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spk00: Ladies and gentlemen, thank you for standing by, and welcome to the ServiceSource third quarter 2020 earnings conference call. 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 this session, you will need to press star then 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then 0. I would now like to hand the conference over to your speaker for today, Chad Lyne, Head of Investor Relations. Sir, you may begin.
spk05: Thank you, Operator. We appreciate everyone joining us today and welcome to ServerSource's third quarter earnings call to discuss our results for the quarter ended September 30th, 2020. On the call today are Gary Moore, ServiceSource's chairman and CEO, and Rich Walker, our CFO. As a reminder, our SEC filings and the earnings released we issued yesterday after market close are available on our website at www.ir.servicesource.com. In addition, we have posted earnings slides to accompany our comments today. Shortly after this call, we will post an audio replay of this call and a copy of our prepared remarks to our website. Before we begin, I would like to remind you that during the call, we will make projections or forward-looking statements that involve risks related to future events. All statements made during the call reflect our views as of today, October 29, 2020, and are based upon the information currently available to us. All projections and forward-looking statements should be considered in conjunction with the cautionary statements in the earnings press release and the risk factors included in our SEC filings, including our report on Form 10-Q. These documents contain and identify important factors that could cause actual events and results to materially differ from those contained in our projections and forward-looking statements, and we disclaim any duty to revise or update any forward-looking statements. In addition, during the call, we will also be discussing certain non-GAAP financial measures, which we believe provide additional information to enhance the understanding of how management assesses the operating performance of the business. The reconciliation of the GAAP and non-GAAP measures can be found in the earnings release that accompany this call. And with that, I'll turn the call over to Gary.
spk04: Thank you, Chad, and welcome everyone to our earnings conference call for the third quarter of 2020. We demonstrated operational resilience and financial discipline in the midst of a challenging and dynamic macro environment in the quarter. Although the headline revenue numbers reflect a tough year-over-year comparable, I am encouraged by the progress we continue to make throughout the organization. We won new business on both the new logo and installed base client front, are doing a better job executing on our brand promise, and are moving forward well with our virtual first operating model. We improved profitability sequentially from Q2, generated free cash flow of $3.4 million, be leveraged as the balance sheet further and accreted net cash in the quarter. Looking forward, I have conviction that we are aligned to an attractive long-term market opportunity with multiple avenues for us to accelerate our strategy, enhance our growth and profitability metrics, and transform our valuation profile. We recently hosted a virtual executive roundtable with more than a dozen executives from market-leading technology companies, including a mix of current clients and those with whom we are working to partner. The discussion with these leaders was representative of what we've been seeing and hearing in the market more generally. Regardless of whether a company is selling hardware or software, delivering on premise or through the cloud, or monetizing through licenses or subscription and consumption-based billing, the challenges and opportunities are the same. Go-to-market transformation and customer-centric initiatives are at the top of the C-suite agenda. The unifying priority for these companies and their leaders is they focus on delivering a better experience throughout the pre- and post-sale customer journey. They need sales representatives that are technically savvy and digitally enabled. They need customer success managers that are product experts and outcome oriented. They need renewals representatives that are consultative and growth focused. And underpinning all of these roles, they need data, processes, analytics, and insights that make every single interaction with their customers more efficient and effective. Commentary from experts at leading strategy and consulting firms validate these needs. In a recent article from Bain & Company, the headline was, and enterprise software renewals and retention have never been more important. And then in October, McKinsey & Company thought leadership piece on COVID-19's impact on B2B sales organization. They identified that more than three quarters of B2B buyers and sellers now prefer remote human interaction and digitally enabled sales have now become the next normal. These things are at the core of what we do at ServiceSource every day, and we are the market leader in terms of our scale and global presence, our solution scope and capabilities, and our client results and impact. Allow me to share some recent examples where our strategic differentiation has resulted in success in the market. In the third quarter, we secured our fourth new client logo win of the year to support a leading provider of software-related services for the $94 billion health and fitness industry. Operating in a competitive environment and facing market disruption caused by COVID-19, the company saw an opportunity to accelerate their go-to-market activities by leveraging service sources, demand generation, and conversion capabilities. In a testament to our virtual first operating model and our focus on moving with