to kick off batch payment runs as one example to really good continued progress and you know we can be more excited about
spk_14: a standing at the other thing i would add to that is that
spk_10: the the impact you are pricey from cooper pay still well beyond twenty percent up left were to propose included versus those deals where to place not
spk_0: your next question can some the line of alex who can with rbc capital markets
spk_15: a as next thing the question
spk_11: i guess maybe rob for you when you think about your pipeline bill in the current environment and what you're seeing now as as hopefully we're we're coming through the the end of least y twenty or nobody ever the pandemic or we're a point where you know you're you're seeing that the new prioritization spend management decisions you can move up the priority sack and and help us you know can calibrate as we think about growth on the other side of this pandemic particularly with things like okay with your ability to now a it to the direct spend manage direct spend every areas a give us a sense for what your prioritization of growth
spk_15: drivers is as soon as you think about the catalyst for growth for next year
spk_3: sure thanks out like intelligently looking at the left to quarters when we think about the order of taking on digital transformation some the larger company is what we are offering it certainly making which is way higher in the party listed that that death scene in our in our financial that's also seen you know in the conversations i'm having with the iowa's and and cheap digital officers and others of these organizations and one of the wonderful things about the unlock synergy between that will be unlocking ceylon as often and could the is the fact that alarms off was largely selling the cheap supply chain off there's and cheaper digital officers at which is or and as that of an overlap in terms of the constituent that we were touching along the way in terms of queue for look it's it's hard to say when some of the some of the deals land we're going into very tough father's the environment with the winner encoded but i can tell you getting into next year undoubtedly ah the synergy of these two offerings and their priority of managing all of your business spending one place
spk_4: direct design and modeling and simulation as well as overall transactional spend in something companies would be
spk_16: would be
spk_4: short serve that they weren't putting higher and higher on their on a list of areas to attack and a weekend hubble and and the big way
spk_17: your next question comes on the line as city pentagon he with a zoo hell
spk_18: i tire lemieux this is michael bird on for three on going on right on red quarter ah i want her off a heard enough of upon but how are you thinking about recovery of as we got the next year i know you're being a little better part of the queue for about how and how would it that
spk_19: the impact of the give a business
spk_3: i looked at a very hard to a question answer without making predictions that dad that day i probably can't make without knowing how things work out and next four months with with that the the point you just laid out but i can tell you what we're doing is making a stronger and stronger every week every month every quarter or customers the incredible value will offering they're paying us more more on an annual subscription basis the customers the we have are renewing and looking at all more business without us actually pushing sales and our way the actually absorbing a lot of are additional offering is a great deal of value and thinking about supply chains at this moment i'm thinking about optimized ways to run your be us when we get back to it to new normal so we're putting our best foot forward quarter in it and quarter out and that's coming out in what you see in the financials more importantly setting us up for a really really incredible future in terms of unlocking the potential disaster management and a huge total dress will market globally
spk_20: your next question
spk_21: i agree on this is actually nicole in for charities stick our question so i guess in terms of your power absent were you most excited about mcgrath respectable next few years and just a followup how much have you thought out farming vs hunting the logos hundred the adoption of these our us banks show
spk_3: so we are largely hunting and we continue to do so because when we land and an account we deliver value very very quickly to our customers and then they choose of a time to add on more more capabilities as you know we started procurement and procurement did not represent the majority or we off our customers today so at a very
spk_22: exciting
spk_4: development what i'm most excited about is not one individual module bills certain quarters when one module leads draw the quarters of different module leads certain industries when one module leads isn't publicized were different module leads what i'm most excited about is the synergy amongst these modules how we go from all the way from so someone in or organization thinking that they need to request some good or service all the way to the workflow the ordering the receiving the ability to invoice again from the supplier the management of supplier experience all the way through managing the inventory and on hand inventory and reordering times and up
spk_3: aiding the contracts with imply or the managing the money in organization and the expense prophecies all the way back to the ai and algorithms that are being used within lot sought help as design and plan the way we're going to spend money and plan our supply chain so it's unlocking the powerball of these things working together for companies they actually orchestrate in a row the business management and that's something that has never been delivered in our industry and and something they were laser focused on terms of building the people the process or technologies to make that a reality
spk_17: your next question comes from the line of code yeah quito with oppenheimer
spk_11: he does congrats on the quarter and thank you for taking my question i just what a question on lama soccer digging and onto their revenue model little bit he said are they have a healthy portion of legacy license revenue could pick you just let us know what that next of of that hundred billion ah
