Intapp, Inc.

Hello, and welcome to NTAP fiscal fourth quarter and year-end 2023 financial results conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during this session, you will need to press star 11 on your telephone, and you will hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I would now like to hand the conference over to David Trone. Sir, you may begin.

Thank you. Welcome to NTAP's fiscal fourth quarter and year-end 2023 financial results. On the call with me today are John Hall, Chairman and CEO of NTAP, and David Morton, CFO. During the course of this conference call, we may make forward-looking statements regarding trends, strategies, and the anticipated performance of our business, including guidance provided for our fiscal first quarter and full year 2024. These forward-looking statements are based on management's current views and expectations, entail certain assumptions made as of today's date, and are subject to various risks and uncertainties, including those described in our SEC filings and other publicly available documents that are difficult to predict and could cause actual results to differ materially from those expressed or implied by such forward-looking statements. NTAP disclaims any obligation to update or revise any forward-looking statements except as required by law. Further on today's call, we will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results. A reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and as an exhibit to the Form 8K furnished with the SEC prior to this call. With that, I'll hand the conversation over to John.

Thank you, David. Good afternoon, everyone. Thank you for joining us. We're pleased to be here with you to share the results of our fiscal fourth quarter and full year fiscal 2023. I'm happy to say that we had another strong year with great results across the business, including cloud ARR growth of 36% year over year. We added new clients through existing accounts, expanded our larger enterprise clients, and expanded our geographic footprint. We also released new applied AI capabilities to our platform, enhanced our product portfolio through organic development and strategic acquisition, and delivered our first profitable year. As I've shared before, Intap serves the overlooked and technologically underserved professional and financial services industry, which we believe has a software TAM of approximately $24 billion. Our target industry includes the world's private capital, investment banking, legal, accounting, and consulting firms, we deliver applied AI in a purpose-built industry cloud platform that is highly differentiated from traditional CRM and ERP systems. Our industry cloud platform is purpose-built specifically for this industry. Our platform provides a unique data architecture that matches the partnership model and operations of these firms. and correctly enables each professional's highly specialized market knowledge and expertise. And it provides specialized compliance capabilities that match the complex requirements of this highly regulated industry. Intap solutions help clients increase revenues and returns, to operate more efficiently and profitably, to manage risk and compliance more effectively, and to leverage their collective knowledge for competitive advantage. Looking at our results for Q4 and for fiscal year 23, it's clear that our value proposition is resonating and the demand for our solutions remains steady. As I noted earlier, in Q4, our cloud ARR grew 36% year over year to $222 million. Cloud now represents 67% of our total ARR of $330 million. In the quarter, we earned SaaS and support revenue of $68 million, up 29% year-over-year, and total revenue of $95 million, up 25% year-over-year. Additionally, we now have 53 accounts with ARR of more than $1 million, a year-over-year increase of 29%. and delivering on complex global requirements, as well as consistently adding mid-sized firms across the market. This gives us confidence in our cloud platform and applied AI strategy to meet the needs of both the broad market and the highest levels of our market. And fiscal year 23 was our first profitable year, in which we maintained strong revenue growth. We're entering fiscal year 24 with optimism and momentum. Before I run through key highlights from fiscal year 23, I'd like to take a moment to thank and recognize INTAP's outgoing CFO, Steve Robertson, and to welcome David Morton, who joined us as CFO in August. Many of you have had the pleasure of meeting Steve, whom I've been fortunate to work with for the past eight years. I'm grateful for his essential leadership in preparing to bring INTAP public and introducing us to the public markets. Steve is graciously staying on for a time in an advisory position to ensure a seamless transition. He is working closely with David, who joins us most recently from his role as CFO of DigiCert. and who brings to Intap a long track record of leading companies through periods of growth, as well as significant strategic capital markets and operational experience. I hope you'll join me in congratulating Steve on his well-deserved retirement and in welcoming Dave to his first Intap earnings call. Thank you very much, Steve. And we're excited to have you, Dave. Welcome aboard. Okay. Now I'll share a few highlights from Intep's fiscal year 2023. I'll start with innovation, which continued to fuel our growth this year. As I previously shared, Intep's industry cloud is designed specifically for the unique operating and compliance needs of professional and financial services firms. Our cloud solutions were built for the way these firms operate. Their business model focuses on leveraging the partnership's collective specialized knowledge, expertise, experience, and relationships to win business and deliver value for their clients and investors. As well, our industry cloud features a robust set of applied AI capabilities that meet the specific needs and unique challenges of our client firms. Advances in generative AI have received a fair share