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spk09: Greetings. Welcome to the PROS Holdings Fourth Quarter and Full Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference call over to Belinda Overdubut, Senior Manager of Investor Relations.
spk00: Thank you, operator. Good afternoon, everyone, and thank you for joining us. Our earnings press release, SEC filings, and a replay of today's call can be found on the investor relations section of our website at pros.com. With me on today's call is Andres Reiner, President and Chief Executive Officer, and Stefan Schultz, Chief Financial Officer. Consistent with how our global teams are operating today, the three of us are hosting this call from our homes. Please note that some of the commentary today will include forward-looking statements, including, without limitation, those about our strategy, future business prospects and market opportunities, and our financial projections. Actual results could differ materially from such statements in our forecast. In particular, there is significant uncertainty around the duration and impact of COVID. This means that results could change at any time, and the contemplated impact of COVID on the company's business results and outlook is a best estimate based on the information available as of today. For more information, please refer to the risk factors described in our SEC filings. PROS assumes no obligation to update any forward-looking statements to reflect future events or circumstances. As a reminder, during the call we will discuss non-GAAP metrics. Reconciliations between each non-GAAP measure and the most directly comparable GAAP measure, to the extent to which available without unreasonable effort, are available in our earnings press release. With that, I'll turn the call over to you, Andres.
spk11: Thank you, Belinda. Good afternoon, everyone, and thank you for joining us on today's call. As I reflect on the past year, I'm incredibly proud of our amazing team and how we supported our customers, partners, and each other. Despite the impact of COVID on our business and our customers, we grew our subscription revenue by 17% in 2020. I'm also pleased to share that we exceeded the high end of our guidance range across all metrics, which Stefan will cover in more detail later. These results are driven by our people and culture, which is defined by our values of ownership, innovation, and caring for each other, our customers, and our communities. In 2020, we kept each other safe and supported each other through personal challenges. We stood by our customers and partnered with them through the challenges they faced and rapidly delivered innovations to help them come back stronger. Innovation is core to our DNA. And last quarter, we added many innovations across our platform, including next-generation pluggable AI models and self-service capabilities to accelerate adoption. We see more than ever that the ability to power an omnichannel digital sales experience is an imperative for businesses today. Industry analysts expect that by 2025, 80% of B2B sales interactions will occur in digital channels. The PROS platform is uniquely positioned to deliver an omnichannel digital sales motion, We're focused our innovations on making our platform even faster to adopt by our customers. For example, our latest smart CPQ innovations make it even easier for customers to accelerate their digital sales transformations with self-service capabilities. This provides businesses with greater flexibility to adjust and implement go-to-market strategies in real time and deliver a better customer experience. Innovations like these are why this past quarter Carrier selected our platform to power a frictionless digital sales motion. Speed to market has never been as critical as it is today in digital marketplaces. Our latest platform innovations enable customers to develop, test, and deliver AI-powered dynamic pricing at scale and in real time. Capabilities such as these are why leading companies like Wesco are adopting our platform. The Fortune 500 electrical distribution and services company merged with Annexer last year and pros customers since 2014. Wesco recognized the immense value of our AI-powered omni-channel platform and plans to adopt pros across their global enterprise to deliver upon their digital growth strategy. The strength of our AI-powered platform, deep customer partnerships, and the ability to deliver a frictionless sales experience make choice for industry-leading companies like BSF. The global chemicals manufacturer is upgrading to our cloud technology after almost a decade of partnership to deliver a better customer experience with dynamic market-based prices. We're encouraged by the continued strong demand for B2B solutions as companies embrace the rapid changing market. For the travel business, we believe 2021 will see a continued increase in passenger demand, driven primarily by leisure and domestic travel, but not back to pre-COVID levels. The recent vaccine symbolizes an early step in recovery for the travel industry. We're pleased to see improved passenger demand in some markets. Our technology is a cornerstone for an airline's business. And there's no better example than our newest customer, Breeze Airways. An innovative U.S.