greater speed and agility, we were able to go from contract signing to being live in production with a remotely hired and trained team within 30 days. We are thrilled to welcome another new client to our software and SaaS vertical and look forward to supporting their ambitious growth objectives. In another third quarter success, we were very pleased to extend and expand our multi-year partnership with Qlik, a provider of an end-to-end real-time data integration and analytics cloud platform. Since 2016, we have played an integral role in supporting Qlik's customer growth and retention initiatives. We have managed the holistic global program across a variety of customer success motions to allow Qlik to achieve a more predictable and on-time renewal rate. In addition, our partnership has driven continuous innovation, promoting deeper customer insights and higher end-user satisfaction. It is this consistent performance, co-innovation mindset, and strong partnership alignment that allowed us to renew our agreement with Qlik for another three-year term. We are thankful for their ongoing partnership and are excited to continue to deliver results that will accelerate their strong momentum. The last story I'm going to share is evidence of our land and expand strategy and our ability to grow with our installed-based clients. In this case, We already managed and influenced approximately $1.5 billion of annual revenue for one of our clients through a large-scale global renewals management program. This cloud and software company has experienced strong organic growth rates, and they have further complemented their growth with strategic acquisitions. Given our multi-year relationship and consistently strong performance in their core business, This client turned to us to launch a new program for one of their recent acquisitions, a cybersecurity company growing in excess of 30% annually. We designed and implemented a solution and launched a remote team of professionals that went live within weeks across North America, Europe, and Asia. Our client can now focus their internal resources on larger enterprise deals knowing that they have a trusted partner and service source to enhance the renewal rate and lifetime value of the acquired company's small and midsize customers. These wins and expansions highlight how we are well positioned to address a variety of client business challenges. Looking forward, we can't speculate on how the pandemic will play out or exactly when the economy will return to a more normalized environment. However, success stories like the ones I shared and viewpoints from third party experts underpin our conviction that our strategy, solutions, and capabilities are strongly aligned to current and emerging market opportunities. Before I turn the call over to Rich to cover our financial results, I want to personally convey my heartfelt thanks and appreciation to him for a job well done. As we announced yesterday afternoon, Rich has decided to step down as CFO. And as of November 1st, we'll pass the baton to Chad Lyne, who many of you know personally and who is on the call with us today. Two years ago, Rich accepted a request from our board to fill a vacancy in the CFO seat. Since that time, he's been a trusted business partner and a tremendous asset to the company. Together with other members of my leadership team, we moved some heavy rocks and strengthened the business and made important strides on our long-term transformation. Rich, it's been a great pleasure having you at my side for these two years, and I am thrilled that you will continue to be involved as a board member. With that, let's turn to the financials.
spk03: Thank you for the kind words, Gary, and good day to everyone. Before I jump into the financials, let me just share some thoughts on the transition to Chad. Although I will be leaving my day-to-day role with ServiceSource, my conviction in the company's strategy and my commitment to its success have never been stronger. As I began contemplating possible changes that would allow me to spend more time with my wife and pursue some other areas of interest, I took great comfort knowing that we already had a robust board-reviewed succession plan in place. Chad brings more than two decades of broad-based finance experience and more than four years as an executive leader at ServiceSource, including the last two where I have had the pleasure of working closely with him on many key initiatives. I have no doubt that Chad is the right person to now take the reins and I am delighted that our world-class finance and accounting organization will be led by someone with his character and expertise. As Gary covered in his opening remarks, we saw ongoing progress financially and operationally in the third quarter. Like other companies in the technology industry, our expectations entering the year have been time shifted out by several quarters due to COVID-19's global impact. And although the markets and clients we serve are not out of the woods yet in terms of the challenges posed by the pandemic, on balance, we do see more encouraging signs compared to when we last spoke with you on our second quarter call. Turning to our top-line results, in the third quarter, we generated revenue of $45.8 million, down $7.6 million, or 14.2% year-over-year. More than 70 percent of this year-over-year contraction is tied to churned or proactively rationalized accounts. As we continue to roll this revenue off, the overhang will persist for a while until we lap the tougher compare. Looking at our largest clients over a multi-quarter horizon, we had revenue growth with four of our top 10 logos on a trailing 12-month basis. We continued to face pressure from a large client we mentioned on our August call who is adapting to some market challenges that cause it to weigh on our overall results. Excluding their impact, we had trailing 12-month