of attention over the past year, but it's important to note that Intap's applied AI strategy predates the current buzz. with a series of applied AI technologies like automated time capture, AI-assisted conflicts checking, and self-maintaining contacts going back as far as a decade and in wide use across our client base today. In fiscal year 23, we continued to advance our applied AI portfolio, releasing new capabilities to consistently grow our value for our clients. We continue to enhance our relationship intelligence capabilities within the deal cloud solution throughout the year. We released our new relationship paths capability, which leverages applied AI to help professionals identify the optimal referral pathways to high value contacts across the firm's network, as well as through third party executive and board data provided by our partners. The new capability enables higher quality outreach that helps their clients to drive growth and greater success in winning new business. Already, more than 250 firms are transforming how they engage with their clients and develop new business using our applied AI relationship intelligence tools. As just one example, a leading law firm said it helps them to resurrect business with a former client. Our list of adopters includes some of our largest clients who see significant value in unlocking the full business potential of their organization's professional network using Intep's Applied AI. In Q3, we augmented our Applied AI email signature parsing engine, which leverages large language models to automatically populate and maintain key contact data to work across multiple languages. This new applied AI capability helps us to meet the growing needs of our international clients, extending our global opportunity. One of our largest law firm clients with thousands of partners is now using this feature across their global firm in eight languages. In Q4, we also enhanced the compliance features in our applied AI relationship intelligence system to further protect clients working on sensitive engagements with high confidentiality requirements the feature will give clients the ability to fully leverage their strongest relationships maintain contact data and promote alignment with their partners work all while complying with complex information governance regulations additionally We expanded Applied AI within our risk and compliance solution this year. We released a new vendor terms feature which eliminates manual effort and improves data quality versus manually entering and tracking vendor agreements via spreadsheet. This is a great example of Applied AI not only eliminating manual tasks, but also adding value in the form of proactive risk mitigation and enhanced client experience. An NLAW 200 client using vendor terms told us they have seen a 30% improvement in the efficiency of their vendor process, saving the firm time and money while lowering risk. And in Q4, we expanded our compliance applied AI to identify potential conflicts earlier in the business development cycle at the opportunity level. Our new early stage alerts help accelerate conflicts decision making and allow firms to focus resources on the right deals. Turning to our partner ecosystem, I'm pleased to share that our partnership with Microsoft continues to evolve and grow. During fiscal year 23, we released new products and capabilities that increase the value our clients derive from the Microsoft tools that their professionals rely on every day. For instance, Intap collaboration and content solutions now enable firms to securely share documents with their clients via Microsoft Teams while meeting stringent compliance requirements. Additionally, our DealCloud solution now features new capabilities using both Microsoft's Azure OpenAI GPT-LLM and embedded document management and collaboration, which seamlessly integrates Microsoft 365 capabilities into DealMaker's primary deal and client management workflow. And further, our operations and finance solution can now automatically capture usage of teams to help timekeepers pre-populate their timesheets, which advances our zero entry strategy and incorporates Microsoft 365 productivity tools directly into firm specialized operational workflows. This year, Intap was officially recognized as a top-tier partner of Microsoft, which fewer than 1% of partners ever achieve. Additionally, in March, our two organizations co-hosted an interactive two-day summit at Microsoft headquarters in Redmond that drew CIOs from the world's top law firms. Last quarter, Intap completed deployment of all of our solutions to Azure as part of our Microsoft partnership strategy, And in Q4, Intap Solutions became available to clients on the Microsoft Azure Marketplace. This new milestone enables professional and financial services firms to more easily discover, purchase, and deploy Intap Solutions. As one example, in Q4, PSP Investments, one of Canada's largest pension investors, selected DealCloud over a large horizontal CRM competitor to manage deals across their global investment teams. PSP also purchased our content and collaboration solution to extend integration, increase productivity, and better leverage its Microsoft investment. This deal is a great example of the way our Microsoft partnership adds outsized value for our clients. Intap solutions available via the Azure Marketplace simplify the purchasing process, and allow PSP to utilize some of their pre-committed spend as part of their existing Microsoft Azure agreement to acquire Intaps technology. We also expanded our partner ecosystem further during the year, including several new third-party data sources. In the professional financial services industry, access to embedded market data, coupled with a client's own experiential data, is key. to generating the best possible information for investment and client selection and growth. In fiscal year 23, we integrated more relationship mapping data with new partners like Equilar and Bordex. We brought in critical property-level data for our