Cloudflare, Inc.

bill came in at $760 million, representing an increase of 10% sequentially and 57% year-over-year. Current RPO was 76% of total RPO. Before we move to guidance for the third quarter and full year, I would like to provide additional color on our expectations in light of the uncertainty in the macroeconomic environment. Similar to the early days of COVID, we performed rigorous analysis to understand both the risks and opportunities in the current environment. However, while COVID particularly affected a narrow set of industries, the current challenges impact a broader set of verticals, which is why we believe it's important for us to be more prudent in this quarter's guidance. Headwinds from foreign exchange have also accelerated, and with our product portfolio priced in U.S. dollars, Our products are becoming more expensive internationally. And while we haven't seen a material change in our customers' behavior to date, we are seeing elongated sales cycles at the high end of our business. We are cognizant of the increasingly cautious environment and have factored this into our outlook. For the third quarter, we expect revenue in the range of 250 to 251 million dollars. representing an increase of 45 to 46% year-over-year. We expect operating income in the range of $0 to $1 million. We expect net income per share of break-even to one cent, assuming approximately 342 million common shares outstanding. We expect a tax expense of $1.9 million. For the full year 2022, we expect revenue in the range of $968 so $972 million, representing an increase of 47% to 48% year-over-year. We expect operating income for the full year in the range of $7 million to $11 million. We expect net income per share over that period in the range of 3 to 4 cents, assuming approximately 343 million common shares outstanding. We expect a tax expense of $6.4 million, We are fortunate to be uniquely positioned as a provider of mission-critical services to our customers. And while there are challenges in the economy, we remain excited about the opportunity in front of us. I'd like to thank the Cloudflare employees for their continued dedication and resiliency in delivering exceptional service to our customers, partners, and communities. And with that, I'd like to open it up for questions. Operator, please pull for questions.

Thank you. As a reminder, if you would like to ask a question, press star then the number one on your telephone keypad. We do ask today that you limit yourself to one question and one follow-up. Thank you. Your first question comes from the line of Matt Hedberg with RBC Capital Markets. Your line is now open.

Great. Thank you very much for the question and congrats on the results in a tough environment. Maybe, Thomas, For you, you know, Matthew had a lot of helpful commentaries, and I think we appreciate the candor. You know, you mentioned longer sales cycles, but you still increased your full-year guide by $13 million or more than the $7 million Q2B. Can you talk a little bit more about specifically, you know, how you thought about levels, embedding levels of conservatism? And, you know, are you assuming things kind of stay the same or maybe get worse from here?

Yeah, you know, we looked at a lot of different factors impacting guidance this year, and you picked up some already. So we continue to see elongated sales cycles at the high end of our business, that is especially in their half a million to a million dollar bucket, and we expect that to continue. We saw also that our European business was the second best performing region this quarter. And we've seen a deterioration of performance, especially in Europe over the first and second quarter. So we expected the trends for sure not to improve. We also see across the board, I think that companies are like us, becoming more cautious in how they approach the business. And things are discussed twice in order to make sure that cuts have only been done once. So we have not factored in our guidance that things would improve from here on moving forward and performed rigorous analysis across verticals, across various regions and customer cohorts. And that's why you see a more prudent and more cautious guide for the third quarter and the end of the year.

Got it. That makes sense. And then maybe just one for Matthew. The wins that you called out in workers are exciting. You know, I guess I'm wondering, you know, is there an opportunity in maybe more challenge economic times for customers to start to use workers in even more creative, maybe cost-effective, higher ROI ways than they would have otherwise done so if, like you said, the road was kind of clear ahead and no clouds or fog in front of us?