revenue growth of nearly 5 percent across the other nine largest clients. And on the retention front, year-to-date through Q3, we renewed or extended approximately 87 percent of the contract value that was up for renewal. Shifting to cost of revenue and gross profit, our non-GAAP cost of revenue was $31.7 million, favorably down $5 million, or 13.6% year over year. We prudently managed our capacity in line with our revenue trends while ensuring we continued to invest in client growth areas and new logo ramps. Average headcount in the quarter was down more than 15 percent year-over-year, and our revenue per employee metric was up modestly. Non-GAAP gross profit margins of 30.8 percent of revenue were down approximately 50 basis points year-over-year, but were up approximately 60 basis points sequentially compared to Q2, despite a lower revenue base. Continuing to walk down the P&L, Non-GAAP operating expenses of $15.8 million were favorably down 1.5 million or 8.6 percent year-over-year. We continued to reduce or reallocate spend from lower return areas to allow us to focus our investments on areas of opportunity that align to our strategic priorities and long-term growth objectives. At the bottom line, adjusted EBITDA was negative $200,000, down approximately 1.3 million year-over-year, but slightly improved sequentially from our Q2 results. Turning to the balance sheet and cash flow highlights, we had very strong execution in the quarter and bolstered an already solid balance sheet. DSOs came in at a record low of 66 days, a reduction of eight days year-over-year and down an even more impressive 10 days sequentially from Q2. Cash flow from operations in Q3 was positive at $5.9 million, up markedly from $500,000 in the same period last year. Combined with the $600,000 year-over-year reduction in CapEx, inclusive of capitalized internally developed software, we generated positive free cash flow of $3.4 million in Q3 compared to negative free cash flow of $2.6 million in the year-ago period. With our improvements in free cash flow, we took the opportunity to reduce the amount outstanding on our revolving line of credit by $5 million. With $15 million outstanding on the line and a cash balance including cash equivalents and restricted cash of $41.5 million, we ended Q3 with a net cash position of $26.5 million, an increase of $3.3 million from Q2. Before I hand the call back to Gary, I would just like to share my appreciation to all the employees at ServiceSource that I have had the pleasure of working with for the past two years. It has been an incredibly rewarding and meaningful period in my career. Although a lot has been accomplished, I look forward to the progress that will be made in the quarters and years to come. And with this being my last call, I'd be remiss to not thank the stockholders on the phone with us who have supported our ongoing transformation journey. Gary, back over to you.
spk04: Thank you for that, Rich. In summary, we continue to perform and execute well amidst what remains a challenging macroeconomic environment. We are making important strides to strengthen our financial profile while also investing wisely for the future. We are winning in the market with new clients while also delivering compelling value and securing expansions with many of our existing clients. And we are committed to making near-term progress throughout the business while keeping a sharp focus on our longer-term opportunity and objectives. With that, operator, please open the call for questions.
spk00: Thank you. Ladies and gentlemen, as a reminder, to ask the question, you will need to press star then one on your telephone. To withdraw your question, press the pound key. Again, that's star one to ask the question. Please stand by while we compile the Q&A roster. Our first question comes from the line of Josh Bogle with Sidoti. Your line is open.
spk01: Thank you. Good morning, everyone. I have a couple questions here, but before doing so, Rich, I'd like to wish you good luck on your future endeavors, and Chad, congratulations on the transition to CFO. First question, you've always had a pretty impressive renewal rate, and 87% is certainly impressive in this environment. I'm curious about the other 13%. that wasn't renewed, whether it was churned, or I'm just curious if in some cases decisions are being delayed given the macro environment.
spk04: Hey, Josh, thank you for that. This is Gary. So actually year over year the churn has improved pretty significantly. And most of the churn that we see are are some tail off from prior quarters, but in the quarter, from a revenue point of view, but the term within the quarter was primarily driven by one of the large clients we have that we've mentioned before that continues to do some shifting based on their own priorities and transformation that they're trying to do. So we're trying to get back into the sweet spot you know, the 5% to 15%. We're making progress there, but again, to some degree, COVID's not helping that because people are trying to protect their own internal team more than what they had before. So it just means we have to sell harder relative to the ROI that we can deliver and do deliver. Hopefully that helps, Josh.
spk01: Yes, it does. Thank you. And
spk05: And Josh and Chad, appreciate the question and just offer a little more commentary to what Gary mentioned. If you look back in terms of where we were last year, Q3 year-to-date, we're at about a 75% renewal and retention rate. So do feel good about the progress here at Q3 year-to-date this year being in the 87%. And again, you know, do see good progress despite the challenges of COVID. And we did talk about the CLIC renewal, the three-year renewal that we were able to secure in Q3. So our delivering value to the clients and do have a good focus on that will continue to drive that focus through the balance of the year.
