WalkMe Ltd.

Thank you for joining our fourth quarter and full year 2022 earnings call. I'm John Strepa, head of investor relations at WalkMe, and today I'm joined by Dan Adika, CEO and co-founder, Scott Little, our chief revenue officer, and Hageet Yanan, our 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 expectations and views of future events. These forward-looking statements are subject to risks, uncertainties, and assumptions, some of which are beyond our control. 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 annual report on Form 20F filed with the Securities and Exchange Commission on March 24, 2022, and other documents filed with or furnished to the SEC. See our press release dated February 15, 2023 for additional information. In addition, certain metrics we 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 our 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. Further, throughout this call, we provide a number of key performance indicators used by our management and often used by competitors in our industry. For more information on the non-GAAP financial measures and key performance indicators, including the reconciliation tables, see our press release dated February 15, 2023. And with that, I'd like to hand it off to Dan.

Thank you, John, and good morning, everyone. I'm pleased to share our fourth quarter in 2022 results with you today and touch on our plans ahead for 2023. As we align to be a sustainable growth company targeting cash flow positive within 2023, we fine-tune our strategy to focus on enterprise and large enterprise customers. I'm happy to share that we grew our enterprise footprint and now count 39 customers paying over $1 million in ARR, showing a 26% year-over-year growth And finish the year with 173 customers with ELA or departmental-wide deployments on four or more applications, which we call our DAP customers. We are focused on our DAP customers as we're seeing the most room for expansion growth, account ARR, and most importantly, value realized from the utilization of our platforms. ARR from DAP customer is up 63% year-over-year, and in Q4, we've seen 18 new DAP deals, showing steady growth above 60% for the last three quarters in a row, accounting now for 50% of our total ARR. While focusing on our key segments and DAP offerings, we've also prioritized our investment in the highest growth area while rationalizing our spend to drive towards positive free cash flows. I'm pleased with the continued sequential progress we made throughout the year, reducing our OPEX run rate and improving our operating margin. Through prudent expense management, we've reduced our non-GAAP operating loss from 35% in Q4 2021 to 16% this quarter. With that progress, I'm positive that we will hit our cash flow positive milestone by Q4 2023. We've seen tremendous progress from our partner ecosystem, driving the highest growth within WalkMe in 2022. We now count Deloitte, Accenture, SAP, HCL, and others as our partners. These partners have deep relationship with the largest organizations and are tackling the largest change management challenges in the world. We'll continue to invest in tools, training, and people to enable our partners to scale their businesses and drive even greater contribution in 2023. We're also excited about the opportunity in the US federal market. In the fourth quarter, we signed two large deals in the federal space to our existing partnership prior to FedRAMP approval. This is amazing progress as we work towards secure FedRAMP-ready status. This is a testament to the pent-up demand in the US federal government. We expect more meaningful contribution to come through the second half of 2023. We are the pioneers of DAP digital adoption platform, accredited market category, and I'm glad to share that 2022 was a tipping point year for the category with unprecedented number of analyst mentions, major market guide reports from Gartner, Forrester, IDC, and Everest Group. And also, the first ever Forrester new wave for DAP, where Walkman was named as a leader in the market. One of the investments we made in 2022 was to strengthen our executive leadership team with the additions of Scott Little, our chief revenue officer, Chelsea Prezinski, our chief people officer, and Adriel Sanchez, our CMO. I'm so proud of the way this group has come together and defined a clear path forward to deliver the best experience for our customers. It is with great pride that I announce the promotion of Chagit Inon to the role of chief financial officer. Chagit has been a valuable member of our ELT in the past three years, having served as EVP finance and operation and interim CFO for the past six months. Chagit has been a leader in building our finance organization and was an integral part in our IPO process. Prior to joining WalkMe, Chagit spent close to two decades honing her skills and expertise at NICE, where she held a variety of financial leadership roles, and she's a certified CPA. Her past and present experience has well positioned WalkMe on the path to profitability. Myself and the company leadership have been incredibly impressed by her ability to step into the role with a clear purpose and commitment, and we have the utmost confidence in her leading WalkMe's finance and operations going forward. Chagit, I want to congratulate you and thank you for all of your achievements. I am looking forward to working with you side by side as we continue to shape the future of our company and our category. It's been a busy and productive year in 2022, and I'm very proud of the progress we've made as a team and company through a challenging macro backdrop. We're not immune to the economic headwinds facing cooperation across the globe, and we've prioritized our strategic investment while anticipating slower growth in 2023. In January, we made the difficult decision to ensure our people resources were properly aligned with our strategic focus, which led to a reduction of around 3% of our global workforce. We will continue to hire in 2023 to support the growth of our initiatives aligned with our upmarket enterprise selling motion. With that, I look forward to working with our customers to navigate the markets and economic downturns that may linger throughout 2023. WalkMe's enterprise