This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk01: Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the CPC 2022 Second Quarter Conference Call. During today's presentation, all parties will be in a listen-only mode. And following the presentation, the conference will be open for questions. Good afternoon.
spk05: Thank you, Savannah.
spk03: And welcome to the CPC 2022 Second Quarter Conference Call. On the call today are Jim Heppelman, Chief Executive Officer, Chief Financial Officer, Today's conference call is being broadcast, and the replay of the call will be available later today at www.ptc.com. Future operating results.
spk05: Because such statements deal with future events, actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements can be found in PTC's annual report on Form 10-K, Form 10-Q, and other filings with the U.S. Securities and Exchange Commission, as well as in today's press release. The forward-looking statements, including guidance, provided during this call are valid only as of today's date, April 27, 2022, and PTC assumes no obligation to update these forward-looking statements, except for the accounting principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in today's press release.
spk03: With that, I'd like...
spk05: Executive Officer Jim Heppelman.
spk03: Thanks, Matt. Good afternoon, everyone, and thank you for joining us. To simplify things, please note that throughout my commentary, I will be discussing all growth rates in constant currency.
spk04: Turning to slide four, I'm pleased to share that PTC delivered another strong financial performance in fiscal Q2. All of our metrics came in above our guidance, and the strength was broad-based across all segments and geographies. Of particular note, we saw organic ARR growth accelerate to 13%, despite the self-ended Q2 with 1.56 billion of ARR.
spk03: Bookings grew faster than ARR, and renewals were very strong.
spk04: We also continued our track record of translating top line growth into even better bottom line growth. In Q2, our adjusted free cash flow performance was strong at 158 million, up 22% year over year, and ahead of our guidance. The non-GAAP operating margin of 42% in the quarter was the highest we've seen. The margin expansion strategies we outlined at our December investor day are generating the results we expected.
spk03: Moving to slide five, geopolitical situation carefully, we continue to see strong global demand environment for our offerings.
spk04: Driving digital transformation across the product lifecycle remains an important priority for our customers.
spk03: Bookings were up mid-teens year over year, and the strength was broad-based.
spk04: Growth was strong in both digital thread and velocity and across all three geographies. Q2 was the sixth consecutive quarter that bookings have grown faster than ARR, which, together with improving renewal rates, creates an acceleration bias for ARR growth. To help you understand the resilience of PTC as you think about any potential macro volatility that may lie ahead, I'd like to expand on our business model dynamics to ensure you appreciate why our business model provides us with confidence in our ability to achieve our financial targets in the back half of the year. Let's take a look at slide six. On the left-hand side of the slide, you can see that the 13% ARR growth we delivered in Q2 was based not just on Q2 performance, but also on the momentum we built over the previous three quarters as well. ARR growth is a rolling four-quarter metric, so when we say ARR grew 13% in the second quarter, we mean the entire book of recurring business is now 13% larger than it was at this time last year. While this rolling dynamic dampens the impact of bookings in any single quarter, such as the strong results in Q2, it also provides a foundation of stability and resiliency for the company. Remember that so long as bookings exceed churn, ARR will grow. Bookings currently exceed churn by a wide margin. To help you run your own scenarios, let me simplify the math by giving you some big, round, directional numbers to work with. Let's say PTC has around 1.5 billion in ARR and on a run rate basis, we're adding 300 million in annual bookings while seeing 100 million in annual churn. Over the next year, the 1.5 billion of ARR would step up by 300 and step down by 100 million to grow to 1.7 billion, which is 13% growth. That's consistent with our run rate performance. 2020, shows renewals remain steady through a macro downturn. To better understand the sensitivity, then, of ARR to macro changes, let's start with a hypothetical scenario, flat indefinitely at $300 million. In that case, with churn being several more years after that.
spk03: If you're concerned about a downturn in Europe, which represents 40% of our business, you could create an alternative declined by 25% for two quarters and then bounced back, in which case we'd still deliver 12% ARR growth over the forthcoming year.
spk04: If you want to run a more draconian global macro downturn scenario, you could model a 25% reduction in quarters, in which case you still get 8% ARR growth over the next year.
spk03: Frankly, no matter what scenarios you might model, you'll consistently see that PPC has a very resilient business.