spk01: All right. I appreciate the insights there, guys. You know, looking at some operating expenses, you've done a decent job in pairing sales and marketing. When I look at G&A, it's been fairly stable, I would say, at about $10 million a quarter. And I'm curious about where you've been cutting sales. on the G&A line. As your presentation mentions, you've reallocated or there's been the reallocation of spend from lower return areas. And am I right to assume that that's being offset by investment in perhaps like the virtual first operating model?
spk05: Yeah, Josh, I can go ahead and take that one as well. So, you know, we are pleased with some of the progress that we continue to make, not just in this quarter, but over a multi-year horizon. throughout our operating expenses. Again, this year we're down about $1.5 million year-over-year, and even on a sequential basis down about $0.6 million on a non-GAAP basis compared to where we were at Q2. But to be clear, we're not cutting for the sake of cutting. It is about reprioritizing spend to higher return areas. You mentioned the virtual first operating model. So continuing to invest there to make sure that we've got the technology and capabilities to recruit, to train, to deliver, and enable our people to work in a 100% work-from-home environment. That's been going well with 100% of our workforce delivering in that model since mid to late March. And we're continuing to see progress there. If you look back from that time, from when the pandemic was declared, we've recruited, hired, and trained, and onboarded, and then equipped several hundred people, north of 300 people since that timeframe to deliver results for our clients and continue to see great productivity. Our clients are pleased with the results, so it will be a key part of our operating model going forward. In terms of where we've rebalanced some of that spend out of, it's not that the areas weren't driving return, it's just that we see greater opportunity to continue to invest in some of our marketing initiatives, some of our strategic clients and partnership ecosystem. and other things where we, again, we're pointed towards that longer-term target model opportunity where we see greater value being created down the road.
spk03: Yes, it's rich. The only investment we've made, per se, in the virtual first model is a little CapEx. We're refreshing our laptop and enhancing our mobility environment to support the virtual first model. If you kind of work through that, and that's for the year maybe a million dollars that would already have been part of our IT infrastructure refresh anyway. I think the real important thing to keep in mind is as we continue on this and as we get into a mid to longer term, that operating model is going to have more opportunity in the form of physical facilities and infrastructure that we've has occupied historically. And that takes time to move out of those leases or sublet space, but that's currently in the P&L and will change over time.
spk01: I appreciate the insights there as well, guys. You had a pretty strong quarter here generating free cash flow. Kind of a two-prong question. I'm curious if you if there's any government stimulus plans that you participated in that helped at all there. And then can you just talk a little bit about your capital allocation strategy today?
spk05: Yeah, Jeff, I'll take that one. And then, Rich or Gary, please jump in as well. So really, please, it takes strong execution throughout the business, you know, from our RevRec teams to our client engagement teams, the global account managers, et cetera. So really pleased, Josh, with the progress that we've made from a DSO standpoint. DSOs this quarter were 66 days. That's down from 76 in Q2 and an improvement of eight days over the year. So continued focus and rigor around that and expect to continue to drive great results there because of the impact that it does have, to your point, on free cash flow this quarter being positive 3.4 million dollars. So we feel really good about the cash flow performance, about the balance sheet, the health and strength of the balance sheet. As of 9-30, we had about $53 million of liquidity. So feel good about where we're positioned from that standpoint. I think the other part of your question was in respect to government stimulus. So within most of our markets, no, we did not participate in any of the stimulus that was related to the pandemic specifically. We did have a smaller grant. It's disclosed in our queue. with respect to Singapore, where they had been incenting companies. It's part of the pandemic response to maintain employment as the area went into lockdown. And so we did have a bit of a benefit year-to-date through that stimulus and do expect that to carry forward for the next quarter, quarter to two.
spk01: Thank you, Chad. Actually, You did mention the DSOs, and it's a pretty impressive improvement year over year. I'm just curious, is some of that timing, or are you just seeing more favorable payment terms? Because I see other companies in this environment, they're being more lenient to their clients. So I'm surprised to see such a year-to-year improvement.
spk04: Hey, Josh, this is Gary. I'll let Chad Rich jump in. But I think the work that's been done over the last year and a half that's Rich mentioned and Chad just now underscored is driving a lot of that. Rich would call it a real machine relative to everyone in the company focused on this. It's an area we started almost two years ago now to really improve that and have discipline. I think everyone understands how important driving that number down is. With that, I don't believe that we've done anything other than negotiate and try to hold firm on what we like to see in our new contracts relative to payment terms. Chad or Rich, you want to add anything?