corporate real estate clients with Cherry, and we expanded DealCloud's ability to support portfolio monitoring with Untap. I'll turn now to key deals and software implementations. We've continued to steadily grow our client base through cross-sell, up-sell, and the acquisition of new logos, including large enterprise clients. We ended our fiscal year serving more than 2,300 premier firms across our target verticals, with our strongest growth at the $100,000 and $1 million levels. Here are a few new logos that we added this year. In Q4, a large accounting firm based in Canada chose our risk and compliance solution to better manage firm-wide risk and improve internal workflows. We'll be replacing a legacy homegrown system as the needs of the firm grow. They wanted a cloud-based solution that leverages applied AI to better serve their partnerships. Additionally, we had a notable win in Q4 that combines a new logo and an upsell in one deal. Nexen Pruitt, a multi-specialty law firm and longtime Intep client, recently merged with U.S.-based firm Maynard, Cooper, and Gale. Leadership of the newly dubbed Maynard-Nexen saw the tremendous value and efficiencies that our solutions provided and chose to expand the use of Intep solutions across the merged firm. significantly increasing the number of licensed users. Mergers across professional services continue to be a driver of growth, given our ability to scale as a platform for our clients and help them consolidate their IT strategy. And to provide a few updates on some deals that we discussed in fiscal year 23. A top asset management arm of one of the largest investment banks replaced its horizontal CRM with DealCloud, Recently, they told us that our purpose-built solution is helping drive adoption far beyond what they ever achieved with their legacy CRM. A top global management consulting firm executed a multi-year contract for our risk and compliance solution. We delivered it in less than six months, showcasing our ability to apply best practices across our target markets. in this case, in consulting. In practice, a fully virtual law firm selected our conflict solutions delivered via the Microsoft Azure Cloud. This client now represents a new generation of professional firms, relying on a digital platform to run and grow the firm. And our cross-selling and up-selling success in our existing accounts continue to drive strong net revenue retention. For instance, This year, a large global financial advisory and asset management firm expanded its DealCloud licenses to their entire financial advisory group, which numbers in the thousands of users. The software was fully implemented, and new users were live in 90 days. This is a great example of how delivering client success on our initial sales can lead to large expansion across departments and use cases. One of the world's largest accounting firms and a current Intab client selected DealCloud for their corporate development team to foster more effective M&A. Delivering success here sets us up for future growth and new use cases across the firm. And an AMLAW top 25 ranked law firm chose to migrate their existing Intap operations and finance solution to the cloud and to purchase our risk and compliance solution and our new bill stream offering. This is a great example of the opportunity we have to expand our footprint as we migrate our existing clients to the cloud. Touching briefly on M&A, during fiscal year 23, we continued to add important technology capabilities to our cloud portfolio through acquisition. In Q4, Intap acquired Paragon Data Labs. Paragon's cloud-based software helps firms to track and monitor employee compliance. Elements like personal trading and political donations are centrally managed, so personal conflicts of interest or policy violations can be spotted and addressed. The product now marketed as Intep Employee Compliance enhances our existing risk and compliance solutions, which are all purpose-built for the unique regulatory compliance needs of our client firms. Already, the investment has proven to help differentiate us with further enhanced compliance capabilities for the regulated markets we serve. Interest in employee compliance is strong. and is bolstered by the evolving nature of the regulatory environment, including the PCAOB's recent proposal to strengthen auditor requirements to identify and remediate noncompliance. Recent wins include a global investment bank that will use the solution to automate previously manual workflows, and a large national accounting and advisory firm that will replace a homegrown solution with ours. to ensure compliance with independence requirements. This year, we also integrated capabilities from our fiscal year 22 build stream acquisition to enhance our Intap operations and finance solution. The broader solution integrates compliance across time entry and pre-billing processes in a way that accelerates the work to collect cycle, improving realization rates, and driving profitability. These are compelling, hard ROI benefits for any firm. We are pleased with the cross-selling we have seen as we grow the value provided to our client base. In conclusion, we're proud of our strong performance in fiscal year 23, and we're excited about our continued growth opportunity in fiscal year 24. We are serving a durable end market with our deeply differentiated industry cloud platform with an applied AI and compliance strategy. Our subscription revenue model is highly predictable, and we see continued opportunity both to add new clients across a broad TAM and to deliver greater value to expand significantly within our existing client base. we have a great growth opportunity to drive cloud and AI adoption and modernization across all these industries. As always, I'd like to thank our clients, our partners, our investors, our board, and our global Intap team, whose teamwork and dedication led to such a successful second year as a public company. Thank you all very much. Okay, now I'll turn things over to our CFO, David Morton. Dave?