Yeah, I think one of the really powerful things about workers is its efficiency. And so a workload, an equivalent workload running on workers versus running on any of the sort of traditional public clouds, AWSs or Google Cloud or Microsoft Azure, is typically significantly less expensive to run. And the technical work in order to make that happen is part of the magic of what workers deliver is And so we are definitely seeing, especially in either new startups or people who are really realizing that they've got to make money go further, the days of just wildly spending on your cloud bill, I think, are behind us. And there are many different ways, both with workers as well as just some of our standard products, that if you put us in front of your typical public cloud, we can often save you quite a bit of money. And so, again, I think that that was a message that didn't really resonate very much a year ago where everyone was just seeing like money was free and people were throwing it at any problem that was out there. But I think in these particular environments where people are trying to figure out how to stretch a dollar even further, workers and Cloudflare's platform as a whole is very effective at helping people save money. Super helpful. Thanks, Chris.

Your next question comes from the line of James Fish with Piper Sandler. Your line is now open.

Hey, guys. Thanks for the questions. Actually, InterQuarter was an interesting release from you guys that you talked about the CloudFlare One Partner Program, and Matthew, in your prepared remarks, you mentioned taking some of your competitors' top channel partners. Can you go over some of the details that you expect in terms of how this program is going to work for you guys Is this solely focused on security and how this is going to impact your indirect mix and profitability over the next couple of years?

Yeah, you know, I think that from the early days of CloudFlare, we explored various partner programs. And the challenge was that, you know, for a lot of our early products, it took five minutes to sign up and they just worked out of the box. And so there wasn't a lot of value to add. as a value-added reseller. And so while we had what I would call fairly standard success for the SaaS industry in working with partners, I don't think our products really facilitated getting the most out of the partner ecosystem. And especially if all a partner is is an order taker, then that's not a lot of value. I think a handful of things have happened One is that our products have gotten more complicated and the ability to customize them in various ways has become much richer. So, for example, with workers, what we're seeing from a partner like IBM is that they can actually develop their own intellectual property for a particular industry vertical, deploy that on workers, and then sell that same IP over and over again. That's great for them. It really drives their services revenue. And it's great for us because it means that we are getting more leverage in what we're able to deliver through partners. The second thing is that I think we saw with Zscaler that their success with a handful of partners in selling zero trust products was really successful. Those products take more work to actually implement and deploy within an organization. It's not a five minute setup. And so in that case, that's an area where we are able to work with partners. And in particular, you know, we're very much following the playbook. And when we talk to the partners that are selling Zero Trust services, they all want to have more solutions in their basket to be able to bring to customers. Because in a lot of cases, the kind of previous Zero Trust solutions either suffered from a lack of ability to scale, real performance bottlenecks, not having the total global coverage that global companies need. And Cloudflare addresses all of those things extremely well. So I think that that's an opportunity for us. In terms of profitability, I think the good news is that these more complex products tend to actually be the highest margin products that we have. And so as we were designing the program, we thought that we could have it be both margin accretive to Cloudflare while also still being very attractive to the potential partners that are bringing that to market. And so I think that this is an area that we're watching very carefully. I think it's part that we're going to continue to invest in. It actually is also one of the hidden benefits of us acquiring Area 1 is they had a lot more experience with the channel and with partners. And so working with the team there to really design that program has been great. And the reception from partners has been terrific. So I think it's a win-win for us and for our partners.

Very helpful, Matthew. Last one for me is a big government quarter coming up here. And obviously you guys have just some integrated relationship. I guess, what are you seeing on the government agency side and that FedRAMP program? Thanks, guys.

Yeah, appreciate it. It's like being in line at the DMV. We've pulled our number and are just waiting for it to come up for us to get our FedRAMP certification. And so we expect that we'll have very positive news for that next quarter. But we're basically at number 84 and it's showing number 83 on the on the sort of red number counting board at the DMV. So that's positive. We see across the board, not just with federal, but the example that I gave of the state of Arizona, we're seeing a lot more people adopt CloudFlare services in that government space. And so I think that that continues to be a place where we have very strong relationships.

And as we continue to get the various certifications, it'll allow us to go even faster.