spk_23: coming in from lama assault and and how to win anything about that transition to staff for those customers is there any sort of have expected revenue up live on the transition to sas brahma legacy thought legacy post maintenance model thank you
spk_14: ecology yeah what money be are a few data points from the the revenue break out in and out even transition
spk_10: in the past six months and then a few comments on professional services as well if you work out last year there last fiscal year
spk_1: approximately forty six percent of the revenue with licenses
spk_10: thirty two percent were subscription and twenty two percent words professional services for to get that last year if you work at the first six months of this your your the licensing has gone down from forty six percent to twenty four percent subscription revenue has gone up from thirty two percent last year to forty five percent and then professional services is roughly thirty thirty one percent and on professional services at your to think i would call up there overtime we do expect it as a percentage to be more in line with our historical norm prior to cuba or they didn't have a thigh a relationship that we do so some of that that will be transition to advise but your the vast majority of that prior to the launch of lama hey i are they would build your ai machine learning models on a customer specific bases and that the product ties that a recurring revenue stream as well so they the preserve amount you feel lot about move into a subscription over the coming quarters that the earth is transitioning actually fairly quickly from on from to subscription south
spk_3: oh add to that i think it's important to get some of the questions have been around synergy that you know whether it's delivered initially on prom and moving to cloud the real value here is first one hundred fifty data scientists that we now have a particular the working on one ip data model with an algorithm library that very very robust and that can love to take their supply chain simulation their that and planning capability their own build your own app environment right and merge that with the transactional mean intelligence we have all the data we have on for a cycle times restocking patterns time to delivery ordering trying to help customers actually predict the way that their supply chain is going to function help them forecasts with a high degree of accuracy what is going to be happening within the way they spend organizational money and that's gonna help i'm in big big ways that will be seen in their financial when should they do restocking when should the renegotiate to drive their margins what it'll landed costs of the any item that they purchase head of the optimize what order quantities have figure out optimal transportation routes and mitigate supply risk and so much more to
spk_4: a value here is really and the data model the i p in the people and a delivery model and apology for that will be mitigated over time will emerge over time into a one hundred percent cloud based on barn
spk_0: your next question can turn the line of my culture and with wells fargo
spk_24: a there thanks thanks a good afternoon they just i and maybe maybe one for todd on just the the margin impacts and and how you think about growth and first profitability from here obviously or layering more capabilities out of the platform and with lama south maybe add a little bigger scale than what we're used to at once once worked through just kind of the near term accounting impacts of
spk_25: so the things that you've called out how we just think about the general resources required is is the extension of something and to supply chain planning how natural is that given us or resources that you have today how natural the sort of a tangential we added selling motion is there there or are there more things you need just to to help add scale and and and that cfl type conversation and to the purview of of what you're working towards here
spk_10: diana saw at a higher level and we look at the opposition from more by several factors and dimensions and one of them is definitely synergies and has kind of went into from a products energy there's there's actually a lot of synergies on the the go to market the engineering and obviously we can drive lot of synergies on the the back office that functions and and we are very far away on that so we're not a lightweight sixty nine months to figure that are we actually do that as part of the in a transaction and your partnership with the the acquire in this case and it's adverse them are you're just a i was even at a much bigger than from the and acquisitions bet you like a balance right couple quarter of margins know returned up to that your family to seventy three percent and in this case it is a is if it or order by negative but the the time in to get there should be any different and two to three quarters and you should see the the leverage in our financial model continue and you're still on the path to the the long term targets that and we highlighted at our lap analysts day so from a a resource perspective and they get a one plus one will spray and and here is where we can drive synergy worth are we moving on us
spk_17: your next question can channel nine as met fan lead with t i d
spk_11: good thanks for taking the question on regulations and i guess i'm thinking about question about overall attach raids and and some of the power ups oh that's earlier but from what about different angle
spk_21: obviously lot of uncertainty in the market ads curious what you're seeing with deal size is maybe total modules per deal
spk_26: just kind of what you're seeing i know stuart leave landed much larger but our customers trying to take on a little bit more of a land and expand in this environment are you still seeing the demand for automation maybe even outpacing my budget so like and of factoring in those different elements there
spk_3: why would say what we saw early on when the pandemic hit it would it was a lack of interest in doing bigger more transformational lives out the gate and to we wound up picking up no more smaller and she point types of deals them we had anticipated but if you look at the last quarter or we've seen really in many ways to reach