spk04: Keep in mind that those were hypothetical examples.
spk03: When bookings grow faster than ARR, as we've seen quarterly since the COVID rebound, it creates an acceleration effect for ARR.
spk04: Improvement in renewal rates, which we've also been seeing, are helpful as well. PTC is experiencing the benefit of these dual acceleration effects right now, which is why we're raising our ARR guidance for the full year. In summary, while the company is in position to accelerate ARR growth, assuming conditions remain as they have been, We're also in good position to power through any potential macro slowdown with strong results, as we did in 2020 when bookings declined sharply for several quarters due to the pandemic before rebounding again. PTC's FY20 ARR growth of 11% compared very favorably to our more cyclical industry peers who don't have the same recurring business model. some of whom even experienced top-line declines in their comparable business lines. The takeaway from this discussion is that our subscription model, which took us years of hard work to put in place, is a wonderful thing, and it will keep PTC in a growth leadership position in our industry for years to come. Moving on, let's take a quick look at our Q2ARR performance by geography on slide 7 before turning to our business units. In Q2, we saw strong ARR growth across all geographies. Our ARR growth in Americas was 12%. All product segments grew, with the main growth drivers being continued strength in our core PLM and CAD segments and another strong contribution from our velocity business. In Europe, our ARR growth was 15% despite the Russia exit. We saw strong results across the board in Europe, with growth primarily driven by our core PLM and CAD businesses, and strong growth in the IoT and AR segment. In addition, our Velocity and FSG businesses delivered solid growth in Europe and Q2. Europe has the largest mix of channel versus direct, and the resellers continue to perform well. I know that investors are concerned about exposure to Europe and the macro environment there, So I'd like to reiterate that, first, we're continuing to see strong bookings performance in Europe. And second, as I demonstrated quantitatively, our model is highly resilient. Our ARR growth in APAC was 14%, with our core CAD and PLM businesses, again, being the main drivers. Next, let's look at the ARR performance of our business units, starting with Digital Thread on slide 8. In our largest product segment, Digital Thread Core, we delivered another double digit growth performance in Q2 with 13% growth. Within this, CAD grew low double digits, while PLM grew mid-teens. Bookings grew faster in each case. Reflecting on Q2 across the now 18 consecutive quarters of double digit ARR growth that we've seen in the Core CAD and PLM business, this was the best performance yet. which I attribute to a combination of strong demand for digital transformation, best-in-class sticky solutions sold in a recurring revenue model with low churn rates, and the growth tailwinds from our SaaS initiatives. In our core business, our solutions are very strategic, and we're executing well and taking market share. You may have noted we also launched Windchill Plus during the quarter, which is our next-generation differentiated core SaaS PLM solution. Windchill Plus contains the technology and operational improvements that enable higher profitability and is now becoming our lead windchill sales play. Windchill Plus is just the tip of the iceberg of a bigger plus strategy, and you'll see us follow with Creo Plus and similar premium SaaS offerings in FY23 and beyond. In digital thread growth, we saw ARR growth of 15%. While the sequential acceleration was modest, we made good operational progress and remain on track to get growth to a two-handle by the end of the year. Following the launch of our new ThingWorx Digital Performance Management Solution, which we abbreviate as DPM, in Q2, we landed our first nine deals across various different industries, including aerospace and defense, high-tech, automotive, and food and beverage. Though these were starter deals, average initial deal size was six figures. Rockwell brought in several of these DPM deals, and the DPM pipeline for both companies looks good going into the back half of the year. FSG had a great Q2 with 8% ARR growth. Servagistics, Retail PLM, and Arbortext all performed well, helping to drive solid results in terms of renewals and churn. Growth was particularly strong in the Americas and Europe. With FSG, our strategy is to keep delivering value to customers by having dedicated focus on each of these products. And I'm pleased to see that strategy produce another strong quarter. Before I turn to our Velocity Business Unit, let me run through a couple of quick customer stories that will give you a taste of how customers are leveraging our digital transformation capabilities. I'll start with Bosch on slide nine. Bosch is a massive global supplier of technologies and services. With 400,000 employees, including 75,000 engineers, a key challenge for Bosch is how to drive end-to-end digital transformation at scale. Bosch is leveraging their Windchill PLM system as a backbone in combination with Creo and ThingWorx to enable new and improved workflows. This specific example is about Bosch using model-based design capabilities of Creo and Windchill. By moving beyond the world of 2D drawings, and leveraging enhanced 3D Creo data across engineering, manufacturing, and inspection processes, Bosch is driving improved productivity