Your next question comes from the line of Alex Henderson with Needham & Co. Your line is now open.

Great. Thank you very much. I was hoping you could talk a little bit about the context of the commentary around economic conditions. It's pretty obvious that the entire planet, the economy is globally decelerating, and particularly Europe is under a lot of duress. Your initial comments was sort of that you saw that start to really manifest in 1Q and that it actually improved somewhat or at least stabilized in 2Q, yet you sound a lot more cautious on your thought process and so forth. And I'm wondering if there's a little bit of a disconnect between those two, the tone of those two. It doesn't sound like your business has rolled at all and sequentially gotten worse or more tense. But on the other side of the coin, you sound like you're being much more conservative in your outlook. So can you parse between those two a little bit?

Yeah, Alex. I think that what we see is that the environment has gotten harder. I think we saw the first signals of that actually going back to December of 2021, and they really started to manifest in various ways, slowdown of pipeline, slowdown of customers paying their bills in Q1 of this year. And we talked about that on the last quarter earnings call, and I think some people were questioning why we would do that. What I think we've been able to do, though, because we saw that, we acknowledged it, we didn't pretend like everything was normal, was really adjust to take advantage of the situation. And so I think one of the real powers of Cloudflare's business is the diversity of our customer sets, both on a geography and also industry basis, the diversity of our products, And that allows us to have multiple levers to be able to continue to deliver even when the times get tough. And I think if you go back to the COVID quarters, that was definitely a time where we had to adjust how we went to market, what we did, what types of customers we focused on. We really transitioned from being a business driven primarily from getting new logos to to one that developed a real expertise in how to go to our existing customers and sell them more. And I think there are a lot of analogies that are similar to the sort of adjustments that we've made that allowed us to have a quarter like this. But make no mistake, we're still in what my grandmother would call a tule fog. We've still got to go out and do the work every day of filling up the wheelbarrow with new leads, sifting through it to look for what's going to be the most promising and then being able to deliver. But what I like about our business is, again, it's diversity across customer types, customer sizes, products, ways that we can go to market. And I think our team has done a good job of adapting to what is a much more difficult situation today than it was a year ago.

I see.

Alex, maybe one additional point. I pointed that out in my script, but I didn't mention it in the previous answer. What we do feel is also currency headwinds, especially in Europe. So even if the economic activity for us in terms of deal volume would be the same, we see the headwinds from a currency perspective in Europe, but also in other parts of the world, Japan, for example, that we need to digest.

That actually leads me to the second question that I wanted to ask. The European environment is particularly onerous with 20% currency translation headwinds in the MIA war, inflation, rising interest rates. Bank of England just raised rates half a percent today. In fact, given that environment, they're struggling with huge price increases, particularly on systems. in local, in dollars, plus the currency translation, and their budgets are fairly flat. Now, my understanding is there seems to be a separation between companies that are selling relatively low-priced, high-value technologies and companies that are selling high-ticket technologies. Can you talk about whether you're aggressively low-priced and the fact that you're a lower ticket up front? gives you a big advantage in that geography because of that characteristic and whether you're seeing more pressure on the higher value, the higher, bigger ticket transactions. Because I think ultimately that seems to be the dividing rod between who wins and loses in Europe.

Well, I think it's certainly a benefit that our products are mission critical. But, you know, even then, the high end... And bigger ACB deals, the decision takes longer. That's where you see the elongated sales cycles. The second factor in our favor is the cross-margin. It's one of the strong points of the business model. When we deploy that weapon, we always talked a bit about it as a strategic weapon where it makes sense. So that doesn't mean price cutting. We try to be strategic and accommodating where we think it makes sense. to build business relationship and business, but we're using our margin to accommodate for that without any doubt.

Great. Thank you very much.

Your next question comes from the line of Shaul Eyal with Cohen. Your line is now open.