spk_4: turn back to thinking about this in a much more abroad or contacts and i think customers as the having real vision luck with us around having all these prophecies working with one in of in one integrated fashion around one data model from one company that that has high me strong references of measurable
spk_3: zest delivered as developed best practices for deploying the solutions with a host of systems integrators a train nearly five thousand people around the world to to to implement cooper to which trying to return back to will we always knew his is the is right vision which is more more these capabilities of bronze transformational type projects and that's evidenced in in i'm in your question around a are for deal that continues to to go on
spk_0: your next question comes from the line as peter levine less evercore isi
spk_11: great thank you for a take my questions and grappling a quarter the could you could dig deeper into the federal business maybe talk about how large for better opportunity as your what are you replacing if anything that anything can be worth calling out in terms of cell cycles got a market proud sharp a big of the great thank you
spk_4: sure are well for blog is the challenge of federals we all know that starting out the cell cycle tend to be quite long and as a whole host of thing like fed ramp and more the you need to do to gain credibility and trust of of about the civilian side as well as our and agencies like the department of defense and others so we have a robot pipeline now
spk_3: built up on both sides of the stuff the house or we also are gaining quite a bit of momentum here with long shot and that a lot of the things that are many visa agencies are struggling with do pertain to the design and planning of their supply chains and i and i highly agile world something data guilty something that the they they surely desire so our what we're replacing very often is either some kind of static
spk_4: solutions that are very very difficult to to turn into it and agile varmint or were walking into a mom with a just don't have you know robots solutions for supply chain simulation for easy to use simple robbed indirect spend the neo procurement and in invoicing
spk_3: ah so across the board we think there's a big big opportunity here and we're just scratching the surface of it
spk_4: dull thankful that without the robust pipeline
spk_3: the been begin to take it to my father
spk_17: yeah next question comes from a line of and you take a spy with the band back
spk_27: thanks for taking my question ah i just had one on cooper pay it's been a few quarters you have that quite a set of customers now using it was just wondering as and give the suit any feedback is the the pricing just how did they feel ah a works for them at this stage and you potentially see and he changes coming is otherwise
spk_7: yeah thanks for watching a we continue to fine tune that was still not in the that the greed of numbers were we can get a place where we
spk_22: we can say what percent we want to be part of they are are vs exactly what percent would be some shared are at risk but i can tell you there is a very strong appetite amongst as cut surveys for all varco but they products from the cards of tour accelerate
spk_3: the invoice management and the up taken adoption is very strong so as we get up to get into higher numbers more more throughput will be a beep be able to fine tune
spk_4: fine tune our pricing but we haven't gotten cute strong push back in any way in fact is real interest in helping us fine tune out amongst our customer community so we're going to continue along that path
spk_17: your next question comes from the line of steve gonna go with s n b c and town
spk_28: a great effect started taking my question on just another one on lama thoughts on can you help us understand like to to what degree is llamas applies to arm
spk_26: change your spend mix between in direct indirect procurement and maybe just digging down a minute they they did a pretty big acquisition maybe you're an alpha god this are analytics can you explain how that fits in the lama soft mix and on you know the data scientist and and that revenue was more posts service that was been product as or maybe just a little bit there i'm on the stop with a great
spk_3: yeah sure that that acquisition brought their whole host of get dragged them am planning and and your exactly right a whole host of data scientists to help folks
spk_4: the companies that lama soft serve get better and better at forecasting a future the literally creating a a digital replica of the physical world inside their platform to help companies understand what's actually happening in their supply chain right to answer is simple questions you know the use of example is a you know when are traveling as much of your bill coca cola their demand for for beverages of the airport these days probably not how can you re route
spk_29: some of your supply chain to account for that had you need the revenue eagles based on your goods availability in general right
spk_3: have you begin to run what if scenarios with high degrees of fidelity how to avoid you're at a stalker a in certain categories and in a very dynamic environment your we have a lot of customers now jointly that are going from international single sourcing they need to get into domestic markets and figure out multi sourcing strategies where they fill up them was time to delivery optimize on hand inventory optimize the way they make their sourcing choices and beyond kill this is very very significant for us and see a point about ah mix of direct and indirect as you know for for probably two nap years we've been taken on one more direct spend two are invoice masry capability to our inventory management capability and so this is a continued
spk_7: evolution in that area but with super powerful again is the ability take real transactional data both direct and indirect and feed that back into the design and planning process to the you cannot only
spk_29: simulate a better version a more precise version in a digital environment but you could be better at prescribing optimized way to set up your spend prophecies and predict and prescribe as we say with the letter pm cooper shoulder the opportunity here is really really exciting i think will be first to market really in the work
spk_3: old and bring in these types of things together for the benefit of your seminal largest companies in the world