-based startup, Breeze selected pros to power their revenue management strategy and drive their digital selling journey as their business comes online. This is a testament to the exceptional value of our technology, and we look forward to partnering with Breeze and helping them successfully launch this year. We're pleased to welcome Carrier and Breeze, among other new customers, to the PROS family and continue to expand our partnership with existing customers. Now I'll share our 2021 strategy before I close with a few highlights on our incredible people and culture. This year, we remain committed on our mission of helping people and companies outperform by leading their digital selling transformations. We plan to accomplish this by continuing to execute upon our strategy of driving market transformation with our end-to-end platform, further leveraging partnerships to accelerate growth in delivering exceptional value and an incredible experience for our customers. We will drive market transformation with our platform by ensuring the market understands the depth and breadth of our capabilities. We'll continue to innovate to accelerate time to value and empower businesses to create and deliver personalized offers to their customers across digital and traditional channels. We're focused on further leveraging partnerships with commerce technology platforms, system integrators, and online marketplaces. Last quarter, we launched our pricing solutions on the SAP App Center to make the Power of Pros platform more consumable than ever to the full SAP ecosystem. We'll continue to extend the reach of our market-leading technology through our partner network in 2021. We'll build upon our customer experience and engagement team's amazing effort last year with a continued focus on delivering exceptional value and an incredible experience for our customers. Despite the challenges of the pandemic, our team delivered a record number of go-lives in 2020, most of which were completed 100% virtually and further strengthened our customer advocacy scores. I'm incredibly proud of our team, and I'd like to thank John Alessio for all his contributions to pros in building a world-class organization. and wish him the best in his retirement. Stepping into the role of Chief Customer Officer is Martin Szymanczyk. We're excited to have Martin back at PROS, and he will be responsible for end-to-end customer engagement, platform adoption, and value deliver as we scale our business and customer base. I'm also thrilled to welcome Sherry Lautenbach to the PROS family as Senior Vice President of Global B2B Sales. Sherry will be responsible for accelerating market adoption of the PROS platform as organizations seek to transform into and selling experiences to meet buyers' increasing demands. At PROS, we want a better world for all and are committed to ensuring that our employees can realize their full potential. Our employee resource groups continue to make an incredible impact inside and outside of our organization, through community volunteering efforts in educational programs on diversity, equity, and inclusion. We're also committed to our emphasis on helping our people learn and grow. Our team completed over 10,000 training courses ranging in topics from leadership and teamwork to mindfulness and communications. I'm very proud to see our team continue to grow in the face of adversity. In recognition of the amazing culture our team has created together, I'm pleased to share the process received the Great Place to Work certification. We remain committed to ensuring that our employees can bring their authentic selves to work in an inclusive environment so they can thrive and grow. We entered this year passionate about realizing our vision to optimize every shopping and selling experience. We have the right people, strategy, and platform to grow and capture the strong market opportunity in front of us. As I close, I'd like to thank our global team for their incredible passion and efforts towards our vision and making PROS an incredible place. Thank you to our customers, partners, and shareholders for your support of PROS. With that, I'd like to turn the call over to Stefan to cover our financial performance and outlook.