and bringing products to market faster. Next on slide 10, Cummins is the world's largest independent diesel and gas engine manufacturer and an interesting ESG story that we help enable. Cummins has long made it a company goal to reduce their environmental impact, and digital transformation is a critical part of their journey. By using generative design and ANSYS-powered simulation up front in their Creo-based design process, Cummins has been able to reduce material usage, create better products, and accelerate time to market. Turning to the velocity business on slide 11, year-over-year ARR growth for our velocity segment was 27% in Q2, with both Onshape and Arena growing multiple times faster than the market, which demonstrates there's a distinct and vibrant segment of the CAD and PLM market that prioritizes SaaS and agile product development as their number one buying criteria. With Onshape and Arena, PTC has a unique ability to serve this market segment, and we're continuing to ramp both our Velocity product and go-to-market investments. Let's move to slide 12, where I'd like to take you through a Velocity example showing how Arena is empowering Filtronic's global team to deliver innovative products faster. Filtronic is using Arena's SaaS PLM solution to control product design and supporting documentation. and to enable collaboration across globally distributed teams. The benefits of providing complete visibility into critical product and quality processes are significant. For example, engineering change cycle time was cut by 50%, and the issue resolution time has been cut in half as well. Turning to slide 13, we announced two transactions last week, and I'd like to recap both and provide some additional context. First, we announced an agreement to acquire Intland Software, a next-generation application lifecycle management, or ALM, company for $280 million. For background, PTC entered the ALM market a decade ago when we acquired MKS and their integrity suite. ALM has become an important and well-established offering within PTC's portfolio and and it's sold both standalone and as a key subsystem of our windshield PLM offering. The CodeBeamer family of software products from Inland is a next generation ALM suite that's fast becoming the new standard in safety critical and regulated industries, especially in the large automotive industries where products are increasingly differentiated by their software. Bringing CodeBeamer into our ALM suite will bolster both ALM and PLM growth potential by significantly increasing our product strength and market momentum. Intland's a great company who matches their strong product with strong growth and surprisingly good profitability for their size. We expect to achieve both revenue and cost synergies with this acquisition. When it closes, the acquisition is expected to add roughly a percentage point of inorganic growth to our FY22 ARR results. Inland will join our existing ALM unit, so CodeBeamer ARR will be reported as part of our FSG segment.
spk03: Second, we announced an agreement to the services business to long-time partner ITC Infotech. This moves to continuation of a long-term strategy we've been executing to focus PTC's efforts on and high-margin software while we look to a partner ecosystem to deliver the professional services that unlock the value of that software in the customer setting.
spk04: As we ramp up the SaaS initiatives we described at our December Investor Day, a key component of the program is the lift and shift efforts required to move on potentially thousands of services projects in the coming years. PTC needs to play a direct role because at the end of each project we will be taking ownership of the running system put our own professional services organization back onto a growth vector as we scale up the performance projects we're instead planning to transition some of our key PLM talent into a new ITCI unit called DXP services thereby allowing the lift and shift capacity to scale on ITC's P&L rather than ours. This new DXP services unit will be our partner to run joint lift and shift projects, with DXP doing the upgrade and decustomization work that happens at the customer site, and PTC assuming the resulting system into our centralized SAS operations. This is a professional services transaction, so it has no bearing on ARR.
spk03: Christian will comment further on the expected financial impact of these two transactions. We expect both will close in Q3.
spk04: To wrap up then on slide 14, I'm very pleased with PDC's position and the opportunity that lies ahead. Our portfolio of products is unique and compelling, and it aligns well with customer demand. Throughout the first half of FY22, bookings and renewals have been strong and growth is accelerating as we enter the second half of what will be our fifth consecutive year of double-digit ARR growth. We're poised to further accelerate growth as SaaS tailwinds blow harder in the coming quarters and as we gain momentum with DPM and other IoT and ARR initiatives. Our profitability continues to expand following the changes we implemented at the start of the year. and as our startup businesses continue to mature up their J curves. Our model has proven to be highly resilient, even in the face of a slowdown, like during the pandemic in 2020. We're raising our guidance for the second quarter in a row, and I think the company's never been in a better position to create shareholder value. With that, I'll turn it over to Christian for more details on the financial results. Christian?