spk05: No, you covered it, Gary.
spk01: All right, great. And then if I could just sneak in one more, and I appreciate you taking all my questions. This is kind of a general business question. Just curious, you know, who you sell mostly to at a client. Is it a company executive or is it usually someone under them? And has this shifted at all during the pandemic with, you know, maybe executives wanting to have their hands more involved in making these decisions and working with a partner such as yourself? Just any general commentary there.
spk04: Yeah. So, again, Josh, this is Gary. I think we sell to as many people within a company as we have to. Typically that involves if there's a chief customer officer. We partner very closely with the head of sales. Sometimes that's the same person, but sometimes it's two different people. We act as an extension of the sales team. So the sales leadership within companies are typically the people that we go after. to show our value proposition to and show them where they're at and how we can improve that. But the relationships that we try to drive start at the CEO level and down because it's a big thing that our clients are giving to us to do, and that's to manage their customers. And so you need those multiple relationships. But the selling goes to the business owner as well as the head of sales.
spk01: Great. Well, thank you guys for taking my questions.
spk00: Thank you.
spk01: You're welcome.
spk00: As a reminder, ladies and gentlemen, that's star one to ask the question. Our next question comes from the line of Jim Kennedy with Marathon Capital. Your line is open.
spk02: Hi, guys. Hi, Jim. Hey, congratulations on the good operational progress, and congratulations, Chad and Rich. Just wanted to start with your new logo. You said it's in the health and fitness category. Is that the first time you've had a client in this area? And what drove that decision? Can you tell us a little bit about what they were doing and what they want to accomplish by bringing you on? And is that logo now a top 10 logo for you?
spk04: So thanks, Jim. This is Gary. It's not a top 10 logo yet, but it has the potential to get there over time. And that's part of our strategy. You know, the company provides software and cloud-based solutions. So think about it as club management and billing for gyms, health clubs, and fitness studios. They are a PE-backed firm. They have... 15,000 plus customers, so they have a broad base of clients or customers. It's a single-year contract. It is live, as we mentioned during the call, and I think what we're doing there is providing digital sales services, converting the marketing qualified leads and converting them to sales qualified leads and then converting those leads by closing the sale. So the very front end of what we do, and I think that gives us an opportunity as we perform and get this ramped up to expand our opportunity there, Jim.
spk02: Gary, what convinced them to choose you versus what they were doing? Are you supplementing an internal marketing sales effort, or have they said, wow, what we're doing isn't working very well, and therefore we're going to turn it over to you for a year?
spk04: No, I think COVID had some impact. We were talking to them before COVID and obviously COVID slowed things down a bit. But I think as time went on and we didn't give up on this, I think we were able to demonstrate that given the pressures they're under, we can actually help accelerate converting, you know, finding and qualifying and closing additional business for them. So it's a value add, in my opinion, that they said, okay, you guys can help us here and supplement what we're doing. So it's a true partnership from that perspective. It's early days, but I believe fully that as time goes on, their services are really aimed at a wide market here. I think I'm recalling this number from the top of my head, but it's like a $78 billion market. So people don't understand typically how big that market is, and I believe it is the first time we've signed a health and fitness software company. So we're excited about it, and we've got the A-team on it.
spk02: In terms of your virtual first operating models, what percentage of your employees are actually back in a call center globally now, or are they still at home? What's that mix look like today?
spk04: Yeah, so 100% are still at home. We have people that go into an office every once in a while. We are in the middle of making our plans relative to the work from home, but the You know, virtual first is here to stay. That's not going to change. Given the recent spikes, not just in the U.S., but in other countries where we have offices, we don't see putting people back in the office until probably after Q1 or Q2 of next year. We'll make that final decision based on a lot of factors, not the least of which is vaccine. But we do have a plan that allow new teams to come together to create some workspaces where we can have social distancing, the cleaning, all the things that go with that. And we've had, you know, the team that we put in place, you know, seven months ago continuing to look at that. We talk to our employees a lot. We have a number of employees who can function from home. We have a number of employees who, you know, just given where they're at and where they live, would prefer to be able to go back into an office when it's safe to do so. But our priority right now continues to be the health and safety of our employees, making sure that we can deliver for our clients. And we're doing things to make it as easy as possible and to support our employees that are working from home.