spk03: Thank you, Andres. Like Andres, I'm also very proud of our entire team as we continue to execute and support our customers despite the challenges related to the pandemic that continue to persist. I'll start by highlighting some of our fourth quarter and full year key metrics. Subscription revenue was $42.9 million, up 5% year over year, while our full year subscription revenue was $170.5 million, which was up 17% year over year. The growth in subscription revenue drove the slight growth in total revenue for the year, which came in at $252.4 million. Our revenue was impacted by customers that were significantly affected by COVID, including some customers that declared bankruptcy. As a result, our gross revenue retention for the year was approximately 88%. However, absent the impact of COVID, our gross revenue retention would have been between 92% and 93%, which is consistent with the retention rate last year and the expectations shared last quarter. Our recurring revenue as a percentage of total revenue continued to grow and was 86% for the fourth quarter and 85% for the full year. Full year non-GAAP subscription gross margins were 72% as compared to 73% last year. The decline in subscription gross margins can be attributed to investment increases in our infrastructure, and the reduced revenue from customers impacted by COVID. Fourth quarter and full year non-GAAP total gross margins were 61%. This compares to 60% in the fourth quarter last year and 63% for the full year in 2019. The decline in full year gross margins can also be attributed to the impact COVID has had on our total revenue. Adjusted EBITDA loss was $4.2 million for the quarter, which was significantly better than expected. The outperformance was driven mostly by additional cost savings realized during the quarter. We were able to improve upon our cost savings goals each quarter during 2020. Starting in the second quarter, we initiated a cost savings program which targeted savings of $13 million versus our original plan. For the year, we ended up saving approximately $25 million. our trailing 12-month calculated billings decreased 18% year-over-year, which was a higher decline than the change in annual recurring revenue, or ARR. The larger decrease was driven by certain one-time billing events that positively impacted our 2019 calculated billings, as well as several customer contract restructurings in 2020, which deferred billings in the future periods. Our ARR was $209.7 million at the end of the year and exceeded the guidance range we set last quarter. Our ARR includes both subscription and maintenance contracts, and the subscription component now represents more than 80% of our total ARR. We generated $11.4 million in free cash flow during the fourth quarter, which resulted in full-year free cash flow burn of $53.3 million. This was significantly better than expected as a result of our near record fourth quarter cash collections. We were able to collect a substantial majority of payment deferrals previously offered to customers. At the end of the third quarter, we disclosed approximately $26 million in customer payment deferrals that were included in our accounts receivable. At the end of the year, that amount had fallen to approximately $12 million. We exited 2020 with $329 million of cash and investments and have access to an additional $50 million through our unused revolving line of credit. As previously mentioned, we have aligned to a virtual-first sales model and streamlined our organization along industry and geographic lines. We've also increased our investments in our revenue operations team, which includes an increased focus on sales and partner enablement. Through this process, we reduced the number of quota carrying personnel to 51 at the end of the year. This is a temporary decline as we have already started to build our sales team in 2021. We expect to increase the number of quota carrying personnel throughout the year and exit the year with more than 60 people. Before turning to guidance, I would like to discuss the continuing impact COVID is having on our business. The reduction in bookings and contract restructurings due to COVID during 2020 will have an impact on our revenue growth rate in 2021. While we believe we will grow this year, many of our customers are still experiencing negative effects to their businesses caused by COVID. This is especially true for our travel-related customers. Due to the continued uncertainty and variability in the macro environment, we are not providing guidance for the full year at this time. but we will continue to provide quarterly guidance just as we did in 2020. For the first quarter of 2021, we expect subscription revenue to be in the range of 42 to $42.5 million. We expect first quarter total revenue to be in the range of 59.7 to $60.7 million. We expect first quarter adjusted EBITDA loss to be between 12 and $13 million. And lastly, with an estimated non-GAAP tax rate of 22%, we anticipate first quarter non-GAAP loss per share of between 27 and 29 cents per share, based on an estimated 44.2 million basic shares outstanding. Lastly, even though we're not providing annual guidance, we do believe free cash flow will improve by at least $15 million. Before I turn it over to questions, I would like to mention that we will be adopting new accounting guidance for convertible debt. Beginning in the first quarter of 2021, our convertible debt will be presented on the balance sheet at par value rather than the discounted balance. We believe this change will simplify our presentation and it will have no impact on our non-GAAP operating results or cash flow. In closing, I'm incredibly proud of our employees who continue to remain focused on helping our customers during these turbulent times. I thank you for your support of PROS, and we look forward to speaking with you at upcoming events. I will now turn the call back over to the operator for questions. Operator?
spk09: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start keys. One moment, please, while we poll for questions. And our first question is from Scott Berg with Needham & Company. Please proceed with your question.
spk05: Hi, this is Alex on for Scott. Thanks for taking my question. We saw the company announce several airline deals with the likes of companies like Emirates. that had agreed to migrate to the cloud right before the pandemic. Have you seen any of these travel customers move forward with these migration plans yet? Or are they holding off until their respective businesses improve?