spk06: Thanks, Jim, and good afternoon, everyone. Before I review our results, I'd like to note that I'll be discussing non-GAAP results and guidance, and ARR references will be in both constant currency and as reported. Turning to slide 16, at the end of Q2, our constant currency ARR was $1.564 billion, up 13% year-over-year. Our SaaS businesses, groups, saw continued solid ARR growth in Q2, and represented a larger mix of our overall business, both year-over-year and sequentially. We delivered above the ARR guidance range we provided for Q2, which was for constant currency ARR of 1.54. Year-over-year ARR growth was 11%. Foreign exchange was a $32 million headwind. and our as-reported ARR in Q2 was 1.532 billion. In March, following the Russian invasion of Ukraine, we announced that we would discontinue business operations and sales in Russia. Exiting Russia had a $4 million adverse impact on our Q2 ARR. We've accounted for the $4 million impact as churn in Q2. Cash from operations of $142 million in Q2 was in line with our guidance. Considering the $32 million foreign exchange headwind to ARR, this was a strong outcome, reflecting expected seasonality and another quarter of solid collections performance. In Q2, free cash flow of $140 million grew 21% year over year and included $18 million in restructuring and other related payments. Adjusted free cash flow was $158 million, up 22% year-on-year. Free cash flow and adjusted free cash flow were both ahead of our guidance due to strong cash from operations and also because CapEx and Q2 came in slightly lower than we'd anticipated. The main takeaway on cash flow is that despite the headwinds related to foreign exchange, we've been executing well and delivering on our targets. Q2 revenue of $505 million increased 9% year-over-year. As we've discussed previously, revenue is impacted by ASC 606, so we don't believe that revenue growth rates are the best indicator of our underlying business performance, but would rather guide you to ARR as the best metric to understand our top-line performance in cash generation. FX impacted revenue by about $6 million in Q2, and our revenue on a constant currency basis was $511 million. Before I move on to the balance sheet, I'd like to provide some color on our non-GAAP operating margin, which expanded to 42% in Q2, as Jim noted earlier. This compares to 37% a year ago. You know, revenue is impacted by SC606, so other derivative metrics such as gross margin, operating margin, and EPS are all impacted as well. Still, it's worth mentioning that our costs in Q2 benefited from the restructuring we announced in expectation that we would be eliminating some duplicative functions and our field operating expense mix would shift towards R&D in alignment with our SAS acceleration strategy. You can see the progress we've made in our Q2 results. We now
spk03: and are sustainable and will enable gap operating margin for fiscal 22 roughly performance.
spk06: Moving to slide 17, we ended Q2 with cash and cash equivalents of $307 million, $2.28 billion with an aggregate interest rate of about 3.4%. During the second quarter, we generated cash proceeds of $43 million through investment in Matterport.
spk03: This in conjunction with our share repurchase program as we communicated.
spk06: Last quarter, we've completed our planned repurchases for fiscal 22 with $5 million settling in Q2.
spk03: And for the remainder of the year, we'll focus on delevering.
spk06: Looking forward to fiscal 23 and on a go-forward basis, assuming our debt to EBITDA ratio remains below three times, our goal is to return to Next, slide 18 shows our ARR by product group. We post a set of financial data tables to our IR website that has our financial statements as well as ARR details. In that file, we share both constant currency and as reported ARR.
spk03: As a reminder, when we calculate constant currency figures, we use our
spk06: current year plan FX rates for all periods. Our fiscal 22 plan FX rates are based on foreign exchange rates as of September 30, 2021. We're using these rates to calculate constant currency figures for all quarters in fiscal 22 and for all prior periods as well. To illustrate, you can see on the bar to be lower than constant currency ARR for Q3 and fiscal 22. This is because of the FX headwinds and rate movements, which have moved significantly since September 30, 2021. Based on the exchange rates at the end of Q2, we expect as reported ARR for Q3 to be impacted by $32 million. And for fiscal 22, we expect the FX headwind to be approximately $34 million.
