WalkMe Ltd.

Good day and welcome to the WACME second quarter earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Nicole Bosher, Investor Relations. Please go ahead, ma'am.

Great. Thank you. Hello, everybody. Welcome to WACME's second quarter 2021 earnings conference call. On the call with me today are Dan Adhika, CEO and co-founder of WACME, Rafi Swery, President and co-founder of WACME, and Andrew Casey, the company's Chief Financial Officer. Certain statements we make today may constitute forward-looking statements and information within the meaning of Section 27A of the Securities Exchange Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 that relate to our current expectations and views of future events. These forward-looking statements are subject to risks, uncertainties, and assumptions, some of which are beyond our control. In addition, these forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in forward-looking statements as a result of a number of factors, including those set forth in the section titled Risk Factors and our perspectives filed with Securities and Exchange Commission on June 16, 2021, and other documents filed or furnished with the SEC. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this press release. You should not put undue reliance on any forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events, and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by applicable law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, after the date of which these statements are made, or to reflect the occurrence of unanticipated events. See our press release dated August 11, 2021, for additional information. In addition, certain metrics you will discuss today are non-GAAP metrics. The presentation of this financial information is not intended to be considered in isolation or as a substitute for or superior to the financial information prepared and presented in accordance with GAAP. We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these measures provide useful information about operating results, enhance our overall understanding of past financial performance and future prospects and allow for greater transparency with respect to key metrics used in management and its financial and operational decision-making. For more information on the non-GAAP financial measures, please see the reconciliation tables provided in our press release dated August 11, 2021. With that, I'll hand the call over to Dan.

Thanks, Nicole, and thanks, everyone, for joining us on our call today to discuss our second quarter results. I'm excited to be here today on our first call as a public company. Before I get started, I would like to thank our employees, customers, partners, and investors for their support over the years as we've worked towards a significant milestone. I speak for the rest of the team when I say we're looking forward to this next stage of our growth as a public company. We had a very strong quarter, and we're very pleased with the results we achieved. Our sales organization has continued to execute very well, driving strong momentum in revenue, ARR, and customer metrics. Andrew will cover the financial details in a few minutes, but on the high levels, Total revenue grew 28% year-over-year to $46.8 million, with subscription revenue growing 31% year-over-year to $42.2 million, an acceleration over our growth in Q1. ARR at the end of the quarter totaled $191 million, up 31% year-over-year. And non-GAAP operating loss was $11.7 million, a margin of negative 25%. Since this is our first turning call, I would like to provide some background information on WalkMe and the opportunity ahead of us. Much has been said in technology industry and in enterprises across the globe about digital transformation. It can be a complex topic with far-reaching implications, but at its basic level, the common element in every digital transformation is buying and customizing software to create compelling user interfaces and experiences that improve business processes. Sometimes it's as simple as a website or a mobile application. As straightforward as it sounds, there is a compounding problem that is hindering the digital transformation efforts or even the largest enterprises. You've probably heard the phrase, there is enough for that. Organizations are proving that to be true as they buy and develop new cloud-based applications at a record-breaking rate, each with the aim to improving any one of an uncountable number of business processes, along with the related experiences of employees and customers. So what's the problem? There are actually two. First, When I talk to CIOs, the biggest challenge they have is figuring out how their multi-million dollar IT budgets are driving improvement across their businesses. They tell me that their lack of visibility and insight into digital assets and business processes, which make it very hard for them to extract value from applications, including those that they may not control or even know about. Clicking through log after log in app after app to find the data they need to even understand what is happening breaks down quickly. Each time someone in the organization has a new app, it's just become that much harder to have visibility to the whole. This is why it's important to recognize the compounding nature of the problem. CIOs can't outrun it. Second is the risk of creating poor user experiences for both employees and customers. As I noted earlier, one of the basic elements of digital transformation is to create