WalkMe Ltd.

Good day, everyone, and welcome to the WalkMe third quarter earnings call. Today's call is being recorded. At this time, I would like to turn the conference over to Mr. John Strepa, head of investor relations. Please go ahead.

Hello, everyone, and welcome to WalkMe's third quarter 2021 earnings conference call. On the call with me today are Dan Adika, CEO and co-founder of WalkMe. Hello, everyone. Rafi Sweary, president and co-founder of Wathme, 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 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 expectation 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 guaranteed a future performance. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including those set forth in the section titled Risk Factors in our prospectus filed with the Securities and Exchange Commission on June 16, 2021, and other documents filed with or furnished to 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 on which the statements are made or to reflect the occurrence of an unanticipated event. See our press release dated November 10, 2021, for additional information. In addition, certain metrics we will disclose 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 the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. For more information of the non-GAAP financial measures, please see the reconciliation tables provided in our press release dated November 10, 2021. And with that, I'll pass it over to Dan.

Thanks, John, and thanks, everyone, for joining us on our call today to discuss our third quarter results. We had a strong third quarter, which exceeded our guidance on all metrics, as well as the signing of two strategic partnership agreements that are important for the company's future growth. We continue to execute well and accelerate our growth, and I can share a quick summary of all the achievements. Subscription revenue continued to accelerate to 37% year over year, to $46.1 million, up from 31% growth in Q2. Total revenue grew 31% year-over-year to $50.6 million. ARR, at the end of the quarter, totaled $201.7 million, up 31% year-over-year. We're seeing continued growth from our DAP customers, with ARR growth of 120% year-over-year, representing 35% of total ARR, up from 21% in Q3 last year. Non-GAAP operating loss, was $10.1 million, a margin of negative 20%. I'm excited to announce another huge milestone in the continued growth of our go-to-market approach with the signing of two strategic alliances, one with Deloitte US, where they have created a digital adoption service business in conjunction with WalkMe. We believe that this partnership is evidence of the growing market need of digital adoption and will support our accelerated growth for years to come. On the ISV front, SAP and WalkMe have entered in a strategic partnership to launch a concur user interface for all global SAP Concur users. Once again, this shows the underlying power of our technology to drive success and business outcomes for our partners and customers. I'll share more details about the agreements and strategic importance of this partnership later in the call. As market leaders, we continue to heavily invest in our platform and technology with over 20 new features launched this quarter and new data capabilities aligned to our data expansion strategy. At the high level, we continue to execute well and are excited about the growth of our partner channel and innovation. But I want to take a step back and highlight why we believe in the long-term future of Walkmeet. We believe that our digital adoption platform can help every organization achieve their digital transformation goals by connecting data and action to improve business processes and outcomes. When I talk to leading CIOs, the two problems they consistently face when driving digital adoption is the lack of visibility into their tech stack and the poor user experience for their employees and customers. We solve both those problems. Understanding the business processes and software usage are fundamental to developing and scale, and agility to fulfill the promise of technology. But the technology in itself is nothing without adoption. Organizations need to adapt to new industry macro trends of digital workforce and remote hybrid ecosystems as they imperative to success. With no clear view on the CIO or CDO part and no clear enterprise user experience strategy deployed, the two clash. This clash is causing over 70% of organizations to fail at reaching their design transformation goals. WalkMe has the unique ability to take action on the data, unlock and deliver a global, scalable digital experience on top of any device. WalkMe platforms help solve the gap of digital adoption by offering deep data insights to decision makers and improve business processes to end users through our no-code editor, which can be deployed on top of any enterprise software. Imagine Every employee in the world starts their enterprise software journey through a personalized user interface and can get things done leveraging automation and guidance at their fingertips. No frustration, no delays, while the organization's leadership have complete control and visibility over their technology assets and can scale change management fast. This is that, and this is why WalkMe is changing the way people interact with technology and how organizations work. With that, I'm excited to share some recent company development. I will start with our partner strategy. I'm humbled to have the privilege to share that we have signed a strategic alliance agreement with Deloitte U.S. Through this agreement, Deloitte is investing in a dedicated team in the U.S. to advance technology adoption best practices. Client of its newly created digital adoption service businesses, can now leverage Deloitte know-how and Walkme technology to gain the rapid results the digital transformation strategies are expected to deliver. The knowledge, expertise, and investments of Deloitte will expose Walkme's gap to additional stream of customers and ensure their expansion and success. I'm thrilled to have them as partners and look forward to signing more agreements with other global leaders soon. The demand for DAP continues to grow as more enterprises realize there cannot be digital transformation without digital adoption. Across its best client base, Deloitte has been observing this hand-in-glove relationship between the two initiatives. Through this alliance, Walkme and Deloitte are making digital transformation a successful reality for more enterprises, simply through making DAP a readily available complement to digital projects. We believe that this type of partnership with GSIs will help drive acceptance of staff as a new way of doing business and help WalkMe diversify and accelerate our go-to-market strategy and drive meaningful growth over time. Next is an extraordinary partnership with SAP Concur. ISVs has always had a vested interest in implementing WalkMe into their main offering to ensure the success and adoption of their customers and their end users. With that, SAP Concur has been a Walkme customer leveraging our platform to do exactly that. Today, I'm excited to share that due to a massive customer demand for customization of business processes, we have signed an agreement to launch a joint offering for their customer base named Concur User Assistant. Available today, Concur User Assistant by Walkme comes in a freemium version to all Concur users via a newly released user interface. This version provides a basic workflow assistance, new user profile setup, on-screen health directory, and new UI introduction. The premium version, available through the SAP Solex program, provides a full license of Walkme, from which clients can create and deploy custom guides for training and