spk03: This is important to remember in context of our guidance because we provide ARR on a constant currency basis, and if the exchange rates fluctuate significantly between now and the end of Q3, the expected impact to our reported ARR would also change.
spk06: We do believe constant currency is the best way to evaluate the top-line performance of our business because it removes positive or negative. With that, I'll move on to guidance on slide 19, performance in the first half, and despite our exit from Russia. The new range is now $1.665 billion, which translates to constant currency ARR growth of $12.52.
spk03: For Q3, we're guiding constant currency ARR to be $1.58 to $1.595. $5 billion. At the midpoint, this equates to 13% constant currency growth. We continue to expect IoT and AR to do well in the market. That all said, the main driver of the guidance raise is the strong customer demand we're seeing in our core CAD and PLM offerings which represented 70% of our ARR. Local 22 cash from operations at approximately $430 million are helping us to offset FX headwinds and the Russia exit.
spk06: Our guidance for Q3 cash from operations is approximately $110 million. We've updated our CapEx guidance for fiscal 22 to approximately $25 million, which is down from about $30 million that we set at the beginning of the year. And we're expecting approximately $5 million of CapEx spend for Q3. Therefore, we're raising our full-year free cash flow target to approximately $405 million and guiding for Q3 free cash flow of approximately $105 million. We continue to expect our normal seasonal pattern in our fiscal 22 cash flow generation, primarily driven by invoicing seasonality. The majority of our collections occur in the first half of our fiscal year, and we continue to expect expenses to increase in the second half because of these dynamics. Q4 is expected to be our lowest cash flow generation quarter. Our free cash flow guidance for fiscal 22 includes 40 to 45 million of restructuring payments compared to our expectation a quarter ago of 45 to 50 million. As some employees have otherwise departed PTC and some employees that were expected to depart have moved into new roles where we've been looking higher. Both of these are good things. We have less restructuring payments and have been able to fill new open roles with good people in a challenging hiring environment. In addition, our fiscal 22 guidance assumes approximately $5 million of transaction-related payments that were incurred in the first half of fiscal 22.
spk03: Therefore, consistent with raising our free cash flow guidance, we're also raising our adjusted free cash flow target to approximately $455 million.
spk06: For Q3, we expect approximately $10 million of restructuring payments and approximately $5 million of transaction-related payments, which were incurred in the first half, bringing our adjusted free cash flow to approximately $120 million. Moving on to revenue. Despite foreign exchange headwinds and our Russia exit, we're taking the low end of our full-year revenue guidance up by $25 million based on our Q2 beat and forecast for the remainder of fiscal 22. So our new revenue guidance range is $1.905 to $1.975 billion. The year-over-year growth we're guiding to now is 5% to 9%. ASC 606 makes revenue difficult to predict for an on-premise subscription company, hence the wide range. Note, revenue does not influence ARR or cash generation as we typically bill customers annually up front regardless of contract term lengths. Turning to slide 20. Jim provided some highlights earlier in terms of the financial impact we expect from the Inflin software and ITC Infotech transactions we announced last week. While both transactions are expected to close during Q3, we have not incorporated the expected financial impact to our guidance because these deals haven't closed yet. We will officially update all financial metrics and guidance when we report our Q3 earnings. In the meantime, directionally, for constant currency ARR, we expect these transactions to have a positive impact of approximately $15 million in fiscal 22. We will report Inland in our FSG product group along with our other ALM assets. And regarding free cash flow, we expect the transactions to have an immaterial impact to free cash flow in fiscal 22 as incremental impact Operational cash flows are expected to offset the incremental transaction-related fees and increased interest expense in the second half. And we expect these transactions to be accretive in fiscal 23. Going forward, as Jim explained, we expect these two deals to help us drive the adoption of our SAS offerings. And over time, ITC The ITCA Infotech transaction is expected to result in lower professional services revenue, but not expected to have a material impact on our profitability. Again, we'll provide a lot more detail at Q3 when we report our results and update all guidance metrics at that point. I'll close out my prepared remarks today by taking you through an illustrative constant currency ARR model on slide 21. Here we're showing our ARR progression over the past six quarters and an illustration of what is needed to get to the midpoint of our constant currency ARR guidance for Q3 and fiscal 22. First of all, recall that in Q2 of fiscal 21, our ARR growth benefited due to the acquisition of ARENA. So taking that into consideration, in the first half of fiscal 22, we added approximately 25 million more ARR on an organic basis compared to the first half of 2008, $8.8 billion for Q3 and $1.653 billion for Q4, both at the midpoint of our guidance ranges.