spk10: This is Sandra. Yes, we have seen, as an example, Emirates has migrated to the cloud. So we've seen our travel customers continue to evolve their migrations. We also talked last quarter about Qatar moving to DSO, migrating to the club. So we have seen some of them invest in this time period to come out stronger as they recover.
spk05: Great. And then when you're looking at the composition of your ramping B2B, deals more weighted towards newer e-commerce usage for pricing optimization needs? Or are the smaller, bite-sized deals the companies will have success with in 2019, are these more traditional, larger pricing optimization deals that the company has been seeing?
spk10: Yeah, so we're seeing a little bit of both. We're seeing some companies in B2B start small and want to drive value in specific markets. But we're seeing also a lot of companies lean into this digital sales motion in wanting to start solutions to help them drive success in terms of powering digital channels as well.
spk05: Great. Thank you. That's all for me.
spk10: Thank you.
spk09: And our next question is from Rob Oliver with Baird. Please proceed with your question.
spk04: Great. Good evening, guys. Thank you very much. Happy New Year to everybody as well. Stephan, a couple questions for you just on your comment around sales headcount. So I just want to understand what you said. I think you said you took sales headcount down into year-end, but expected that into baseline and maybe go higher. So if that's right, just a couple questions around that. Was that a result of you know, sort of confidence around the lighter go-to-market, not needing as many salespeople in certain stricken verticals, you know, or a combination of those two. And then as you think about the sales headcount throughout this year, you know, if you can give us some sense of how you think that might look, you know, towards year-end. I think you said you're at 51 quota carrying now, and if that would be skewed more towards the B2B side. Thanks. I realize there's a lot in there. Appreciate it.
spk03: Well, I'll take the last part first. So yes, it will be skewed more towards the B2B side. And you should see progress as we look to go beyond 60 people by the end of the year. You should see, you know, steady progress on that as we go throughout 2021. In terms of what we did in the fourth quarter, you may remember we did signal that we felt like our quota-carrying personnel was going to come down a little bit. It came down a little more than what we had signaled, but that was all kind of by design as we went into the fourth quarter, started making plans about the areas we wanted to invest in, and quite honestly, you know, there were some, you know, lower performers that that were were moved out as well so when you combine all those things we decided to go ahead and take advantage of the the shifts that we're making uh make the adjustments understanding that this may appear and look as though there's some questions about whether or not there's uh the need for those sales people but there are we just made the decision to execute on the on the changes and then grow throughout the year But the last thing I'll say, and I did comment on this as well in my prepared remarks, we do feel like there's an opportunity to be more effective and efficient in this virtual environment. We started to see that happening from the second quarter through the fourth quarter, and we expect to see that continue into 2021 as well.
spk04: That's really helpful. Yeah. And on that last point, and Andres, this may be for you, but I think gearing those sales hires, as you mentioned, Stephanie, towards B2B seemed right. I know that the wake of the pandemic, even that area has seen some delays. And I guess just wondering, clearly there's some confidence you guys have. And from a macro perspective, I think we would share that. But are there things you guys are seeing right now, any shifts at your customers that would indicate they're starting to move a bit more rapidly on the B2B side? Thank you guys very much.
spk10: So a couple of things. I would say, look, part of us last year was building a foundation for long-term growth. We felt very strong about coming into this year in terms of deal activity. In pipeline, we're continuing to see those increase quite well. And in really simplifying kind of our go-to-market based on industries. So that was a part of the strategy. But we felt that making changes would allow us It's something that we felt was the important changes to make to execute better. As we look at the year in terms of the pipeline, the strength of the pipeline, we're seeing good improvements.
spk03: Rob, hopefully you were able to get all that.
spk04: I think I got most of it, a little bit of fade at the end. But thank you guys very much. Appreciate it. Much better. Thanks, guys. Appreciate it.
spk09: And our next question is from Tom Roderick with Stifel. Please proceed with your question.
spk02: Hey, guys, it's Max on for Tom. Thanks for taking my questions. I just want to start by kind of talking about the B2B success and how you said looking forward this year, there's going to be a lot of work with like partners and system integrators. Can you talk about how the SAP App Center and then also like those partners impacted sales over the last year and quarter, I guess?