onboarding, getting insights regarding the user experience and business goals completion, support custom fields and workflows, and create organization-specific messages. Unlocking customization and the full utilization of WalkMe for every SAP Concours customer is a breakthrough in our ISV strategy and will enable us to operate our land and expand motion to grow each account into a full DAP customer. Thinking about the bigger picture, strong ecosystems are important. The most valuable companies in the world have them. Our ecosystem, we call it WalkMeBeyond, is about expanding beyond WalkMe's core platform by bringing together two key elements, talent and technology. Deloitte and SAP are an important addition to this ecosystem and further validate both our vision and our ability to execute against our vision. We're also pleased to announce our new Chief Customer Officer, Wayne McCulloch, who joined us during Q3. Wayne's expertise in extracting more value from the technology investment and user experiences of global enterprises while leading the industry's most customer-centric client success teams, making him the perfect executive for this role. Wayne joined us from Google, where he oversaw customer success for Google Cloud's entire SaaS portfolio of 7.1 million customers. Prior to Google, he held senior leadership roles within the customer success group of Looker and Salesforce.com. At WalkMe, we lead all postal functions, including customer success, services, support, and the Digital Adoption Institute. Our success can be best measured by the success of our customers, and I want to take another moment to thank all of our customers for their true partnership with us. For us, our customers are key to growing the market and potential of Dell. Driving high ROI delivering on their digital transformation initiative is critical, while expanding and deepening the relationship with our product throughout the organization. Let's look at some specific evidence of customer success. A number of our customers received awards this quarter for their successful digital adoption initiatives powered by Walkman. For example, Christos Health and Red Hat each took home gold in Brandon Hall's annual Human Capital Management Award, winning the Best Advanced in Business Automation and Best Approach to HCM Innovation, respectively. And Nestle, the world's largest food and beverage company, was named a winner in Constellation Research Annual Supernova Award in the category of Future of Work and Employee Experience that took place recently in October. WalkMe even appeared with a customer in a magic quadrant this quarter. I'm referring to a Fortune 50 enterprise customer whose further implementation of WalkMe called out by Gartner as a contributor to to one of their three primary strengths in their magic quadrant. For ease of use, the report said that the company partnered with WalkMe to include our digital adoption platform in its product. This integration helps IT administrators learn and use the product in the context and flow of work rather than offline. We don't expect it to be the last time you see WalkMe in this kind of report. Moving on to that category. As the creator and leader of this category, WalkMe has more than 45% market share according to Everest Peak, by far the highest among the 18 vendors that qualify to be in the Everest Peak metric. As the market leader, WalkMe has more than 900 million unique users, 21 billion user interaction, and 38 million automation triggered on the platform on a yearly basis. We have customers in over 42 countries. This number demonstrates not only the significant demands for digital adoption platforms, but for the WalkMe formula specifically. In the Everest Peak report, WalkMe demonstrated the strongest year-to-year movement on both market impact and vision and capability categories. This is yet another proof point of the progress we're making in both creating the DAP category and establishing ourselves as the leader in the market. This recognition is happening because of the positive changes we're driving in business outcomes for our customers. These strengths, the DAP category further aside many other achievements, include Gartner shortlist of WalkMe as a composable technology vendor, among some of the world's largest leading technology companies. A key strategic theme for Gartner analysts and a top priority for CIOs worldwide. Gaining more momentum with research analyst firms is a strong indicator the DAP category is growing and impacting many organizations globally. Moving on to the product and innovation, we continue to invest a lot in our core technology and our platform. In Q3, we focused heavily on our biggest differentiator, our ability to start with data. We released over 20 features just in Q3, but I would like to focus on our new UI intelligence technology as well as our automated insight technology. With WalkMe discovery capabilities, CIOs will have a full view in their tech stack. They can analyze adoption, business processes, and utilization across applications, users, and departments, and can manage and track digital transformation initiatives by defining KPIs aligned to their business goals. From there, organizations can analyze digital behavior, usage, and experiences across workflows to see exactly where users dropped off in the process, which capabilities are not being adopted, and general behavior across applications and business processes. Finally, WalkMe UI intelligence, a machine learning algorithm which understands UI in the underlying application, takes over to provide actionable insights to be addressed with WalkMe content. With this new innovation, organizations will, for the first time, have full visibility into their tech tech and the insight into where users are struggling so that they can ensure full adoption and usage of software. In other words, They will be able to ensure that their business stakeholders will be able to drive software users to achieve the business goals for which the software was intended to do in the first place. For example, with UII technology, our customers can see exactly where their employees or customers have errors, which errors they got, and how much time it took to complete the process. All of it is being done completely automatically without any setup or configuration of the process from the customer side. This is a complete game changer in UI process discovery. The challenge for digital transformation and digital adoption is similar to what has been seen in other disciplines like IT service management or governance, risk and compliance, where the first roadblock is just to figure out what you have in the environment. This is especially difficult in the middle of digital transformation when, as a CIO or a CBO, you are trying to manage a situation where literally anyone who uses software and keyboard to do their job can bring new application into the environment. This can be done without the CIO or their team knowing about it, or employees might just be building new apps using no-code platforms, tools that were given to them by their very own same CIO now grasping for control. Either way, it's yours as the CIO to manage now. So just like ITSM and DRC, where an efficient and accurate discovery mechanism was a requirement, the same is true with digital adoption. This is why we're excited to bring this innovation to our customers and are looking forward to telling the world more about them soon. We have a strong plan to further advance the digital adoption platform category as a whole and our leadership position in it. We are still in the early stages of the opportunity and look forward to discussing our accelerating progress with you in future earning calls. With that, I'll turn the call over to Andrew to walk through our financial results.