Thank you. Good afternoon, guys. Congrats on the set of results. Matthew, the first question for you. Lots of discussion throughout the quarter, maybe some chatter around your crypto exposure, potential implications. Maybe a good opportunity here to address cloud exposure, maybe current thinking on this vertical, given the changing dynamics we've seen in recent months.

Sure. I mean, I think that we have customers that are in that space, including customers a number of the large exchanges. But I don't think that there are any of them that would crack being a top 10 customer. And I think as a whole, I don't know that the exact exposure Thomas may be able to add to it, but I will say that it's not significant enough that it has been brought up as a big risk item internally. So I think that we have always had I personally have never... There's a lot of religion around the crypto space where people are either hyperly pro-crypto or hyperly against crypto. I feel like I'm the only kind of agnostic on crypto where I don't think we have bet heavily on it. But at the same time, we've definitely made sure that if there are things that emerge from it, that we're in a position to take advantage of those. But that has not been a meaningful headwind to us.

Yeah, maybe some color. Our exposure to crypto was less than, was single, mid-single digits in percent of revenue, but under 5% for the second quarter. So not a big, an interesting part in terms of the size and the amount of customers, but not a big exposure to revenue. Understood.

And Thomas, maybe one for you. Question on elongated sales cycle. I know it's a bit tricky. It differs from customer to customer, but maybe can you generalize for us how long, how much are these cycles being elongated? Are we talking two weeks, three weeks, more than that? How can we be thinking about it? You know, the word elongated is a very, very general term.

Well, I would say for the main part of our business, we are still far below 90 days from a sales cycle perspective. So when we talk about elongated sales cycles, it's in the upper end of our cohorts where you look at the bucket $500,000 to $1 million of ACV where it's moving out. But there it's moving out by weeks, not by days.

Understood. Very helpful. Thank you so much.

We ask that analysts limit themselves to one question so we may get to everybody today. Thank you. Your next question comes to the line of Fatima Boulani with Citi. Your line is now open.

Hey, good afternoon. Thank you so much for taking my questions. Matthew or Thomas, jump ball for either one of you. Thinking about the shift to pay-as-you-go customers, some of your observations and commentary around elongating deal cycles that you just addressed, I'm curious if you can just take a step back and bifurcate for us how new logo land purchasing and procurement behavior has changed versus expansion or install-based expansion customer behavior has changed over the last three months. And maybe if you can help contextualize this or put this under the lens of your product pillars, whether there is more or less usage or slower adoption of certain pillars versus others, and certainly against the hardware supply chain constraint backdrop that we're in right now.

Sure. So as I said in the prepared remarks, I think that it has gotten harder to sign up a new logo since the beginning of the year. But it's actually gotten easier to talk to our existing customers about using more of our platform in order to solve the problems that they have. And so I think that where we benefit is because we have such a broad product portfolio that allows us, even in these times where signing up new logos is hard, We can go to our existing customers and have a conversation about how we can simplify their IT stack, how we can save them money, how we can make them more secure. And I think that that's attractive. So we're still signing up plenty of new logos. But I think that on balance, it has definitely gotten harder to sign up new logos. and it has gotten easier to have conversations about expanding usage of our platform and especially adopting different products that are part of our platform. In terms of what products are, how the mix of products is changing, I think security continues to be top of mind. I think that there was real kind of concern around when the Russian invasion of Ukraine happened, that there would be attacks that went out from Russia in retaliation against Western companies. That actually did not materialize in Q1 the way I think a lot of people thought it would. But we started to see more of that start to materialize in Q2. It's still, I wouldn't call it a trend yet. but we're seeing more companies come under attack and turning to us when that happens. And so I think this is an environment where security products do very well, and across our security portfolio we're seeing strength.

Thank you so much.

Your next question comes from the line of Joel Fishbein with Truist. Your line is now open.