digital adoption platform emphasizes the need to drive ROI from the second largest investment, software. Corporations across the globe are wrestling with the initial promise of digital transformation. to increase revenue and margins, reduce risk, and provide greater clarity into the underlying workflows, which allow their businesses to succeed. The accelerated path to technology has led to tech sprawl, with the average company of over 2,000 employees running 185 applications. Buying has been decentralized and owned by the departments. diffusing the visibility from decision makers and creating a disjointed user experience for the employee. In today's world, simply put, employees expect a frictionless digital experience. Organizations have found themselves in a paradox. With more technology than ever and more powerful system than ever, adoption is an all-time low, resulting in 70% of digital transformation efforts still failing. Today's worker is using on average 27 applications a week and the average company running over 1,900 workflows. This leads to a duplication of cost, wasted employee time, context switching to understand the process or application, and decreasing time spent on innovation and driving the ultimate business outcome. Bottom line, in today's economy, organizations are focused on efficiency and time to value. WalkMe has been working closely with global leaders to achieve these results by focusing on streamlining the digital employee experience and automation for key workflows. I'd like to share a few recent developments to our enterprise dApp offering. Being able to understand software utilization and the impact it carries on the key company business outcomes is mission critical. To achieve this, We've launched our discovery tool and cost optimization module as part of the Digital Transformation Intelligence, DTI, currently in beta and GA by end of Q1. Using the discovery tool, enterprises can unlock data about software consumption and utilization across the org by department and users. At the end of Q1, we will be introducing a new module for license tracking and optimization. With this new dashboard leveraging our proprietary DeepUI AI technology that uses machine learning to understand any user interface and any user journey across all enterprise applications, enterprises will be able to get a clear view of how many licenses are used and the type of usage. For example, licenses that can be converted to read-only or licenses which can be eliminated due to lack of usage. Alternatively, Organizations can use this data to pinpoint where to use WalkMe to drive user adoption. Our ability to understand exactly how users use the application allows us to generate quality data sets that provide clear, actionable insights to our customers. Using DTI discovery at WalkMe in Q4 resulted in immediate savings of 15% of our software spend, spanning over various underutilized SaaS applications. We expect the product to be generally available to walk me customer at the end of Q1 and heavily adopted by our customer base. In the past four years, we've been developing the workflow blueprint of enterprise organization and which system tasks drive them. I'm excited to announce that we're launching Dapkit, a second generation to our solution accelerators that packs pre-built content for almost every enterprise workflow and task, leveraging all best practices and years of accumulated knowledge from all the major enterprise SaaS applications. With new DApp kits, customers will be able to go live much faster, and our teams will be able to shorten the sales cycle and improve our professional services margin. Our customers will be able to pick and choose the solution for their problems and almost instantly deploy it and get real-life data on their business processes and improve their user workflows. Since its founding, WalkMe has been committed to being a technologically leader in their areas that empower employees and customers to interact with software. Our deep UI technology has eight unique patterns that automatically understand end-user interface and end-user journey, and all its elements allowing us to deliver the best experience for both building content and automation focused on end-user journey. This technology has always been the foundation of our innovations, and ensure that we are on the forefront of the DAAP category and the future of work. For the past 12 years, we've been developing modules and data centers that understand human interactions with technology. WalkMe has unique intelligence on billions of interactions with enterprise software. Using our deep user interface intelligence technologies, We have accumulated a vast understanding of every UI element, and now it's being used by employees in leading organizations every single day and every single moment. I'm excited to share that this data is the foundation of new IT developments currently in the works that will unlock huge value for enterprises. We are leveraging our technology, data sets, and know-how connected with the power of natural language modules. available through OpenAI to bring a completely new digital employee experience. Aside from our native AI offering, I'm also thrilled to announce that WalkMe and Jasper AI integrated to bring generative AI content capabilities in the flow of work to millions of global employees. Together, we aim to enhance the employee experience through our omnichannel workstation product on mobile, web, and desktop. Employees will have access to Jasper AI content functionalities contextually in the flow of work when they need it, where they need it. We are integrating AI content creation into input fields to streamline user workflow. This will help organizations stay ahead as the future of work is rapidly unfolding. I'm truly excited about the road ahead and will take a personal role in this unique area of technological advancement for WalkMe, for DAP, and for the future of work. I want to thank all of our customers, partners, and most importantly, our employees, for a great 2022, and I'm looking forward to all of the advancement and achievements we'll make together in 2023. With that, I'll pass it over to Scott Liddell, our Chief Revenue Officer, to share more about our go-to-market plans. Scott?

