Research Solutions, Inc

Good afternoon, everyone, and thank you for participating in today's conference call to discuss research solutions, financial and operating results for its fiscal fourth quarter and full year ended June 30th, 2022. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, John Beisler, Investor Relations.

Thank you, Ariel, and good afternoon, everyone. Thank you for joining us today for Research Solutions' fourth quarter and full year fiscal 22 earnings call. On the call with me today are Roy W. Olivier, President and Chief Executive Officer, and Bill Nerthen, Chief Financial Officer. After the market closed this afternoon, the company issued a press release announcing its results for the fourth quarter and full year fiscal 2022. The release is available on the company's website, researchsolutions.com. Before Roy and Bill begin their prepared remarks, I would like to remind you that some of the statements made today will be forward-looking and made under the Private Securities Litigation Reform Act 1995. Actual results may differ materially from those expressed or implied due to a variety of factors. We refer you to Research Solutions' recent filings with the SEC for a more detailed discussion of the risks that could impact the company's future operating results and financial conditions. Also on today's call, management will reference certain non-GAAP financial measures, which we believe provide useful information for investors. A reconciliation of those measures to GAAP measures is included in the earnings press release issued this afternoon. Finally, I would like to remind everyone this call is being recorded and made available for replay via a link on the company's website. I would now like to turn the call over to Roy W. Olivier. Roy?

Thank you, John, and thanks to everyone joining. For our fourth quarter and fiscal 22 results, before I get into specifics about our performance versus plan, I want to quickly recap some of our results that we accomplished during the fiscal year. During FY22, we sold 180 net new customers, resulting in net ARR growth of over $2 million for the first time. Our customer acquisition costs, or CAC, a measure of our sales efficiency, ran at about 13 months, slightly over our target of 12. Our lifetime value to CAC also remains very strong at approximately nine times our CAC. Both of these measurements put us in the better or best category as defined by Bessemer Venture Partners, SAS, Guardrails, and indicate that we should continue to invest in growing the top line, which we plan on doing. Renewal rates remain strong in the high 90s, and our net renewal rates ran over 110% for the year and stand at an internal record on our trailing 12-month basis. We also started measuring net promoter score or NPS during the year, and our average NPS score for the year is 63, well above the 22 SAS company average of 41. Both the renewal rates and the NPS score underscore the value we're delivering to our customers and will remain key metrics influencing our strategy moving forward. During the full fiscal year, we made tremendous progress related to our product strategy, which I will cover in more detail later in the call. We released significant upgrades to the ArticleGalaxy platform, including pivoting to a good, better, and best version of ArticleGalaxy. We also released ArticleGalaxy references, both a standard and pro version of the software. References is a reference manager application that will significantly improve the value proposition of the Article Galaxy platform to our users. Finally, we are about to release a new product called CureDatus, which is a regulatory compliance tool that is integrated with Article Galaxy. CureDatus is a pharmacovigilance product intended to help our customers collect, detect, assess, monitor, and prevent adverse effects with pharmaceutical and other products. Pharmacovigilance is required in several vertical markets and countries we serve and is a manual process today in many cases. This product automates the process and integrates with Article Galaxy to help our customers search, identify, and acquire scientific articles that are related to that process. I'd like to pass the call over to Bill to walk through our fiscal fourth quarter and 2022 year-end financial results in detail. And then I'll wrap up with some more comments related to our product strategy and M&A.

Bill? Thank you, Roy.