Thanks, John, and thanks everyone for joining us today. Before I get started, I want to express my appreciation to John as well as the NTAP board and management team on providing me an opportunity to join this great company. NTAP has demonstrated strong, resilient growth performance against a tough macro backdrop, and I'm a firm believer in our growth momentum with our target industry markets. I'm looking forward to working with our team to execute against our untapped growth opportunities and continue to deliver strong profitable growth as the company scales. As a reminder, all of our financial figures we will discuss today are non-GAAP, except for revenue and revenue growth. Our GAAP financial results, along with reconciliations of GAAP to non-GAAP financial measures, are provided in our earnings release and its supplemental financial tables. Turning to our results, I'm pleased to report that for the fourth quarter of our fiscal year, cloud ARR was up 36% year-over-year, and total ARR was up 22% year-over-year. Staffs and support revenue was $67.8 million, up 29% year-over-year, reflecting both new sales to new clients and upsells and cross-sells to existing clients of Intab's purpose-built cloud solutions. Subscription license revenue was $12.2 million, down 9% year-over-year, as expected, due to a reduction of multi-year renewals as we continue to move more of our clients to the cloud. Professional services revenue was $14.6 million, up 55% year-over-year, reflecting an accumulation of large clients throughout the year and completion of implementation projects for those large clients, coupled with a continued strong attach rate. Total revenue was $94.6 million, up 25% year-over-year, driven primarily by sales of our cloud solutions, as well as by strong growth in professional services revenue, partially offset by an anticipated decline in license revenue. Q4 total non-GAAP gross margin was 69.9%, as compared to 68.2% in the prior year period, reflecting improved professional services gross margins and a previously mentioned reclassification due to an organizational realignment. This was partially offset by revenue mix impacts related to license and professional services revenue. Non-GAAP operating expenses were $63.2 million, a $7.9 million increase year-over-year, as we continue to invest in sales, marketing, and product development to support our growth. Non-GAAP sales and marketing expense was $28.6 million, a $4 million increase year-over-year, as a function of increased headcount and related sales commissions to capture new business and our growing markets, along with a previously mentioned organizational realignment. Non-GAAP R&D expense was $21.7 million, a $5.5 million increase year-over-year as we increased headcount and made investments in our product roadmap. Non-GAAP G&A expense was $12.9 million, a $1.6 million decrease year-over-year as we harvest some back-office cost reductions and continue to see some leverage and scalability in the business. Non-GAAP operating profit was $3 million as compared to our fourth quarter fiscal 2022 non-GAAP operating loss of $3.9 million. Non-GAAP net income for fully diluted share was $0.04 in the fourth quarter of fiscal 2023 as compared to a loss of $0.04 in the fourth quarter of fiscal 2022. Moving to our full year results for fiscal 2023, Cloud ARR grew 36% year-over-year to $222.3 million. At June 30, 2023, Cloud ARR represented 67% of our total ARR, up from 60% a year ago, reflecting our cloud-first business focus and the market's ongoing shift to the cloud. Total ARR grew 22% year-over-year to $330.2 million. Overall, we continue to execute our land and expand model, ending the quarter with more than 2,300 clients, 603 of which had ARR of at least $100,000, up from 506 in the prior year period. Our trailing 12 months net revenue retention rate was within our expected range of 113% to 117%. At the end of fiscal year 23, we have 53 clients of more than $1 million in ARR, up 29% from 41 clients at the end of fiscal 2022. SaaS and support revenue increased 31% year-over-year to $252.3 million, reflecting continued strength in the sale and adoption of our cloud solutions. Subscription license revenue increased 11% year-over-year to $49 million, reflecting a significant number of multi-year contract renewals and product value-based renewal price increases. Professional services revenue increased 42% year-over-year to $49.6 million, in part due to strong attach rates for a number of large new clients that we closed during this year, particularly in financial services. Total revenue increased 29% year-over-year to $350.9 million. Non-GAAP gross margin was 71.1%, up from 68.1% in the prior year, as a result of increased services gross margins and the previously mentioned organizational realignment. Overall, non-GAAP operating expense was $238.9 million, a $46.6 million increase year-over-year as we invested in a variety of resources in support of the growth of the business. As a result, non-GAAP operating profit was $10.5 million as compared to operating loss of $7.1 million in the prior fiscal year. which also represents our first full year of profitability. Non-GAAP net income per share was 11 cents in fiscal 23, as compared to a net loss per share of 12 cents in fiscal 22. In terms of the balance sheet, we ended the quarter with $130.4 million in cash and cash equivalents, including the proceeds from our follow-on common stock offering in May of 2023. Our cash flow from operations was $27.5 million for the fiscal 23 as a result of growing profitability at scale. Now turning to our outlook. For the first quarter of fiscal 24, we expect SAS and support revenue of between $70 and $71 million, and total revenue in the range of $96 to $97 million. non-GAAP operating profit in the range of $2.5 to $3.5 million, and non-GAAP per share results of approximately $0.03 using a fully diluted share count weighted for the quarter of approximately 82 million common shares outstanding. For the full year fiscal 24, we expect SAS and support revenue of between $306 and $310 million, and total revenue in the range of $419 to $423 million. We also expect non-GAAP operating profit to be in the range of 20 to 24 million. And non-GAAP net income per share in the range of 20 cents to 24 cents, using a fully diluted share count weighted for the fiscal year 24 of approximately 83 million common shares outstanding. Thank you, and with that, John and I look forward to taking your questions. Operator, please go ahead.

