Intapp, Inc.

Good day, ladies and gentlemen. Welcome to NTAP's fiscal first quarter 2024 financial results conference call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automatic message advising your hand is raised. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host for today, David Throne, Senior Vice President of Investor Relations. Please go ahead.

Thank you. Welcome to NTAP's fiscal first quarter 2024 financial results. On the call with me today are John Hall, Chairman and CEO of NTAP, and David Morton, Chief Financial Officer. 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 second 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. INTAP 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. As a reminder, all of our financial figures we will discuss today are non-GAAP, except for revenue and revenue growth and current remaining performance obligations. Our GAAP financial results, along with reconciliations of GAAP to non-GAAP financial measures, can be found in today's earnings release and in supplemental financial tables, which is available on our website and as an exhibit to the Form 8K, furnished with the SEC prior to this call, or a supplemental financial presentation, which is available on our website. With that, I'll hand the conversation over to John.

Thank you, David. Good afternoon, everyone. Thank you for joining us today as we share the results of our fiscal first quarter. I'm pleased to share that once again, we've achieved strong quarterly results supported by cloud ARR growth, new logos, and expansion of our existing client accounts around the world. We also released additional new applied AI capabilities to our platform and furthered our strategic partnership with Microsoft. I'll share more details on each of these select growth drivers throughout this call. In Q1, Our cloud ARR grew to $242.5 million, up 38% year-over-year. Cloud now represents 69% of our total ARR of $350.1 million. In the quarter, we earned SaaS and support revenue of $73.1 million, up 29% year-over-year. and total revenue of $101.6 million, up 28% year over year. We continue to expand our client base with particularly strong growth in clients with over $100,000 in ARR, which totaled 626 clients at quarter end, up 20% from a year ago. Now, I'd like to share a few business highlights from our fiscal first quarter. I'll talk first about innovation and specifically our applied AI strategy. Intap has embedded industry-specific AI throughout our platform and our solutions. We've done this to help our clients use their vast data stores to improve critical processes and make better, faster decisions. Intap is not a newcomer to AI. Our AI team has been delivering capabilities into our solutions for more than 10 years. We've been leveraging a portfolio of AI technology, including automation, machine learning, deep learning, and generative AI. We've applied these across firm operations, including strategy, business development, risk and compliance, and work executions. And during this quarter, we expanded our applied AI capabilities. For example, within our risk and compliance solution, we introduced a new applied AI capability that helps firms more easily identify employee conflicts of interest before assigning an engagement team. This capability leverages our historical strength in managing firm conflicts and adds employee compliance data gained in our Paragon Data Labs acquisition earlier this year. Using applied AI to analyze both types of data and make more integrated compliance recommendations helps our clients to win more business by increasing their accuracy and efficiency. This addresses a critical regulatory compliance need for our financial services clients. And with pending PCAOB regulations, it will be increasingly relevant for the accounting market as well. Leveraging our strategic Microsoft partnership, we also delivered our first generative AI feature using Microsoft Azure OpenAI services. The feature in this release creates content based on context and historical firm data applied to help streamline email marketing for busy professionals. It's the first step in a series of generative AI releases featuring increasingly advanced contextual content generation and marketing automation via the use of large language models. These are just two examples of applying our industry expertise to build industry-specific solutions that help our clients to realize practical, immediately usable advantages from AI's continuing generational technology advances. In September, we showcased our applied AI capabilities at our client conference in Boston. The feedback validated our applied AI strategy and its capability to drive tangible results and positive outcomes for our clients. As an example, Jack Jacinto, manager of application development at law firm Vetter Price said, I am excited that INTATH has made strides in expanding their already robust and powerful AI tools by incorporating generative AI and large language models. I believe these tools will empower our fee earners to focus more on the billable hour than on the repetitive but necessary daily administrative tasks, thereby freeing them up to better service our clients while still providing the organization what it needs. We're very excited to be working with Jack and his team at Better Price. We're also investing in our industry solution strategy, which incorporates built-in best practices for the various markets that we serve via our pre-populated industry blueprints. Designed using our team's deep industry experience, these blueprints provide specific deal cloud configurations that suit a range of specific application needs for each type of firm that we serve. Our field team uses our industry solution to clearly showcase our industry-specific fit for each of our