And good afternoon, everyone. I will begin with a recap of our results for the fourth quarter of fiscal 2022. Total revenue was 8.6 million, a 4.2% increase from the fourth quarter of fiscal 2021. Our platform subscription revenue increased 32% to 1.9 million, primarily driven by a net increase in platform annual recurring revenue bookings and deployments from last year, including a new company record of 573,000 in incremental ARR bookings in the fourth quarter, along with 53 net new deployments. We ended the quarter with $7.9 million in annual recurring revenue, up almost 8% sequentially and 35% year-over-year, reflecting our continued sales and upselling efforts and low churn of existing platform subscribers. Please see today's press release for how we define and use annual recurring revenue and other non-GAAP terms. Our transaction revenue decreased slightly to 6.7 million from 6.8 million in the fourth quarter of 2021. Our total active customer count for the quarter was 1,213, a net increase of 81 from the same period a year ago, and 20 customers from the third quarter of fiscal 2022. The sequential increase was primarily due to more corporate customers. I will note that while the trend regarding transaction revenue has been slightly down, the year-over-year performance did improve through the fiscal year after a steep drop-off in the first quarter of fiscal 2022. I will talk more about what I think this means for our upcoming fiscal Q1 and fiscal 2023 later. Turning to gross margin, as we continue our mixed shift to platform revenue, we continue to see corporate gross margins move up and to the right. In addition, as noted in our press release, we reached an important milestone for the company, as this was the first quarter in which the gross profit from our platform business exceeded the gross profit from our transaction business. Gross margin for the fourth quarter was 38.3%, a nearly 500 basis point improvement over the fourth quarter of 2021. It should also be noted that the increase is not only due to the ongoing revenue mix shift towards our higher margin platforms business, but also to improvement in our transaction margin. The platform business recorded gross margin of 87.3% in line with our target gross margin range of low to mid 80%. Gross margin in our transaction business increased 140 basis points to 24.5%. The increase was primarily due to lower copyright costs in the quarter and some of the pricing initiatives which we have undertaken. Total operating expenses in the quarter were 3.7 million compared to 2.8 million in the prior year quarter. The year-over-year increase is partially related to higher technology and product development costs and includes approximately 275,000 in severance expenses related to the company's repositioning strategy for fiscal 2023. I will speak more about our outlook for our operating expense in the first quarter of 2023 and fiscal 2023 later in the call. Net loss for the quarter was 438,000 or two cents per share compared to a loss of 89,000 or nil on a per share basis in the prior year quarter. Adjusted EBITDA for the quarter was a loss of 121,000 compared to a positive 134,000 result in the year-ago quarter. This adjusted EBITDA is inclusive of the 275,000 in severance charges, and without them, adjusted EBITDA would have been positive 154,000, which would have been our best result for the fiscal year. Now turning to the full fiscal year 2022, Total revenue increased 3.7% to 32.9 million compared to 31.8 million in fiscal 2021. Our growth rate did increase through the fiscal year as we were up 4.6% for the second half of fiscal 2022. Our platform subscription revenue for the full year increased 32% year over year to 6.8 million. ARR was 7.9 million compared to 5.9 million at the end of fiscal 2021. as we added over 2 million in ARR for fiscal year 2022. Total platform deployments as of June 30 were 733, a net increase of 180 deployments, or 33% from a year ago. Transaction revenue for the fiscal year was 26.1 million, a 2% decrease from fiscal 2021. We have discussed a number of times that there is a downward bias on the transaction business as our software platform helps customers save on paid transactions. That said, this number did improve throughout the fiscal year and was down only 1% for the second half of the year. We continue to think that as we add new platform customers, that this business will at some point return to growth. Moving to gross margin, For the full fiscal 2022, gross margin was 36.5%, a 410 basis point increase from the previous year. Gross margin for the platform business was 86.2% compared to 82.2% in fiscal 2021. We continue to be able to grow the platform business without having to add a great deal of incremental cost. Gross margin in our transaction business was 23.6% compared to 22.8% in fiscal 2021, as we experienced lower copyright costs and also commenced new pricing initiatives halfway through fiscal year 2022. It has been a goal of ours to increase this gross margin in the transaction business, if only slightly. Total operating expenses in fiscal 2022 were $13.6 million compared to $10.5 million in the prior fiscal year. The increase was primarily due to greater technology and product development costs as we added a new product development and software development headcount in the fiscal year, and also due to higher general and administrative expenses. The G&A expenses did include some unique items, which include some excess legal and professional services costs, and cost to upgrade our core systems, such as our ERP and CRM systems. In addition, severance charges for the full fiscal year totaled $450,000, with an additional $150,000 in accelerated stock compensation. Net loss for fiscal 2022 was $1.6 million, or six cents per share, compared to a loss of $207,000, or one cent per share in the prior year. Adjusted EBITDA was negative 374,000 in fiscal 2022, compared to positive 700,000 in the previous fiscal year. Turning to our balance sheet and cash, cash flow dipped in Q2 this fiscal year, but improved in Q3 and Q4. In Q4, our cash flow from operations was relatively break-even, and we ended the quarter with 10.6 million in cash and cash equivalents. We started the year with $11 million in cash, so the burn for the year was roughly $400,000, relatively in line with our adjusted EBITDA performance. There were no outstanding borrowings under our $2.5 million revolving line of credit, and we have no long-term debt or liabilities. As we look ahead, we carry a great deal of momentum heading into our first quarter and full year 2023. As noted in our press release, we intend to run the business adjusted EBITDA and cash flow positive for fiscal year 2023. From a revenue perspective, we continue to believe the platform can grow at the same rate it has and that the transactions business will likely be flat. This will start to drive overall top line growth as well as continue to improve our gross margins. In addition, Some of the cost changes that we have made should start to serve to flatten out our cost base as we continue to grow. As we look towards the first quarter of fiscal year 2023, we are seeing some early signs of growth in the transaction business in addition to our normal growth in the platform business. If this holds, we should be above 5% overall top line growth with a chance to achieve double digit overall top line growth in the quarter. In addition, our operating expenses will be below the levels we experienced in Q3 and Q4 of last fiscal year 2022, resulting in positive adjusted EBITDA for the quarter and a shot at positive gap net income. Lastly, we may see some ebbs and flows in our costs throughout the fiscal year, and there may be some additional costs we need to take on with respect to our operation in Mexico. However, as noted, the intent is to run adjusted EBITDA and cash flow positive for the year, seeing those numbers accelerate as we hit the second half of the year. I will provide more details on our fiscal year 2023 outlook in our next call. I'll now turn the call back to Roy. Roy?