Thank you. Ladies and gentlemen, as a reminder to ask the question, please press star 11 on your telephone and then wait to hear your name announced. To withdraw your question, please press star 11 again. We ask that you limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question comes from the line of Alex Schuyler with Raymond James. Your line is open.

Great, thank you. John, starting with you, I just wanted to follow up on that AMLA 25, that cloud conversion and cross-sell when you talked about in the quarter. Can you just talk about why the migration to the cloud drove the risk and compliance and then bill stream cross-sells? And with that, do expansion stories like that at all change your view on accelerating that customer shift to the cloud?

Thanks, Alex. So, migration to the cloud was one piece of the firm's objectives and for most of the firms as we've talked about on some earlier calls we have a agreement and a plan to go to the cloud with them it's more of a practical transition that they've got to work through how are they going to do that in what sequence today so we're past the point i think in the market where the firms are really struggling with the cloud transition it's more practical issues in this case Billstream was an exciting new offering that we could come back and talk to the firm about that helped create hard ROI benefits. And then they used that as a driving function to do the whole project, to move everything to the cloud. So it's just an example of us bringing out some innovative new offerings, in this case through an M&A transaction that we did, that provides the prompting for the firm to prioritize the project. And I think generally, as we continue to bring out more and more innovation, particularly AI in the cloud, which is the only way they can get it from us, we're seeing more of that. And I do think it's having an effect, and you're seeing some of the progress on the cloud numbers.

Okay, great color there. Dave, one for you, just in terms of the right framework to think about ARR growth, kind of relative to that 20% revenue guide. And in that 113 to 117 NRR range, that you delivered in FY23. Is that still the right framework for 2024? Thank you. Thanks, Alex.

We don't specifically go NNRR per se, quarter by quarter, but that is the correct framework that we're working under. And as John had articulated and where a lot of our prepared remarks is that continuing expansion motion that we continue to work through. And our model continues to be very beneficial commentary as well as our results that we posted for the quarter end of the year.

Okay. Thank you both.

Thank you. Please stand by for our next question. Our next question comes from Kevin McVey with Credit Suisse. Your line is open.

Great. Thanks so much. And let me add my congratulations to Steve and welcome Dave as well. Hey, unpacking the 24 guidance a little bit, it seems like there's just really, really nice leverage on the EBIT line, operating line, you know, given the revenue growth. Is that all just kind of the revenue or are you starting to see maybe some of the benefits of, you know, some of the legacy costs starting to run off and just, again, just a really, really neat Nice outcome from a leverage perspective. We can unpack that a little bit.

Yeah, Kevin, thank you. It's John. We're excited about the progress that the company is making. As you know, we came public not showing a non-GAAP operating profit, and this year we did. So we felt like that was an important milestone for us to achieve in 23. And we've also said that we've got a profitable growth strategy generally. So we're going to be consistently pursuing that as we grow the business. And some of it is scalability. And Dave can talk to you a little bit more about that. I think some of it is some important work that Dave's group is doing on different operational improvements that we can make now that we have achieved some more scale to improve efficiency further. So it's a combination, I think. Revenue growth, good progress in the marketplace, consistent demand, real transformation opportunity to grow a big company up here and the scaling that comes from that. And then some conscious work internally is now that we're bigger to get some efficiencies inside the operation.

Great. And then just, you know, you've got a fair amount of cash on the balance sheet, particularly given some of the recent proceeds. Any thoughts as to use is that, you know, continued M&A or Maybe some additional investments, just any thoughts on the cash because it's a nice part to the story as well.

Thank you. We don't have any immediate uses per se. Obviously, we're just trying to be really, really good stewards of shareholder capital, be very smart about future investments, making sure we're seeing the right return. And as John had articulated, you know, this comes from a very agile, but yet bootstrap company from its infancy. And so the investment and growth narrative is really rooted here from top to bottom.

Terrific. Congrats again on just a really, really nice outcome.

Thank you. Please stand by for our next question. Our next question comes from the line of Koji Akita with Bank of America. Your line is open.

Hey, John. Congrats, Steve. I know you're probably listening out there. And welcome, David. Thanks for taking the questions. Just a couple from me. Wanted to ask on the billings in the fourth quarter. I did notice there was a bit of a deceleration in the fourth quarter. Really trying to triangulate that. Billings exit growth rate with the fiscal 24 revenue guide starting point, but also realizing, too, that when you look at Billings from maybe a second half perspective, you know, the growth does look fairly similar from a second half last year perspective, but really trying to figure out if there's anything specific to call out in the Billings exit growth rate or any sort of mechanics in this fourth quarter Billings or something.

No, there was nothing abnormal about it. I would say it was in line and fairly consistent across the year. Obviously, you'll have various points of time of the actual transactional nature of when both billing shows up and how some of the deferreds work DR to DR. But as far as year-over-year comps, I think everything was pretty straightforward.

Got it. Thanks, David. And maybe a follow-up for you, realizing, or just maybe you could comment on if there's going to be any change or any things that we should be thinking about in the way you're approaching the guidance methodology versus the prior guidance methodology.