Thank you, Dan. Our go-to-market engine executed well in the fourth quarter, driving upsells to some of our largest customers. signing some of the biggest deals in company history across the globe, and focusing on selling to our most important market segment, the enterprise. We're optimizing our go-to-market motion, focusing on the best and most impactful use cases to deliver value to our newly landed customers right out of the gate. We're also improving our packaging and pricing to give our customers a clear and structured path to grow on our platforms. Our data product offerings will play a strong role in 23 as organizations look to identify redundancies in their software staff, identify mission critical processes that are inefficient, employ meaningful improvements to their workflows fast. Our ability to deliver an omnichannel digital experience on web, mobile, and desktop with our workstation product line will also play a key role in 2023. as organizations will need to extract high engagement from their employees in order to drive results. We like to say workflows with WalkMe. I strongly believe that every enterprise can benefit from our digital adoption platform as they face software paralysis in their growing organizations and unwieldy tech. 2022 was a transformational year internally at WalkMe. and I'm thrilled to help drive this transformation forward with clear purpose and plans in place to deliver the best-in-class workflow management platform to our customers. I've partnered closely with Adriel Sanchez, our CMO, and Wayne McCullough, our Chief Customer Officer, to shape a customer-first, value-oriented organization that is hyper-focused on growing our customer base and value. While we ended the year short of expectations, I'm still very pleased. We executed across regions, further advanced our strong relationship with our ecosystem, and continued to accelerate our strategic priorities, all the while maintaining strong growth in DAP customer ARR at over 60% year over year. In Q4, we saw many longtime customers continue to expand and invest in their WalkMe deployments, including one of the largest railway networks. As they shifted from mainframe-based legacy systems to new, modern, and purpose-built mobile applications and equipped their 30,000-plus field employees with tablets, they selected WalkMe as their digital adoption platform of choice. After deploying WalkMe on a handful of applications and seeing successful results, they're now rolling WalkMe out on over 20 applications while developing a roadmap of over 100. They've established a WalkMe Center of Excellence to ensure all of the new applications are DAP-enabled and are simple and intuitive for workers to use, whether they're a conductor or in the rail yard. Most notably, they're going to use mobile workstation as the gateway to all of the apps railway employees need to complete their work. Employees will simply launch workstation from their tablet and, based on their role, will automatically see their role-specific apps. It's customers like these that are seeing the ROI that we can deliver and utilizing us to drive workflow improvements and business impact that touch all areas of their organization. We have customers across every industry from highly regulated financial institutions to retail and transportation customers that are transforming the way all of their employees interact with technology to create value. In the fourth quarter, we started new relationships with Ingersoll Rand, American Electric Power, and On-Process Technology. We expanded our relationships with C&H Industrial, Standard Chartered Bank, and Income Insurance Limited, among others. Before I focus on what's in store in 23, I want to look back at some of the successes we had in 2022. One of the big investments that we made in 21 and 22 was in our partner Ecosystems. What started out in the third quarter of 21 has grown over 100% in 22 and is the fastest growing area within WalkMe. We've signed great partnerships with Accenture, Deloitte, HCL, SAP Concur, Salonis, among others, and now are seeing those partnerships turn into tangible business. Partners helped us deliver 37% of our new ARR in 2022. We doubled the overall ARR sourced by partners in 2022, and we're asking our team to double it again in 2023. The Alliances and Channels organization sourced over 12 million in new ARR in 2022 and influenced an additional 14 million in 2024. Our most established and largest geo for partners, the Americas, grew sourced ARR over 185% year over year. We're continuing to invest in our partnership ecosystem to accelerate this important area and enable our partners to work with us easier. Our partners also helped us generate demand in markets that we wouldn't be able to access otherwise. A great example of this is in the U.S. federal space. As Dan mentioned, we generated over 2 million in new ARR in Q4 from the U.S. federal market with the Veterans Administration and the U.S. Army, which we could not have secured without strong partner relationships. We also excelled within state and international governments. In the EMEA region, for example, we closed a large seven-figure deal with our partner, SAP Concur, and one of their largest public sector clients. All three of these transactions would not have happened without strong sales support from our partners and the ability to use their contract vehicles for entry into the market. The public sector market is ripe for an enterprise-ready solution to drive ease and workflows across both citizen-facing applications as well as those used by government employees. In the U.S. federal market, we've been able to capture market share through our existing partnerships. And when we secure FedRAMP-ready status, We will be primed to take advantage of budgets that have already been allocated to major digital transformation contracts in both civilian agencies and the Department of Defense. This is important to establish ourselves as the only digital adoption provider in the U.S. federal space and generate the demand needed for a brand new category of technology for the government. Our pipeline is already building and is nearly 5x what we saw in 2022. We are looking to the second half of 2023 for this opportunity to help us accelerate our position and establish ourselves as the digital adoption provider for the U.S. federal government. In 2023, our go-to-market motion is focused exclusively on the market segment that is ripe for a digital adoption platform. Over the last six months, we have reduced our focus on smaller customers and shifted some of those resources upmarket. Our marketing activities are aligned to the enterprise buyer, and we're shifting our sales process to adapt to the new market normal of longer deal lengths and more levels of approval. Our fourth quarter results were impacted by several headwinds, including continued elongation of deal cycles for both new business and renewals. We've also been impacted by headwinds to seat counts, which limited some opportunities for expansion, even with desire within the organizations. We anticipate that these headwinds will continue for 2023 and have built our plan with that expectation. Given these headwinds, our dollar-based net retention fell in the fourth quarter, and we expect this to continue into 2023. Despite these headwinds, I'm pleased with the progress that we're making to shift our strategy upmarket and believe we are well-positioned to reap the benefits of our investment during the last two years in our partner ecosystem and public sector. Before I pass it off to Higit to review the numbers, I want to thank all of our amazing customers, partners, and most importantly, our employees for a great 2022. I'm looking forward to building value with our entire ecosystem in 2023. Now to Higit to review our numbers.