Thank you, Bill. About 18 months ago, I described the major priorities of the business as follows. First, we were going to focus on accelerating growth. Second, we were going to review the business with an eye toward ensuring it can support that growth. Third, we were going to update and roll out our vision, mission and values to our base of employees. And fourth, we were going to review and update the IR plan to expand the shareholder base and analyst coverage. I'd like to take a few minutes and provide an update for each of those items. Regarding accelerating growth, I previously communicated that we wanted to accelerate top line growth organically and via acquisitions. That organic growth was intended to be the result of enhancing our sales force and a revamped product strategy. As a result, we did expand our sales force, upgraded our prospecting process and CRM and other related systems, and improved the process associated with our upsell and renewal teams. This resulted in 180 net new platform deployments in FY22 and over 2 million in net ARR growth, both records. Our platform growth rate for the year was 32%, slightly better than FY21. That said, it did remain 32% on a larger base versus declining for the previous four years. On the product side, we delivered big time. We pivoted to a good, better, and best version of ArticleGalaxy. We created and released two versions of a reference manager application called References and References Pro, and we will shortly release a pharmacovigilance product. Most of these updates were released in Q4, one in Q1 of FY23, and line us up well as we seek to continue record new deployments and renewal rates in FY23. Regarding acquisitions, the results have been disappointing. In the first half of FY22, valuations were a major contributor of not finding anything that met our strategic and financial objectives. And in hindsight, it is likely a good thing that we did not purchase anything during that time. I will say that we've seen valuation expectations come down and we're now involved in more conversations that I've ever personally been involved in in my career. We have found some exciting opportunities and I'm confident that we'll have some news in this area soon. Regarding reviewing our business with an eye towards scalability, much work has been done. We've onboarded an HR head who is providing some needed organization and structure in addition to helping us monitor and improve our employee engagement. In the first half of the year, we upgraded our accounting system from a very old unsupported version to a current version that provides much more automation and more options for our customers. We are currently completing a CRM consolidation project now that began in FY22, which will include all of our customer data in one place and builds a foundation for automation, which we believe will help us be much more efficient and helpful to our customers. And we believe this will show up in upsells and renewal rates in the future. We did review our update We did review and update our mission, vision, and values and are now working on effectively communicating them in addition to measuring and improving employee engagement. While we can't always improve, we have very low voluntary turnover, which is a testament to our compensation benefits and culture. In the corporate governance area, we also did several things. We brought on a new board member, Barbara Cooperman, who has extensive marketing and directly relevant experience in our space with Elsevier and LexisNexis. The other thing we did is change the way executives are compensated. In the past, executives earn stock each quarter based on the company results. We have discontinued that plan and have replaced it with a long-term equity bonus plan. In this plan, we are providing executives one large grant that vests at specific share prices. The vesting schedule starts at $3 per share and goes up in 75-cent increments to a top level of $6. I believe this aligns management interests with yours versus building a large position over time, irrespective of increasing shareholder value. You can review last year's proxy and one of our recent AK filings for more details on the plan structure. And additionally, we'll provide additional details on our first quarter fiscal 2023 earnings call. And finally, we discussed reviewing and updating our IR plan to drive more shareholder values. In this area, we are much more active. We're much more active in the second half of the year compared to the first half of the year and are completing approximately one non-deal roadshow or conference per month. We have and will continue to pursue additional coverage, including newsletter coverage focused on individual investors. We do currently have two analysts covering us, Roth and Maxim. I am disappointed in our current stock price, but do evaluate our stock in two ways. First, as of a week ago, we were down 29% versus 22% down for the iShares microcap ETF, which I think is one good benchmark. For the record, I never like to underperform benchmarks that I think are important. Second, I also look at the software equity group SAS index that comprises 109 publicly traded SAS software companies. Those companies are down 37% on a year-to-date basis overall. The small companies index are down 39, and vertically focused companies, the most relevant comparisons to research solutions are down 31. Vertically focused SAS is trading at about 4.9x the median enterprise value to TTM revenue, and the entire SAS index is trading at 6.7 median enterprise value to TTM revenue. We're trading at 3.5 if you conservatively value the transaction business. We will review and update our IR plan to look for more innovative ways to reach potential investors that invest in small microcap stocks, including retail investors. That said, I think this issue will work itself out as we complete a strategic acquisition and continue to build scale on the top line. I will discuss in more detail our FY23 operating plan in the upcoming annual shareholder meeting in November. With that, I'd like to turn the call back over to the operator for Q&A. Operator?