Thank you. No, not whatsoever. I think this organization by design is very prudent, and I'll continue to carry that flag as we move forward. So looking for no immediate changes here.

Thank you. Please stand by for our next question. Our next question comes from the line of Terry Tillman with Truist Securities. Your line is open.

Great. Good evening, guys. This is Connor Passarello on for Terry. Appreciate you taking the questions. I just wanted to start with one. I believe in the past we talked about the $1 billion revenue opportunity by just simply selling the entire product set to existing customers. I'm just curious, as we move into the new fiscal year, how we should continue to think about GTM or growth investment as we kind of focus on accelerating the share of wallets inside your extolled base for selling additional products. And then I have a follow up for Dave.

Thanks, Connor. One of the things that we think is really exciting about our growth opportunity is that we have over the years landed a position in so many of the very largest professional financial services firms. So the hard work of winning the relationship has happened. And now we have the opportunity to expand within them. And you're right, we've talked about the fact that just in the top 100 clients that we already have today, if they bought everything that we make, it's a billion dollars of ARR. So there's a whole growth story just from cross sell and upsell within the client relationships that we have. What you are seeing, and you can see a little bit of this in the million dollar plus clients that we gave the number for and the $100,000 clients that we gave the number for. There's some good upsell and cross-sell happening in those accounts. And some of those upsells and cross-sells, because the firms are so vast, are quite large in and of themselves. So I think the emphasis, your question about go-to-market, I think we are looking carefully at strategic accounts and and putting together in fiscal 24 a little bit of a larger group to make sure that we're focused on capitalizing on the opportunity to go win and cross sell inside these large firms. So it's a good instinct. That's definitely part of our growth strategy.

Got it. That's great to hear. Maybe just a follow-up, Dave. Welcome aboard. You came from the outside. Just curious. what you think might be the most underappreciated about the company at this point by investors? And then going forward, maybe what's your thoughts on the balance of top line growth and profit expansion? Or maybe just said another way, should we continue to or should we expect steady margin expansion over time? Thank you.

So a couple things. And I could probably go on for the rest of this call just as to, you know, the untapped potential here at Intap. But when I think about you know, not only the product set, not only the end resilient clients that we're selling into, not only as we're at a very infancy of this nature, as well as if you think about how some of these larger expand opportunities can continue. And even if you look at that million dollar and above cohort, and then those, you know, shortly behind that, that we're looking to expand, it provides a lot of strong opportunities. opportunity heading into not only 24, but beyond. As I think about the model itself, you know, there could be some leverage going forward. And obviously, we want to continue to be very, very prudent about our investments and making sure we're seeing the right return, you know, notwithstanding the backdrop. And so we're very cautious about that. But then, you know, we also get excited about the opportunity as we think about going to go forward plans.

Great. Thank you.

Thank you. Will you stand by for our next question? Our next question comes from the line of Parker Lane with Stiefel. Your line is open.

This is Matthew Kicker for Parker. Thanks for taking my questions. And let me first say congrats to Steve and welcome David to the team. I'm wondering, now that a meaningful share of your ARR is coming from cloud solutions, how are you thinking about the pricing on those cloud solutions versus on-prem? Do you anticipate some of those price actions might play a meaningful role in the growth story over the next few years?

Thanks, Matthew. I think this is a topic that we've discussed with you all, and there's definitely opportunity there. One of the things that we're finding is that the applied AI innovations that we're bringing out are very well received and have strong value with them. And so one of the things we're excited about as we bring more and more together, and we talked a little about some of the Microsoft connections that we had come live this past quarter or two quarters, is that we do have a real opportunity as we move people to the cloud, not just to move them there, but to help them achieve higher value from what we're delivering. And a lot of that is in the applied AI technologies that are embedded in the platform and more and more come out each quarter. So I think we haven't officially announced anything, but our experience has been that people do appreciate the value that we're bringing to them. And we're going to continue to focus on that.

Okay, got it. And then you mentioned the acquisition of Paragon Data Labs in your intro. I wonder if you could give an update on specifically the integration process of that company. Is it a part of your go-to-market strategy right now? And then secondly, how widely adopted do you think that your employee compliance tools will be over time? Is it every customer could potentially buy those solutions or just a subset?