compelling user experiences. These turn out to be extremely difficult when there are no UI standards for applications and software with a single use case doesn't, by its nature, consider the user experience across all of the applications required to complete business processes. How does management even know if the experience is working for the users as intended? At WalkMe, we recognize that the key to successful digital transformation is not about the software you buy or the experiences you accept. It's about user adoption. To achieve user adoption, organizations need two critical things. One, deep visibility and insight into their tech stack. Who is and who isn't using each application, who are using getting stuck and abandoning processes, where system and user errors are happening, where integrations are breaking. The permutation across all of the applications in the enterprise are endless. It is a compounding problem. Second is an efficient and agile way to action this insight, a GPS-like experience using no-code constructs and automation that put the employee and customers at the center, where every change directly improves their experience and in turn drives adoption. Being data-first is the most important thing when designing a digital transformation strategy. Without the visibility to the data and the ability to declare and measure the KPIs, There is no way to improve applications, deliver the experience employees and customers expect, and fully realize the value of digital transformation. The WalkMe Digital Adoption Platform, or DAP, analyzes and understands any application with a simple no-code implementation. CIOs and CDOs are provided with immediate insight to find the gaps between the user experience with technology and an organization's business goal. With actionable insights, Organizations can create and deliver elegant experience that enables users to access the full functionality and value of your application, ensuring adoption, and ultimately fulfilling the promise of digital transformation. This is why WalkMe has become not only a category leader, but a category creator. In Q2, we have continued to make huge investments in innovation, and I'm excited to share with you the following insights. We completed the acquisitions and integration of the enterprise search built with for digital adoption. Now users of Workstation, our unified employee solution, can search what they need at the moment they need it and get personalized AI-driven results. For example, imagine the productivity increase in sales when they no longer need to remember which application Haystack is searching to find the latest version of presentation, order form, or contract. I'm also proud to share that we've completed another milestone in the development of our machine learning capabilities we call Deep UI. With Deep UI, WalkMe analyzes how humans interact with software and proactively recommends ways to improve the user experience with actions that can be taken immediately right from the WalkMe platform. For example, organizations using self-force lightning can turn on WalkMe UI intelligence and expose in full detail data-driven insight for all forms. That professional can now see which fields are redundant, understand where users waste a lot of time, or make form field errors, and chart the optimal path to form completion. Imagine how powerful it is for a CIO to deliver a radically better user experience across applications and align to business processes without any configuration changes or human interaction from your team. Everything is done automatically, powered by AI and machine learning to extract data. better user experience, equal better digital adoption, and more value from digital transformation. The best way to understand WalkMe is for our customer success stories and hearing about how they use data-first approach to close the gap between user interactions with technology and their business goals. We had a very strong Q2 in terms of both new logos and expansion with enterprise customers. As of the end of Q2, we serviced more than 2,000 customers globally. Giving our enterprise-focused approach, we continue to see outside growth in that market. To that end, we added 50 new enterprise-wide app customers in that quarter, which is growth of 110% year-over-year. The growth we are seeing in these enterprise-wide deployments demonstrate how our platform becomes a really strategic part of our customers' digital transformation strategy once they are reaping the benefits of data visibility and better employee and customer experiences delivered by Walkme. I'd like to share how a bank in Southeast Asia expanded with WalkMe to support its hybrid workforce strategy. The bank formally launched its hybrid work program 14 months ago with the goal to increase support from 700 to 45,000 employees across eight markets. Today, nearly 37,000 employees have a flexible working arrangement. The hybrid work program is powered by four applications, ServiceNow, an e-learning platform, Talent Marketplace, and SuccessFactors. WalkMe connects business processes across these four applications, so managers have the data and visibility they need, and employees have the right user experiences. Each can now optimize the use of all four applications to push the bank's future of work initiatives forward in an efficient and smooth way. With WalkMe, bank employees intuitively adopt new platforms, improving productivity and task completion rates. Engagement rates are high. 99.9% of employees have interacted with