Thank you. We will now begin the question and answer session. To join the question queue, you may press star, then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. To join the question queue, please press star, then one now. Our first question. Go ahead.

I'm sorry. I do have three questions via email. Would you like me to do that now or wait?

By all means.

I have a question. Confused about comments, RE pricing initiatives as ASP at quarter end Q4 seen below ASP for Q4 21. That is true. The ASP is lower. And as a reminder, our ASP is heavily influenced by the first customers that signed up for the platform that are by far the largest customers, customers that have hundreds, in some cases, several hundred seats. A lot of the 180 deployments we're doing now and a lot of our focus from a sales and marketing perspective is on SMB, where that ASP is lower. So we can expect to see $6,000 to $8,000 ASPs on new sales in the SMB space versus our corporate ASP number, which is between $10,000 and $11,000. The second question I got.

Roy, if I could just add real quickly to that too. While we are, we did do some pricing initiatives on the platform. A lot of what I was referencing with respect to pricing initiatives is things that we're doing on the transaction side of the business to improve margins there.

Second question I got was nice growth in deferred revenue. Is this mostly in platforms? Can you please talk about seasonality expected in deferred revenue? Bill, I'll turn that over to you.

Yes, it definitely has something to do with seasonality and also having a record bookings quarter for the fourth quarter. Obviously, with the platform, everything that we bill there is an annual upfront payment. And so where we have a strong quarter, we put out a lot of annual bills that do drive the deferred revenue balance up. Typically, from a seasonality standpoint, you will see that deferred revenue drop in Q1 as we sort of typically have our strongest quarters in the back half of the year. And so I would expect the deferred revenue balance to come down by the end of Q1.

Okay, why don't we open it up for questions, and then I have a third one, but we'll give some of the folks a chance.

Certainly. Our first question comes from Alan Klee of Maxim Group. Please go ahead.

Good afternoon. I wanted to... Could you talk a little about how Galaxy Scholar has performed and your thoughts about how your expectations on that? And then secondly... with your new product, Cure Datas, how you think about the launch, when this is, how you're thinking about the ramp up of what you're planning to, you know, and how long this could potentially take to become material. Thank you.