spk02: Can I read into that that potentially next year or maybe in 2022 that some of your leases potentially may not need to be renewed, or maybe a smaller footprint?
spk04: Yeah, I think you can read into that, and Rich has talked about it before. I don't know that we will get into specifics here, but we have identified and have already made some changes. We've sublet two two pieces of property, if you will. We have reduced the number of floors in a couple of locations where we have the ability to do that based on those leases coming up. And we have laid out over the next actual several years what our plan would be relative to that. And again, as we understand better how much space we need post-COVID, we'll continue to make that optimization of the facilities. Chad or Rich, I don't know whether you want to add anything to that or not.
spk03: Jim, it's Rich. I made the point that Gary alluded to. Even before COVID, I think we had put in motions a very deep inspection of our operating and delivery model, looking really at the global footprint. As we came into the COVID environment and were quickly able to transition from 100 percent remote, that's become a pronounced catalyst to accelerating that migration and remain optimistic. And as you allude to, some of them are contractually bound by the terms of the leases. Others, we can be more vigilant. And the continuum ranges from lease expiration to possibly subletting to possibly negotiating fair and equitable transition. So we're exploring all of those and we'll continue to do so.
spk02: Great, great. And then just following up on the last caller in terms of great job on the free cash flow, can you speak to, say, free cash flow or your net cash position relative to seasonality? Was there anything unusual in this quarter and how should we look at that say, for the next four quarters? Is there a seasonality in your ability to generate that cash?
spk05: Yeah. Hey, Jim, thanks for the question here. This is Chad. You know, from a revenue standpoint, there's clearly seasonality in the business, you know, where Q4 does tend to be one of our strongest quarters generally. But specifically to your question in terms of the cash flow itself, nothing abnormal that really drove the benefit of this quarter other than the the rigor and the focus that Gary and Rich and I mentioned previously. It's all about the teams and the focus that they apply to make sure that we're getting the invoices and the reconciliations and the booking reports and all that kind of stuff out in a timely manner and orderly fashion so that the clients can pay within the terms or sooner than that with the terms of our contract. Just a lot of vigilance throughout the organization. Obviously, we're focused on doing what we can to maintain that, not going to guide or say whether we can maintain the 66 days going forward, but are clearly focused on it throughout the business. From a CapEx standpoint, there is some seasonality there on a quarter-to-quarter basis. Rich mentioned some of the CapEx that we incurred to deploy some of the updated laptops to enable the virtual first operating model, but again, not significant or material as you think about Q3 relative to any other quarters.
spk02: Got you. Very good. I just want to switch gears real quickly over into kind of some growth initiatives. Gary, we're coming up on, I guess, the beginning of somewhere next year, the beginning of year three in this transition. I know the first year or so was, as you said, you had to move a lot of rocks, a lot of heavy lifting. What does the current pipeline look like in general? Sure.
spk04: I think in general my answer would be, you know, the pipeline is a lot healthier than it was a couple years ago when we started the transformation work that we're doing relative to 2019. I think the point that I made during the call I think points to some progress. If we look at the fact that we grew four of the six large clients that we have on a Q3 quarterly 12-month period, I think we had some COVID impact there. The way I would answer the question, Jim, is, you know, we're growing our installed base, especially the large clients, with the exception of one that we've talked about. And I think our portfolio continues to be more and more attractive relative to growth opportunities. That's offset by some impacts from COVID and actually some M&A in the market, etc. So that's that's caused some choppiness, but as I look at where we're at, we've done a really good job of focusing on and prioritizing the opportunities that I think will give us much better results over the long term. I'm encouraged by the new logos that we've brought in this year to the company. And we have more in the pipeline. And I never talk about what's in the pipeline from a named client base or potential client base. And I always say it's never full enough. But I would tell you that the discipline we have relative to what's in the pipeline and measuring that every week and sometimes more often than every week. But I sit through the weekly reviews as does the senior team. We also accelerate those things. We've done a lot of work relative to driving our ability to do virtual EVCs and really put together some at some events. I mentioned the event that we hosted over a dozen current and potential clients. Denzil and I hosted that a couple weeks ago. We actually had two clients that led the panel discussion and talked about the importance of the full customer journey experience and why that starts on the very front end of that with the very first part of the cycle where you're actually closing business to really enhance our client's ability to get those renewals. I think in terms of as I look at the pipeline, you know, closing the business that we do, we closed a new logo in Q1, we closed two in Q2, and we closed another one in Q3. And compare that to last year where we had three total for the year. But the other thing, and we're really focused here in the investments we made with global account managers, and the executive sponsors and the quarterly business reviews is really driving some wins within our install base. So we continue to see the right focus relative to last year's reorganization. We're ramping some new hires, some marketing. We've brought in some people, some new sales leaders, as well as beefed up the marketing team, as well as moved some people into sales from other parts of our business to really strengthen that. So, like most companies, we're adapting and navigating the COVID-related stuff and dealing with that as it comes up. But, you know, it's never over until it's over. And I think that win that we mentioned is one where they had pulled back and said, you know, just given COVID, we're not going to do anything for a while. And we kept after it. And that's the attitude here now. Everybody sells. customers for life, and just driving the top line. It's the most important thing we can do from a company point of view is to figure out how to grow in this environment, how to continue to provide value to our clients and keep the clients that we have and grow them.