Thank you for taking my question. Matthew, at Analyst Day, you talked about acts and these large markets that Cloudflare is going to go after. Notwithstanding the macro environment, current macro environment, is there anything that has changed in your philosophy about these big markets? And maybe you can just give us an update on these acts or large markets and where you're positioned, maybe specifically around R2 and the big data that you have going on right now. Thank you.

Yeah, so we think of Cloudflare as stacking multiple adoption S-curves, one behind another. And so our first act were, how do we protect the infrastructure of customers around the world? And it is important. incredible to see how we've been able to do that successfully, where today more than 20% of all websites use our infrastructure. We continue to sell those products, but I think that where we are earlier in that S-curve is with our Zero Trust products, and we're able to go to all of those people who adopted our application security products and now say hey we can help you with zero trust as well and i think that that is the big act that we're focusing on um right now um act three for us which i think will really start to hit in a material way around revenue uh in three to five years uh is really around workers um and i think we have been very pleasantly surprised how that adoption has happened faster and sooner and earlier than we expected. R2, which is our object store and our S3, Amazon S3 competitor, went into public beta last quarter, and we expect that it will go into GA right at the end of Q3. And so I think that that's an opportunity for us to do more, and we continue to invest in it. And again, we think that the real durable nature of CloudFlare is that we're able to continue to stack these acts one behind another behind another.

Great. Thank you.

Your next question comes from the line of Hamza Fadawalla with Morgan Stanley. Your line is now open.

Hi, guys. Thank you for taking my questions. Matthew, maybe a question on the security angle for you. You talk a lot about having larger platform conversations with your existing customers. Can you comment on when you talk to CIOs, CISOs at these customers, what is their willingness to really want to transform and modernize their existing security architectures versus perhaps continuing to refresh their existing on-premise state?

Yeah, I mean, I think Morgan Stanley is a great Cloudflare customer and we have a terrific relationship with the CIO team over there. And it's definitely an organization that has been willing to embrace change. And I think that that's a big piece. And I think that most organizations today understand that they have to make that change and they're very willing to have that conversation. I think the thing that has changed to some extent is even those organizations that thought they could continue to invest in on-premise hardware are finding the current situation very difficult, where if you want to get a new firewall today, the leap times can be nine months before you get it. And at the same time, the firewall vendors are raising their prices. And so I think that a lot of In the results, a lot of the sort of RPO that you saw in the traditional firewall vendors was people basically holding their place in line. But it's not a way to make customers happy, telling them they have to pay more and then delaying when the product is going to be there. And so even for some of the organizations that traditionally have said, you know, we don't believe in the cloud or we don't believe in moving in this direction, I think that that tune is starting to change, and it's becoming very much the minority opinion that you can solve these problems with on-premise hardware.

Thank you.

Your next question comes from the line of Adam Borg with Stiefel. Your line is now open.

Hey, guys, and thanks so much for taking the question. Maybe just for Thomas, I think you talked in the script about being more judicious and slowing hiring in the back half of the year and Maybe I was hoping you could talk a little bit more about which areas are still prioritized into hiring and which ones you're kind of slowing a bit more. Thanks so much.

Yeah, so we grew quite a bit employee headcount-wise in the second quarter. We said we take the velocity down quite a bit. We still prioritize go-to-market open positions and protect current people moving into the second half. So the slowdown is in GMA and some of their R&D functions, but go-to-market is still going to continue to hire.

Super clear. Thanks so much.

Your next question comes from the line of Andrew Nowinski with Wells Fargo. Your line is now open.

Great. Thank you. Maybe just a Follow-up question on the operating income for the year. You know, your loss in Q2 is actually better than your guidance. I think you just said you're slowing hiring in the second half of the year. So I assume the reason you lowered your operating income for the full year fiscal 22 is due to the Area 1 acquisition. And if so, could you just pull that out, maybe tell us what your organic revenue and operating income would have been outside of that acquisition?

Yeah, I don't want to get much more specific than the color we gave in our script, but it is true with a couple of moving parts. Without the continued investment in Area 1, we would have been operating margin positive, probably more in their single-digit, mid-digit million-dollar range for the second quarter.