Yep. Good questions. Article Galaxy Scholar, I think, has been disappointing in terms of customer take rate. In other words, we're definitely it's harder to sell than Article Galaxy is. However, once they do take it, it produces a pretty nice jump in transactional revenue. So we're actually reevaluating our pricing and sales strategy on the product, and we will likely split it into two versions. Right now, it's a single version and it's paid only. We're going to split it into a freemium version, which will drive transaction revenues positive, and a paid version that delivers some of the high value that libraries are willing to pay for. But the ARPU on the product will continue to be well below Article Galaxy, and we're going to have to see in the coming months whether or not we can get the traction that we hope to get by splitting it into a freemium and premium product. In terms of your second question on Cure Datas, it will launch in October. We have very conservatively budgeted for its sales in FY23, a little bit as a result of the surprise on Article Galaxy Scholar, but we do expect it to generate a few hundred thousand in revenue. You asked me, I believe in the last call, the TAM and SAM for that product. I will tell you now that pharmacovigilance as an industry has a TAM of about 650 million worldwide. The SAM, the serviceable market in the U.S. and Europe, which we serve, is about $435 million. However, and this is a really big however, all capital letters underlined, we are releasing the MVP, which is the minimum viable product, the release one, that we will continue to add to over time, but we want to see it be successful first. So we think the TAM for the MVP, or service addressable market, or adjusted, whatever you want to call it, is in the tens of millions. But as we launch this product, if we see traction with it, we're going to make the changes to expand its applicability from a vertical perspective. It already meets the country requirements, specifically the US and Europe regulations. So we'll add capability so that it's applicable to other industries outside of pharmaceutical or outside of medical devices. And, you know, it's an exciting product. It does integrate with Article Galaxy, and we're very bullish on it, but we're being conservative in terms of the operating plan forecasts in FY23. Go ahead, next question.

That's great. Yeah, could I follow up?

A question that I had was – I apologize. I just missed something. When you were talking about guidance and – first quarter, and you talked a little bit about for fiscal first quarter, you said something about 5%, but then you also said double digit. What were the difference between those two numbers?

Yeah, that's just the range. Sorry, Roy, if I cut you off. That's just the range of the outcomes we are pursuing right now. In other words, With some of the early returns that we've seen so far, we think top line growth will be somewhere over 5%, potentially up to 10%.

Great. And my last question, and then I'll get back in the queue to let other people, is in the platform segment, you think it can grow at the same rate. When you say same rate, are you talking absolute revenues or year-over-year percentage type rates?

Percentage. Yes.

Percentage. Okay, great. Thank you so much. Congrats on the quarter.

Our next question comes from Richard Baldry of Roth Capital. Please go ahead.

Thanks. On the Pharmaco Vigilance product, can you talk a bit about the sales model for that, how similar it Will the end buyer, not just the company itself, but the person making the purchasing decision, is someone you've dealt with before? If you have some early positive returns on that, could that warrant its own standalone sales team to flesh out the go-to-market there? Thanks.

Yeah, I think those are all great questions. The buyer, in some cases, is the same business decision maker. And what I mean by that is there's some regulatory affairs capability, depending on the size of the company that we're selling to, that would be the buyer or both products. However, we also have a pretty good percentage of our customer base where it is a separate buyer. However, it is applicable to almost every customer that's on the platform today, or a pretty big percentage of the platform customers today. So we certainly know typically at least an executive or a librarian that's responsible for the research side of the business that can introduce us to the regulatory affairs folks that would typically look at a pharmacovigilance product. We are planning today on selling it through our current sales force. However, if we get the traction that we hope to see, then I think we'll need to evaluate whether we want to bring on a dedicated sales force for that product. We have had several development partners, and these are companies that already own Article Galaxy that have helped us through the development process. Many of those companies are going through the purchasing process now to add it to their subscription. So, you know, we're optimistic about it, but I also don't want to overcommit.

Okay. And could you talk a little bit more about the severance repositioning sort of efforts? How complete you think that is? You know, is there more strategic sort of long-term thinking still underway that could result in any more sort of repositioning throughout 23? Or do you feel like you're in a pretty good stance as you exit the year?

Well, I think our intent was certainly to do it once at the end of the year and not have any additional expenses this year. That said, you know, there are some surprising, at least to me, severance requirements in Mexico which are much more generous than the ones in the United States and even many countries in Europe. And we're also, you know, if we feel like we need to make a change because of strategic shift or whatever, we will go ahead and do that and we'll communicate what the severance impact is. But our intent was to do it once and not have any more.

And I know in the past you were inquisitive at your prior firm. So maybe you, under the sort of infrastructure you've got at Research Solutions, could you talk about what your approach to M&A would be in terms of funding, how comfortable you are with drawing cash down on the balance sheet, how important you think equity components to newly acquired entities are, just to give a sort of a backdrop for how to think about what M&A might look like when it comes to paying for those deals. Thanks.

Yep. In our last assignment, Bill and I ran a fairly significant EBITDA margin, so we were able to do some deals. We were able to do some portion of a deal with debt. So we would typically borrow two and a half, three times EBITDA of the new combined organization and then use some cash and occasionally use stock, although we didn't do that very often, and also use seller notes. So I would expect a similar playbook here, although we cannot use debt until we start generating some material amount of EBITDA. I will say I'm not crazy about giving away stock, especially when we're at under $2 a share. So I'm open to seller notes. I'm open to using a significant percentage of the cash on the balance sheet because we will be producing cash going forward. But we're not going to use all of it. We'll use some portion of it to get a deal done.