spk02: Got you. Given all of that, Gary – Do you think that the pipeline is more robust going into 21 than it was going into 20?
spk04: I think it's clear to me. When we came into 20, we had made a lot of progress on the pipeline. What we didn't anticipate was some of those would pull back because of COVID-19, Some of them would actually get consolidated, and some of them would just take longer to get closed. So I think where we're at today, you know, that's still a concern. COVID is still, you know, Jim, you know me well enough to know that I don't use anything as a crutch. We have to figure out how to win and how to drive this. But COVID keeps throwing different things out there that – make some of our prospects want to hold back and take longer to close. So as Rich mentioned in his conversations or his opening today, you know, we've seen some stuff time shift, but we're not giving up on it. I would tell you that I'm very happy with a couple of the much larger opportunities that we have in the pipeline, and we're really focused on trying to get those closed as we go into next year.
spk02: Great. Okay, last one for me, guys, and I'll let you go. In terms of the whole Salesforce IRG health, do you have anybody live at this point? Are we in some trials with folks? Can you comment at all on that effort?
spk04: Yeah, so, you know, we've invested in a team of about a half a dozen people to build and drive alliances and those partnerships. I think we can ultimately drive, you know, this is going to be something, not this next year necessarily, but my hope and the planning here would be that eventually this could grow into somewhere close to 10% of our total revenue. I haven't given up on it. We're still in the early days, and candidly, the progress, as I've said to you before, isn't where I'd like to see it, but the team is really focused here. I think as we look at the alliances and the ecosystem we're building, that's really taking hold, and it's a force multiplier to our go-to-market strategy. It's really going to help us have better reach and a stronger portfolio from some of the solution partnerships we're doing. So we have the alliances, particularly around the Salesforce one that we call organizational health management. We do have transitioned some of those early pilots, but they're not really big enough, Jim, to talk about. When we get the first big one, I told the team I will talk about it because I think once we get the first big one and really can demonstrate the solution and the partnership that we have with Salesforce and their partners, that will be a thing that could open up a lot of acceleration. But at this point, we don't have it. We have signed, just to add on to that, a number of partnerships and they're solid partnerships, companies like CleverBridge and iAsset and Grax, DataAxle, and we're working on joint account planning. I sat through one probably two weeks ago with one of these partners with their head of sales, with our head of alliances and Denzel, and we've come up with, I think, a pretty good way of looking at how we can work better together and accelerate these things. But it's taken time, and it's certainly taken more time than what I would be happy with normally, but there have been some things like COVID that have slowed some things down as well.
spk02: Well, it sounds like the groundwork and the foundation is being laid, so that's good. Okay, guys, thanks for your time today.
spk04: You bet. Thank you, Jim. Thank you. I'm not... I'm not sure if there's other questions and how much time we have, but let's go ahead.
spk00: I'm not showing any further questions.
spk04: Okay. All right. Tawanda, thank you. And let me just close out with everyone that's still left on the call. You know, we feel, as I mentioned, very confident that we're on the right track, that we're still in a very big market opportunity. certainly the COVID impact has slowed some things down, but we still believe that I'm more confident. I'll just say it that way. I'm more confident now that even in the face of some of the revenue headwinds and the compare for this quarter, we are driving the right areas and the right areas of investment and taking care of our people and our clients. So, that at some point will translate into the kind of growth that all of us are looking for and the value of the company. So with that, I'll close out the call. Thank you.
spk00: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
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