prospects. And our services team uses them to deliver fast and clear time to value for each of our clients. We release updates regularly Using some of our most recent industry blueprints, we're seeing clients ready to go live with their new solution in just one to two weeks. And our portfolio of industry solutions continues to expand. In our most recent release, we're now providing industry blueprints for 15 different sub-verticals, such as transaction advisory services, fund formation, and M&A, with more on the way. I'll turn now to partnerships. where I have some exciting news to share. Last quarter, I mentioned that our solutions are now available on the Microsoft Azure Marketplace. This step prepared us well for a major strategic change that Microsoft made this quarter. Specifically, Microsoft's co-sell incentives for its sellers are now tied to solutions that are available on the Marketplace. We were ready for this change in Microsoft's seller incentives and we are positioned very well to garner additional interest and support from Microsoft's field team to further accelerate the growth of our business. For example, as a result of this change, in Q1, we successfully sold a large in-tap collaboration and content deal in the consulting vertical via the Azure Marketplace with the support and assistance of Microsoft's team. Furthermore, our partnership with Microsoft is increasingly supporting our global growth. We have grown into a global partner, and Microsoft has grown our team to include both global and U.S. partner managers to help us identify, win, and grow large global accounts together. Turning to our broader partner ecosystem, we also launched Intap's new partner program with more than 100 active partners. The program expands our clients' access to trusted technology, data, and services providers who are helping our clients to drive innovation and grow their business. Our new program supports the development, marketing, sales, and delivery of joint solutions with our partners, driving new revenue opportunities for Intap and its partners together. I'll turn now to Q1 wins and implementations. and share some examples of how we're continuing to grow our client base and expand our global reach. First, I'm pleased to share that we are growing through the addition of new clients, including national CPA and advisory firm Forbis, who selected Intap Employee Compliance to improve their quality control system, better address regulations, and prepare for upcoming regulatory changes. And Storrskogen, a Stockholm-based international group of businesses across trade, industry, and services, who selected DealCloud to strengthen their sourcing and origination efforts via end-to-end support for their M&A and corporate development processes. This client is a great example, showing how our industry solution blueprint built for the corporate development function helped us to better showcase our value and land a new relationship. Additionally, cross-selling and up-selling success in our existing accounts continue to drive strong net revenue retention. For example, global law firm Mayor Brown selected Intep Workspaces to modernize and improve collaboration. Intep Workspaces will help manage Microsoft's Teams governance, workspace provisioning, Matter lifecycle management, and client collaboration. and Warner, Norcross, and Judd, a longtime law firm client, added to their Intac portfolio by selecting Intac Risk and Compliance as their new cloud-based risk management and compliance solution. As the executive director at Warner said, when it comes to risk and compliance, it's essential that we provide our attorneys and staff with the resources to make smart and efficient decisions on our client intake. This quarter, we also had a number of notable go-lives, including UK-based accounting firm AAB, which went live this quarter on intact collaboration and content. Our solution has streamlined AAB's process for saving, retrieving, and sharing emails and documents by aligning with familiar Microsoft 365 applications. AAB's professionals are now efficiently accessing information related to their engagements and collaborating with peers and clients more effectively. Additionally, prominent Japanese law firm Nishimura & Asahi went live on multiple in-cap solutions aimed at modernizing their risk management and timekeeping practices. Hajime Ueno, the firm's chief technology officer said, With the move to INTAP, we're building a foundation of contemporary products that will enable us to compete on a global scale, continue our trajectory of international growth, and maximize profitability. In conclusion, we're proud of our strong performance in our first quarter, and we're optimistic about our continued growth opportunities. As our Q1 performance has shown, we continue to grow by adding new capabilities to our platform and increasing our global reach. We see continued opportunity both to add new clients across a broad TAM and to deliver greater value by expanding within our existing client base. We're serving a durable end market with our subscription revenue model, industry-specific cloud platform, and applied AI and compliance capabilities. We have a great growth opportunity to drive AI, cloud adoption, and modernization across all the industries we serve. As always, I'd like to thank our clients, our partners, our investors, our board, and our global Intap team for their teamwork and dedication. Thank you all very much. And finally, before I turn things over to our CFO, David Morton, I'm pleased to share that Intap will hold its first Investor Day. It will be held at NASDAQ in Times Square in New York City on February 22nd. In the coming weeks, we will post more details and links to the broadcast on our website at investors.intap.com. We hope you can join us.