And then your ARR growth has been pretty strong. Could you talk about, and this will be my last question, talk about how high a quota attainment rate you're getting? I'm sort of curious about the capacity you have in sales to keep up or expand from sort of the win rates, dollar win rates you've been having in fiscal 22 as we look forward.

Yeah, we last year, I believe, in building pregnant, I believe we had every new new hunter person hit their quota that had been here for a while. They weren't in ramp. And I believe we had most of our upsell renewal people hit their numbers as well. So, you know, they are hitting their quotas to answer your broader question. We don't have a capacity problem. We have a filling the top of the funnel problem. In other words, we can book probably five to 10 more appointments per week per salesperson. And we would expect to continue to close those at a similar close rate that we have now, which is about a third of those typically close. So for us, it's filling the top of the funnel, not capacity with the existing team. And then obviously part B of that is we will feel comfortable that we can expand the existing team as we need to.

Great. Thanks for taking my questions and congrats on a good quarter.

Thanks. And related to one of your questions, one that came in via email was, other than 275 and severance, are there other one-time costs in R&D and G&A? And are you finished rolling out various upgrades? Do these costs decline? The answer is yes, there is some other one-time costs in FY22 related to the CRM project, related to the aforementioned accounting upgrade, and a few other things. We didn't define those. There is actually some one-time R&D costs related to the development of cured data where we used a third party to help us get launched. But I don't think we've defined those or communicated them externally. Bill, is there anything you want to add to that?

No, I think you touched on the key things. It was some outsourced development for Curedatist and some of the internal system development that we've been talking about that was also impacting this particular quarter.

Our next question is a follow-up from Alan Klee of Maxim Group. Please go ahead.

Thank you. For transaction revenue, Can you remind us, is there any seasonality in the quarters, typically, in that business?

Bill will give you the exact numbers, but there is some, you know, Q1 is typically our slowest quarter from a platform perspective. You know, the transaction business, there is some seasonality, which Bill can comment to, but there's also just external factors, like when the war in Ukraine started, everybody stopped doing research for a week or two, probably paid attention. what was going on over there. COVID obviously had a big impact on researchers. So there's other events that impact that that don't have anything to do with seasonality. And then, Bill, do you want to comment on the seasonality question?

Yeah, typically Q1 and Q2 of our fiscal year are typically the lowest quarters that we see for transactions, and they can be relatively low. you know, stable, but as Roy mentioned, some things do impact that, potentially the given quarter. Q3 is typically always our best transaction quarter. So typically we see a nice jump in Q3 and then a flattening out to down in Q4. And so I would expect that seasonality will likely hold again as we move into this fiscal year.

Thank you. I was just trying to do a sanity check on like estimates and I didn't catch what you said for how many people renew. You said something about 90%. I don't know if it was 90% or high 90% because what I was trying to think of is if I took this quarter's revenue and then I took your incremental ARR that you add, And if I assume you recognize half of that quarterly, if you kept that ARR at that same level for four quarters next year and you recognize half of it as revenue on top of it, I come up with a number for revenue, but then I think I have to reduce it for penetration or customers that you'd lose. So I was wondering if this is a reasonable way to think about kind of your outlook.

Bill, you want to take that?

Yeah, I think that you could do that, but yeah, you'd have to do factor in those that would churn out. I think the easier way to kind of think about it is, you know, what revenue rate are we growing at and what is the sort of forward ARR growth rate? So we said on the call at the end of this quarter, the forward ARR growth rate was just under 35%, and then typically our recognized revenue has been growing 32%. And so I would view that as a sort of a bias upwards a little bit on the growth rate that we've been realizing, which is the 32%. But that's something that I would sort of continue to monitor as we continue to post through the year is what is the recognized rate and then what are we seeing in the forward ARR growth rate.

Great. Thank you so much.

There are currently no further questions from the phone lines. I would like to turn the conference back over to Roy Olivier.

Thank you, and thanks, everyone, for joining us on our call today. We will be attending the LD Micro main event in October, and for more information about this event, please contact LD Micro. We look forward to speaking to you in November to discuss our first quarter fiscal 2023 results, and we hope you have a great day.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.