spk10: Yeah, so in terms of our partner strategy, we've continued to expand across multiple. We talked about Magento in the last quarter. In this quarter, we talked about joining the SAP App Center. As you know, SAP is a very strong ecosystem within our customer base. Approximately 70% of our customers are from the SAP ecosystem. And it's our continued investment over a decade into that ecosystem We're seeing, I would say, a lot of our opportunities come from the SAP ecosystem. But in general, what I would tell you is that our partner team is doing an amazing job and an increasing number of the opportunities are coming from our full partner ecosystem, which includes our Microsoft partnership, which is one of our strongest partners in the market, as well as partners like EY and Accenture and Deloitte. many of our other SI partners. And more and more, I would tell you, in the majority of deals, we're partnering with one of our strategic partners.
spk02: Gotcha. That's really helpful. And then thinking about airlines, I know that The previous forecast was no real new airline bookings in the first half of 21. I imagine that's still pretty similar, but there's also kind of positive notes like Breeze Airways signing on, whether or not they go live in the first half of the year will be seen later. But if you could talk any more about kind of the expectation around that side, that'd be great.
spk10: Yeah, no. So I think the airline industry, I think, is still trying to innovate in the areas of digital sales motion. As you can imagine, as they come back online, the more they can move every aspect of their business, their contracts, their group, and their passenger side to be 100% frictionless sales motion, the better. So digital retailing is resonating a lot well, very well. and continuing to innovate on the latest generation revenue management solutions. I would say that at this point, a lot of airlines are waiting to see the passenger volumes continue to improve. They did see with the rollout of the vaccines an initial improvement, as I commented in my prepared remarks, but predominantly it's been on the domestic side and leisure travel. And we expect that to gradually improve. I would say back half of the year, we should see some improvement. But in the first half, I would say travel is still going to be a little bit better than last year, but not a significant improvement.
spk02: Great. Thanks. That's all from me.
spk09: And our next question is from Jackson Adder with J.P. Morgan. Please proceed with your question.
spk08: Great. Thanks for taking my questions, guys. The first one is just maybe a little bit more color on kind of the expectations for ARR growth in 21. Not necessarily looking for, obviously, for guidance, but just, you know, how should we think about the relative kind of growth or strength between airline and B2B, and then And also, as you think about maybe the mix between renewal bookings and net new bookings, how that should shape up here in 21.
spk03: Yeah, I'll let Andres comment on the new and renewal. But, you know, we, as I said in my prepared remarks, you know, we do expect our overall business growth. to grow. And in order for us to be able to do that, ARR has to grow as well as you probably already know. And B2B will definitely be the driver to that. We're not at this point in time planning on a significant recovery in the travel space, at least as we're planning for 2021. And I think the reason for that is we're going to wait to see more momentum building, not only from a passenger's perspective, but also from an investment perspective. And so as we start to see that, then we'll start to put more of a travel component to our growth plans. But our growth plans are primarily driven by B2B.
spk08: Okay. And then, Andres, anything on the mix between kind of net new and renewals? And then I just have one quick follow-up.
spk10: Yeah, so so I would tell you last year or Nixon and it's been pretty standard throughout the years. It's about 50% is new versus existing and that's maintained. I expect that to continue to be similar this year. I would say we have a pretty strong migration pipeline and we've continued to see success last year. We expect that to continue this year. as well as a pretty robust net new on the B2B side, obviously.
spk08: Okay. And then the follow-up on gross retention, really appreciate the color on, you know, the difference between COVID impacts and non-COVID impacts with the retention range. Um, that 92 to 93% range is still kind of below, I think what pros would have expected a couple of years ago, kind of closer to the mid nineties. Um, is this just a function of the mix continuing to shift more to B2B or is there something else that, that, you know, that I may be missing?