And I assume the operating guidance for the year would have gone up in absence of that acquisition then?

You know, we gave guidance for the quarter that took into account a lot of variables, and I'm not going to parcel out now what the specific impact area one would have been if we hadn't done that acquisition. So guidance is a holistic picture on many things that move, and you should take it as that.

Understood.

Your next question comes from the line of Trevor Walsh with JMP Securities. Your line is now open.

Great. Thanks, Dean, for taking my question. Matthew, maybe a quick one for you around your comments around DBNR. You mentioned your aspirational goal of 130%. What do you think is, how do you get there? Is it kind of a function, kind of where you're at now based on macroeconomics and Just what's going on in terms of budgets or is there something internally that you guys are looking to maybe change and or kind of refocus efforts on in order to drive that number up? Thanks.

Yeah, I think that it really is for us about how we bundle products together. You know, today, 29% of the Fortune 1000 are already CloudFlare customers. If you fast forward with that, I think that a very significant percentage of the Fortune 1000 are enemy customers. And so what we really want to focus on is how do we get them to use more of our platform? And what I think is unique about Cloudflare is we've already got the products in place where we can have those customers adopt more and more of our platform. There is not a single customer that uses every single feature of Cloudflare's platform today in terms of a contracted customer. And so I think that's where we really see that growing. And I think that's a very healthy way to expand spend with customers is to become more and more critical. What we want to be is the network that the Fortune 1000 relies on for connecting to the Internet, making sure that they're secure, making sure that their employees have the best experience possible, and making sure that no matter what happens, they're always going to be online.

Great. Thanks a lot.

Your next question comes from the line of James Breen with William Blair. Your line is now open.

Thanks for taking the question. Can you just talk a little bit about CapEx was up a bit this quarter, a little bit higher than the guide for the year, the range for the year, and how you think about that spending going forward? And maybe some of the puts and takes on cash flow relative to top line growth and where areas where you can generate cash without too greatly impacting the top line.

Thanks. Maybe I could start it on CapEx. I mean, we're going to stay within the range that we guided for the year. We said before, you will see variability quarter to quarter, just in terms of how we purchase, where we see opportunity to pull and spend, and make sure that we maneuver ourselves smartly around the supply chain disruptions you see. This is pretty much driving the variability quarter to quarter, but we will stay within the range we guided for the year. From a free cash flow perspective, We said we have a lot of levers at hand. One of the biggest levers is moving to annual billing for our large customers. We are, from a company history perspective, coming from a pay-as-you-go business where people give us a credit card even at the beginning of the second quarter, the majority of our revenue of monthly billing. So we've made first strides into that direction of annual billing. And there is a lot of opportunities still in front of us. So this, I would say, is the biggest lever. But we run a pretty holistic cash conversion project across the company that looks into literally anything that can positively impact free cash flow generation. And it's a cross-functional project. And it's We're making good progress, and you saw that already reflected in the second quarter numbers.

Great. Thanks.

Your next question comes from the line of Gray Powell with VTIG. Your line is now open.

All right. Great. Thanks for taking the question, and congratulations on the strong results. So, yeah, Matt, you called out the Fortune 500 energy company where you replaced Zscaler, and then you talked about some other similar wins. I just want to make sure I have it correct. Are those mainly on the ZTNA side with Cloudflare Access, or were there some gateway wins as well? And then maybe can you just drill into it a little bit more and talk about, like, why you won? Is it more on price, technology, or a combination of both?