spk03: The illustration shows the sequence. As you can see, in the second half,
spk06: fiscal 22 we need to add about the same amount of new ACV as we did in the second half of fiscal 21 in order to hit the midpoint of and given some of the macro concerns that we also have more deferred ARR starting in the second half of fiscal 22 that we did in fiscal 21 so Hopefully that's helpful, and with that, we'll turn it over to the operator and begin Q&A.
spk01: Thank you. And as a reminder, that is star one to ask a question. If you ask a question, please remember for a moment to compile the Q&A roster. Our first question will come from Joe Brewing with Barrett. Please go ahead.
spk03: Hello. Hello. I guess I'll start with a question on the macro and, you know, obviously I appreciate the backdrop is dynamic and your model at this point is built to withstand a lot of what I'm about to ask.
spk02: But can you maybe just contrast how customers are maybe talking to you about strategic investments and, some of your more time or IOT, maybe contrast how this is different today. than it would have been in mid-2020 or other periods that maybe have parallels to the past. And does it seem like customers are kind of separating strategic from the macro, appreciating that the things they're committing to today do have longer-term benefits, and so that just kind of scope of conversation is different than it has been in the past?
spk04: Yeah, I mean, absolutely, Joe. Jim here. Keep in mind that PPC is really helping customers plan and engineer and plan the production processes for products.
spk03: We're not helping them to actually, by and large, we're not helping them much to produce the product. So the supply chain problems really are production problems.
spk04: And if you're having production problems, most companies don't see that as a reason to stop planning the next generation of products because suddenly a production problem could be solved at some point, and then you'll be competing for who has the best next generation product, and I hope you didn't take the year off. So we don't really see any connection, and frankly, we didn't see much connection in 2020 either, you know, in that particular way. So... I think the pandemic in 2020 put a lot of momentum into digital transformation. So that momentum is carrying through, and people are forging ahead with their strategies to implement, for example, PLM and CAD to semiconductors or, in some cases, wire harnesses that used to come from Ukraine. All that type of stuff. So actually, I was in Germany the last week of the quarter, as it related to the PTC project.
spk03: And we mentioned that in Europe, and again, fairly, you know, if you put all that churn from Russia in Europe, it's material. It's like probably a point of growth, I'm guessing, for Europe.
spk04: So, you know, I think we're doing well and sort of feel like actually conditions look pretty good. And at the same time, we can withstand a lot and still really deliver some impressive growth and free cash flow numbers.
spk02: Okay, that's great. One follow-up just on how your approach publicly announced that now have had a chance to have conversations with It seems like a lot of your peers are talking about things that have accelerated recently.
spk03: I'm just wondering if you're kind of getting the inkling that that could play out for PPC as you're dedicated to windchill this point onwards.
spk04: Yeah. If you go back to our investor day, I'll remind you that we really feel like we're starting the third phase of our SaaS project. And the Windchill part of it started back in the first phase. So for us, we've had a lot of success with cloud. And it's one of the growth drivers for Windchill. It has been over the last 18 quarters. I think the difference is we didn't like the profitability of the cloud part of the Windchill cloud business as we used to do it. So this Windchill Plus is really our shift to the multi-tenant model, which to the customer doesn't look much different. But to PPC, it looks quite a bit different and produces quite a different outcome in terms of profitability. So I think customers liked the windshield in the cloud before. They still like windshield in the cloud. It's just PPC likes windshield in the cloud better now. And that's causing us to open the floodgates a little more because it's more attractive business for us now.
spk02: Great. Thank you very much.
spk01: Our next question, Alvin. Hello, Adam. Go ahead.
spk00: Hey, guys. Thanks so much for taking the question. Maybe just on IoT and AR, you talked about it last quarter, and even in the slide deck today, you talked about a continued focus on upselling and cross-selling the install base. I'd love an update here on kind of what you're thinking about the strategy going forward for upsells and cross-sells, as well as, you know, what is it?
Disclaimer