spk_17: today
spk_11: your next question comes from the line of ryan mcdonald as need him and tell i think you're taking my question is quick follow up to the earlier federal question key top of a potential there is now given the breadth of the platform and and the growing said ramsgate it's reputation government why deal summer what we saw with concur several years ago and then a llama sox he just talk about the process of higher thinking about providing support for the am premise
spk_3: it's customers i'm and what assumptions you might be making for churn thanks while so i think it's early to talk about a governor wide
spk_30: you know deal we don't have something that and flights at the moment to be to they're very transparent by god the opportunities obviously very very meaningful both on the director supply chain design and planning side as well as on the the in the indirect transactional sides of the up to as is definitely there and as we gain more more of these
spk_4: supporting
spk_10: so the stamps of approval like that ramp and beyond with that that up to the auto auto growth wanna grow mean for yeah and then on the that the lama thought you know with the respect on prom in the cloud your as you can see in the last six months the the transition to the cloud has then pretty rapid much faster than you would see another historical companies i think that this because of the the value of brains in the way that it's deployed and once again be an abstraction layer bit of an e r p have similar to our strategy from day one and i think if you wrapped around your number one core value of ensuring customer success rate we're going to make these people successful and you know while we may take a conservative mindset towards renewal right in our our goal is to keep one hundred percent of them and and certainly you have a higher reno rate then perhaps maybe well with a historical run rate so yeah what will obviously get more details on that in history of time goes by but and they were positioned with the strength of group and offer the strength of of lama often enough with a very strong company with deep leadership across the board and gum
spk_0: i know i'm very confident that though we're going to create great results are
spk_31: your next question comes from the line of brad cells with the away securities oh great hey guys thanks so much for take my question up another question that cooper pay
spk_25: in a nice result they're on the other that as their that the new ads there
spk_32: you mentioned the amex partnership or v card he talked about a customer running cross border i'd others the accelerate option in there as well can you talk about some of these adult services to the base offering what's the interest of have been there in our customers running the base offering in order to get the some of these other transaction services
spk_3: or these kind of further down the line
spk_5: if any the color on on the attach right there and it and maybe volume the be very of i nose very early thank you sure we've seen both really interesting we we've seen both types of vibe from stations we've seen some cases where out the a large portion of our customer base users are no requisitioning capability are purchase order capability receiving and voice
spk_29: thing it's only natural for them to go further downstream and our handling payments but we've also seen ago go the other way around where they see the value of all the upstream capabilities everything from from from sourcing and contract management but the actually begin with with pay in their deployment because they see the greatest opportunity for
spk_3: ah automation streamlining are less errors job in that area and then they go upstream from there so it's always been our vision to have a set of capability that operates very much like a a swiss army knife where you can begin with the tool that is most relevant to your company at the current time and then begin to utilize all the other capabilities
spk_4: as needed and that maturity model
spk_17: i continued to express itself and we see that obviously in in in the mix of products or companies at our customers i continue to our topic
spk_33: last question concerning the line of joseph fatty fatty with canaccord
spk_34: the guys hey guys good afternoon thanks for squeezing men just stop in the really interested to hear you know if we can rewind the clock couple years ago the i'll i value pop that you are talking about the just enough your know if you're a new perspective cooper customer and
spk_28: yep couple years ago you were focused on ah support supplier network that was providing discounts and workflow benefits and now you look at the of totality of the solution
spk_3: from pay to lama soft serve to balance to all these other add ons is there a way that cannot think about how that our ally has changed and i know it's a little bit more subjective then perhaps it used to be better be interesting thank you
spk_35: the question whether wonderful thing that i had grown with every acquisition and with integrated into a black olives was what we done organically aged look at lama chopped is one example maybe and realizing for customers you know cantor a caption feeding the in areas from outsourcing hemp production improve
spk_29: instead of transportation trump transportation optimization better inventory management better handling management to all these capabilities all come back down to real measurable value real dollars and cents they could see on in income on income statement at the same time they have huge strategic value right they provide
spk_3: greater visibility to business spending with an organization that mitigate supply a risk for the supplier network that the reference to moment ago and they and they bring companies into digital world where the theme of we manage all their business spending in one integrated digital platform and that's always been division for coop and why
spk_0: we've been x getting on now for well over ten years
spk_1: thank you ladies and gentlemen i liked it on the comeback ever team mr stephen horwitz for any closing comments thank everyone for joining us and apologies to the number of question are still in the queue
spk_0: will look for just talking to you again nine in march for argue for to begin

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