Yeah, so when we sell our zero-trust solutions, we really believe that the pieces all fit together. And so those are typically when, you know, sometimes somebody will just adopt one portion of the solution, but we really like to sell that holistic solution and see how all of the pieces fit together. In terms of where we win, I think what we hear from the space is that our products are significantly more performant. We have a much more holistic solution where we can protect mobile devices in a way that a lot of the other providers can't. We can work across the geographies. When I was this time last year traveling in Africa using our products, they worked great. Whereas most people in the space don't have that broad of a network that can deliver that. And I think that we are just able to scale much more significantly. We have literally two orders of magnitude more capacity to be able to handle the forward proxy traffic across us than any of the other providers in the space. And I think that that's why we've been able to display some companies that have used, that have tried to adopt C-scaler and found it less user-friendly and that it generated a lot of IT support tickets. But that's really not our focus. Our focus is going after all of the on-premise firewalls and hardware and VPNs that exist in the universe. And so I think They can be successful and we can be successful, but I think we have a better product. And over time, I think that will help us win. Understood. Thank you very much.

Emma, can we take a question from one more analyst, please?

Of course. Your final question today comes from the line of Brent Phil with Jefferies. Your line is now open.

Matthew, on Area 1, I know it's early, but can you give us an update of what you're seeing there? And again, on the last question, can I squeeze one in at the end? Thanks.

The Area 1 tech is amazing. So the product, we're seeing really great wins from very large customers. And we think of that product as being a gateway product to help with people on their Zero Trust journey. If you think about email, the nature of it is it enumerates the employee directory of an organization, and it very much then helps us sell the other Zero Trust products that we have. And so that conversation is going well. It's also a conversation that is going well in terms of talking to our existing customers. It turns out everybody's got a phishing problem it is for most of our customers one click to sign up and test whether or not Area 1 can result in that. And so we're seeing, you know, million-dollar-plus wins that close in, you know, oftentimes in a matter of, you know, days or a short number of weeks, which is just because we can just prove how successful that is. I think beyond that, Area 1 has helped us in a number of other ways. One, as I mentioned earlier, is that they had a much more sophisticated channel program, which has now helped develop our channel program. And I think we're really thankful for that team being on board. And then the third, which I think you'll hear us talk about more going forward, is that they have a really world-class threat intelligence team. And that, I think, will turn into more products across our entire platform. And because... And because I like your brand, I'll let you have one more question.

I appreciate that. You've had the crystal ball, and everyone appreciates your candor. And I think you were the first one to come out and say, hey, things are feeling a little different than they felt. And I was just trying to understand, when you look at the perspective of what's happening now, you mentioned things have stabilized. I mean, I just want to make sure we understand, from your perspective, it hasn't gotten worse. It's come in. the stabilization trend that you're seeing, have you seen that extending into July and in the rest of the summer? What's your sense of kind of the trajectory from where things came in? Where are you at now?

Yeah, you got me in trouble with a lot of my peers at your conference where I said that, you know, the economy was not as rosy as people think. And I think you've heard a lot of those folks echo those comments now in Q2. Let me be clear. I think that the economy is still in really rough shape. And I don't know, and again, I'm not a member of the, I'm not an economist, but from what we hear from customers, customers are really still suffering. And the economy, I wouldn't say that the economy itself has stabilized. What I would say is we have had the flexibility in our business to be able to adapt to a very difficult environment. That environment continues to be difficult, and I think it will be difficult at least through the rest of the year. But being able to deliver products that deliver real value, have an incredible ROI, can save customers money, and are must-haves, not nice-to-haves, puts us in an incredibly powerful position. And as I said in the prepared remarks, I would not trade places with any other CEO.

Thank you.

This concludes our Q&A portion of the call. Matthew Prince, I turn the call back to you.

So I'd like to, first of all, thank a bunch of the students from the Berklee School of Music who let us use some of their new and original songs for the whole music going in. So I hope for those of you who tuned in the call early, you appreciated that. I also want to thank the analysts for actually asking Thomas some questions this time. Usually I get all the questions. Thanks to our team and all of our customers We've got our hands on the wheel, our eyes on the road, and we'll see you all back here next quarter.

This concludes today's conference call. Thank you for attending. You may now disconnect.