Yeah, we're very excited about the progress that we've made with the Paragon Data Labs acquisition. It was just a few months ago that we did that and the team that come over. It's just a fantastic group of people that really have mastered this subject matter and the issues of employee compliance across all the types of firms that we sell to. And yes, it absolutely is part of our go-to-market today. And we've had very encouraging progress already in wins with that product, even in areas that weren't necessarily part of our original business plan. For example, we're making great progress in the accounting industry. And this is before this PCAOB policy actually becomes real. It's just a proposal right now, but a lot of the interest that we're getting to your question is from the entire community of firms that we sell to. Some of them have a little bit of a different regulatory requirement today. Some of them are looking more from a risk management perspective, but all of them increasingly realize this is a key category for them. So this general area of compliance for this highly regulated set of industries is something that I think is a cornerstone of our whole strategy. And the more that we experience in the marketplace, the more we realize this is a fundamental differentiator for us that we've been doing for a long, long time. And then the employee compliance offering today is an expansion of that and enhancement of that gives us a little bit richer story to tell and something that has a lot of strength for the business.

Terrific. Thank you very much.

Thank you.

please stand by for our next question our next question comes from the line of brian schwartz with oppenheimer your line is open yeah hi thanks for uh taking my questions today um john i wanted to follow up i was going to ask you if you had made any changes to uh the sales organization as we start a new fiscal year and then you did answer one of the questions that it does look like you are making an investment on the inside sales force. Can you maybe provide a little more color in terms of how big of an investment that's going to be in terms of increasing the capacity and maybe your thoughts in terms of the duration of the increase in the capacity of the organization?

Thanks, Brian. We're focused, as we always have been, on working with the clients that we have to cross-sell and up-sell and simultaneously winning new clients. So the Go-to-market organization evolves each year as we put the business plan together. For 24, one of the specific objectives that we have and one of the choices that we made in increasing the investment in the sales and go-to-market machine a little bit more generally is what we're calling strategic accounts, the large enterprise class firms where there's so much upsell and cross-sell potential where just the upsell and cross-sell can be measured in millions of dollars in some of these accounts. So we're excited about the opportunity there. I'm also very excited about some of the talent that has joined the company in the past year or so, bringing incredible history, selling to this class of firm from some of our friends in the software industry and from some of the firms themselves, real experts who know how to do this, who are seeing the success that we're having and who are inspired by the vision that we have for digital transformation inside these firms and want to represent that. So it's just been a very, positive year in terms of bringing talent and a little bit of organization into that. In terms of how much are we putting there, relatively speaking, you know, I don't know that we're talking specifically about that. But I think you will see, particularly some of the aiming about the firms coming on, more and more of these large account stories coming in. And I think that's a real opportunity for the company for all sorts of reasons.

Thanks, John. And then one quick follow-up for Dave. Welcome to the call. Been noticing that the delta between the cloud ARR growth and the SaaS and support revenue growth has been narrowing here for almost two years now, which is a good trend. Is there any reason that that trend should not continue as we kind of think about our forecast and the business in the future? Thanks.

Good question, Brian. And I'm just thinking out loud here. As we cogitate our 24 plan and the implied guide, we definitely have SAS's going to continue to grow. And then obviously, the support will have a tail kind of a flat line, right? It's not going to grow at the same rate of pace. And so from there, you can kind of see the implied linear of where those two are starting to have a crossover effect. Does that make sense, Brian?

Yeah, that's helpful, Dave. And congratulations on a real nice quarter.

Thank you. Please stand by for our next question. Our next question comes from the line of Matt VanVleet with BTIG. The line is open.

Yeah, thanks for taking the question, and welcome, David. Congrats, dude. I guess as you look at some of the recent success you've had in the financial services world as that's sort of a newer area, thinking about not only investments and go-to-market, is there an expectation for sort of an outsized portion of those investments you were talking about coming in this area? or how do you feel about your market coverage in general? And then kind of a part B to that is you've mentioned before that sometimes as things slow down somewhat, it gives some of these organizations an opportunity to invest in new technology rather than just trying to keep their head above water. So curious how the current market environment, especially with the slower capital markets activity, may or may not be impacting overall deal cycles.

Yeah. Thanks, Matt. First of all, you're right. We have talked about the fact that we've had a lot of progress in the financial services target industry, also in the professional services target industry. Both grow for us, but the financial services group is newer and starting from a smaller base, and it has really been growing. We've also had a lot of success. We've talked about this in both the private capital markets firms, the private capital asset managers of various strategies, as well as the investment banks and the other advisory firms. And we've even talked about some of the other segments like the pension funds. I talked about PSP in the prepared remarks. So there's a lot of excitement about the range of classes of firms that are picking up our deal cloud solution, our collaboration and content solution, our compliance solution, so really across the board. I think we are going to feed that because it's such a growth industry itself. regardless of the cycle of the economy, the general macro trend is a shift of investment dollars from the traditional public markets more and more to these private capital models. And it's a growth industry just structurally. And I think we've really benefited from that and are continuing to benefit from that as the company scales. So we're going to support that and, and, um, make sure that we take advantage of the opportunity there. The second question you asked about, you know, how do we, how are we impacted by the market generally? I think the one thing that we've said is that if there's a part of our target market that might be more sensitive to the capital markets, it's the investment banking. The rest of the industries that we sell, even the private capital firms themselves, been remarkably stable and growing and growing their spend for digital transformation and for cloud and for applied ai because they're trying to modernize themselves they're trying to do that internationally so there's a lot of opportunity for us that has fed our growth through some sort of uncertain times over the past couple years and the investment banks interestingly are some of our largest deals that we've talked about here in this year's So we are making very good progress there, and I think they're kind of coming from behind. There's an opportunity for them to modernize with technology that's purpose-built for their industry for the first time. So there's a lot of tailwinds there, but we have been kind of transparent about that. If there's a market signal that we experience one day, it's probably investment banking.