WalkMe to complete business processes on ServiceNow, and 93.9% of the bank's e-learning platform. Let's look at another expansion deal. Here is an example of a large multinational tech company that first became a customer in 2016. Like organizations around the globe, the company embraced a remote workforce model as a result of COVID, and today is one of the most successful hybrid workforce success stories. Not to be derailed by the new normal while moving forward with their planned IT initiative, they started off with a WalkMe pilot primarily for its customer experience transformation. Their goal was to onboard 7,000 customer service managers on new processes in Salesforce.com to better support the new software product as they move away from their hardware-focused strategy. With the data and visibility they gained with WalkMe, the company provided new user experiences that reduced the average handle time for critical business processes in Salesforce by more than 50% while improving process completion rate. The success of the pilot got the attention of the sales organization who ultimately decided to onboard WalkMe to facilitate their global sales transformation. Since we first started working with them, we expanded from one application to four applications, 7,000 users to 30,000 users, and we closed a two-year upsell and renewal in Q2. We're now in talks to expand our use of WalkMe dApps so they can realize even more value from their transformation initiative. These are two perfect examples of companies that look to WalkMe to drive their hybrid work strategies by gaining better visibility to their data and using insight to create better user experiences. They connect the data and action on the WalkMe platform to deliver outstanding business outcomes. Customers are at the center of everything we do. Now, let's widen the lens and look at our category and its ecosystems. While we have directly seen the positive impact and ROI of DAP across our customer base, major industry analysts at Gartner and Forrester have increasingly been featuring WalkMe as an enabler of digital transformation and have recognized the category of digital adoption platform, which we have helped define and shape. In 2019, Gartner classified digital adoption solution as an emerging category across software landscape, alongside the likes of HCM and CRM software. recognizing that WalkMe couldn't be put into a narrow category that underappreciates the value of what our platform can deliver. Gartner stated that by 2025, 70% of organizations will use digital adoption solutions. They believe that the number is only somewhere between 5% to 20% today. Most recently, Gartner featured WalkMe and digital adoption solution in two hype cycles where digital adoption solution has advanced the stage in the maturity phase. In addition, Forster has done extensive research on the economic impact of WalkMe for enterprises. Forster found that WalkMe drove an ROI of over 368% based on cost saving across employee-facing applications and customer-facing services. This translates to a payback period of less than three months and over $20 million in savings to the company over a three-year period for the composite company studies in the report. Strong ecosystems are important. The most valuable companies in the world have them. WalkMe has made important strides in this area. Our ecosystem, WalkMe Beyond, is about expanding beyond WalkMe's core platform by bringing together two key elements, talent and technology, to drive new opportunities. This ecosystem is built around our Digital Adoption Institute, which empowers our customers, partners, and users to become skilled WalkMe professionals. Through our self-study courses and certification programs, an ecosystem of WalkMe users and collaborators is growing rapidly. Over 2,000 individuals actively engage in the Institute to grow their skill set in Q2, and over 15,000 have joined to develop the skills of the future since its launch last fall. Experienced DAW professionals are championing WalkMe in their professional and industry network, which increases mind-share and awareness and redefines industry-best practices around digital adoption to realize more value from digital transformation. More than 3,500 professionals feature digital adoption platform and WalkMe skills on their LinkedIn profile, and there are more than 30 companies with open job acquisition for this skill set. The ecosystem also provides another layer of resources to increase the strategic value of WalkMe for our customers, including access to community, service marketplace, market research, integration, apps, and solutions. This is the power of our ecosystem, which enables our customers to maximize the value of our platform. As we look ahead, we're excited about what the future has in store for Walkme. In particular, we look forward to the launch of new products that leverage the power of AI to enhance the intuitive nature of our platform, the expansion of our ecosystem to amplify the power of our network effect, and the investment in our sales and marketing organization to drive increasing brand awareness and further recognition of our leadership as a leader in digital adoption platforms. While we have made great progress, become a category leader, and achieve scale to date, we strongly believe that we are still in a very early stage of our journey. We look forward to discussing our progress with you in the quarters ahead. With that, I will turn the call over to Andrew to walk us through our financial results.