Thank you. Please stand by for our next question. Our next question comes from the line of Saqib Khalia with Barclays. Your line is open.

Okay, great. Hey, good afternoon, guys. Thanks for taking my questions and glad to be on the call here. John, maybe first for you, a lot of helpful deal examples that you gave on the call and called out some displacements of other in-house or horizontal applications. I was wondering if you could just go one level deeper just into the competitive environment a little bit, particularly with those horizontal SaaS providers. Maybe you could just touch on qualitatively, of course, a little bit just on competitive win rates and sort of what you hear from customers about your very purpose-built platform versus other kind of more horizontal solutions out there. Does that make sense?

You bet. And welcome to the group, Saqib. We're very excited. So, you know, there's an interesting dynamic that we've talked about a little bit, and I can go into. When comparing us to the traditional large horizontal suppliers, the firms are sort of in two classes. They're either coming off of their in-house built bespoke system, And they're trying to decide, do we go with one of these classic horizontal players that everybody has known for many years? Or do we go with a purpose-built company like Intep in their first move? And in the early days, we were a small company and we're not well known. And we won kind of more in the midsize firms and fewer in the large because they felt like the big guys were the safe bet. As we have grown and won more market share in midsize and started to move up and added some real capabilities to the platform that met both the technology requirements and the security requirements for the more enterprise class firms, we now have more and more references that have successfully picked us in the first instance. And the win rate there is pretty good and getting better. The flip side is there's a whole generation of firms that already went to the classic horizontal players for reasons that are very logical, but they're not getting good adoption. And this is the big knock is even after people go through all the pain and effort to try to put the thing in and try to customize it to make it work for the unique business model that it wasn't really designed for. At the end, they don't get the users to run with it because it's too clunky and it's not a knock on the software because the software is excellent. That's why these firms are running all over the place in other industries. But in this industry, the professionals really have a very specific workflow, very specific data model that they need to model for their deals and their engagements. They have to look at the market data coming in from third parties to really try to orient themselves for the types of strategies they want to pursue or the types of clients they want to pursue. They have to use very modern applied AI if they want to compete on networking to the right clients. There's all kinds of things now that are available in our platform that are so natural. to the end user in this market that when they see it and they can compare it to their experience, what their experience has been with the previous generation, the horizontal systems, they say, oh, finally, somebody built something for me. And they buy it. And so our win rate when people are looking at adoption problems or those things come up for renewal is actually higher than in the first instance when they're trying to figure out whether they should go with us or go with one of the big horizontal players. So as we march forward, I think both of those numbers should move in the right direction for us. And it's just the natural purpose-built value proposition. As people become more comfortable and we get bigger and we become more capable, it's easier and easier to trust their environment to us. And one of the great quotes I loved in this quarter's report was actually the adoption change. that one of these big firms experienced when they put us in and moved off of the traditional horizontal thing. That's ultimately the proof and the stickiness for the purpose-built system.

Yeah, absolutely. It makes sense and it shows. David, maybe for you, for my follow-up, I'd love if you could just dig in a little deeper on the professional services business. You touched on it a little bit in your prepared remarks, but I'm wondering how you kind of think about the growth there as well as the margins. We've seen kind of the gross margin there narrow quite a bit. I'm wondering how you're thinking about the services business in 24, both from a growth and margin perspective, to the extent you could disclose.

You know, outside of the prepared remarks, first and foremost, we've done a lot of work on the margin. And I'd like to commend the team here because that's a hard task. order. And so, I believe over this past year, there's been material improvements that have brought that up. And, you know, we still have some work to do as we continue forward into 24 and beyond, but pretty happy at what's been done thus far. As far as the growth, obviously, it's not going to scale as fast as SAS, but there are some growth plans in place. that obviously mirror, you know, rapid deployments across our various clients. And so, you know, I'm pleased with what we've done here and what I've been able to learn about the team themselves and how they're deployed. And so I think we get a lot of good grades from that service offering.

Got it. Very helpful. Thanks, guys.

Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to John Hall for closing remarks.

Okay. Thanks, everyone. We appreciate your attention and your questions, and we have a great Q4 behind us, and we're excited about our continued momentum in 24. Thanks again for your time today, and we look forward to talking to you in just a little while, next quarter. Thanks so much.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.