spk03: Well, yeah, I think that's true. We've said that, you know, overall we were in the mid-90s and travel was going to be a little higher than that. B2B was going to be a little lower than that. So there's certainly some of that in what you're seeing. But I would tell you that, you know, we – We do see a mid-90s as we get through this type of an environment that we're in. We do see us getting back to that in the future. I'll be honest, I don't know that we'll see it quite yet in 2021, but we do see getting back to that mid-90s as we kind of get back to that same mix of having a travel and B2B component. But yeah, to your point, no question that B2B has been slightly lighter than the travel component.
spk08: Okay. Makes sense. Thank you. Thank you.
spk09: And our next question is from Chad Bennett with Craig Allen. Please proceed with your question.
spk06: Great. Thanks for taking my questions. So, Stephan, maybe for you, just in terms of giving us an update on where you ended up in year N, in terms of Contract amendments or modifications, where we ended up. I think in the third quarter we were around $18 million at that point. Maybe I'm wrong, maybe I'm dating myself, but just kind of where we are there, where we ended up.
spk03: Yeah, so, yeah, you're right. You know, I commented last quarter on three different components. I talked about, you know, the amount of billings or I should say receivables that were deferred. And then I also talked about the impact that, you know, our bookings had from the COVID environment. And then I also mentioned the impact on revenue. The only one I updated in Q4 was the receivable deferral. I talked about it going from $26 million down to $12 because we had a really good, strong collection quarter in the fourth quarter. But looking at the other two metrics, those stayed about the same. So therefore, I didn't really provide an update because what we were kind of projecting at the end of the third quarter ended up being what ended up happening. So I talked about a bookings impact of around $25 million in Q4. and that's the area that we landed for the full year. And then the same thing on the impact on revenue itself. I had talked about $18 million in the third quarter, and that estimate is the same as we ended the year in Q4. Got it.
spk06: No, I appreciate the update there. And so if I look at just in terms of thinking about this upcoming year and growth, you know, and I know – You know, there's been some, like you said, modifications, and hopefully, you know, we kind of recoup some of that, and billings and cash payments are back to normal. But if I look at recurring billings in the quarter, I mean, they were down mightily, you know, like 30% plus year over year, if my math is right. And if we just do the math on your first quarter guide and assume some expectations on deferred rev seasonally and so forth, it looks like they're down again. How do we, unless you're seeing a major, you know, in the first month plus or the first quarter of the year, a major rebound in bookings, how do we get back to not only overall revenue growth, but specifically subscription revenue growth?
spk03: Yeah. Yeah. Well, I will tell you that, let me start with the back part of your question and then get to the front part of your question. You know, what's going to drive growth in 2021 is going to be subscription revenue. Services will play a part, but subscription will be the largest component. You know, when you look at calculated billings, and I'd be remiss if I didn't talk about some of the timing impacts that are there. And I wanted to call out in my prepared remarks the delta that we have between calculated billings and ARR, because to your point, calculated billings looks far worse in the fourth quarter than what you saw in ARR. And you may recall we had some really positive events that occurred a year ago that are having a negative impact on us now. And the vast majority of the decline, that 30% decline you're talking about, has to do with timing. Now, there's still a component of the reduction that is because of the COVID impact on our business. That's for sure. And that you see in ARR as well. But to kind of fast forward through the answer here, you should see calculated billings improve throughout the year in 2021. And I would expect also to see calculated billings actually have a higher growth rate than you would see ARR. for the same exact reasons why you see a lower impact on calculated billings than ARR in 2020. It's the timing of some billings that impact that. And, you know, Chad, it's the reason we've kept ARR as a metric. You know, three or four years ago, we had talked about stopping ARR and focusing just on calculated billings, and we ended up keeping ARR exactly for this reason. The timing differences can skew you too far one way or the other, and that certainly was the case in the end of 2020.
spk06: No, I appreciate the color and the timing, and obviously the comps are going to get easier here much. Just real quick, if I can slip one last one in for you, Stephan. So maintenance revenue was down a little over 20% in 2020, How should we think about that going forward, or at least for fiscal 21? And I'll hop off. Thanks much.
spk03: Yeah, I want to comment. You're right. Before we go to this question, you're right about the comps getting easier. But where I'm going is not even looking at comps. The actual calculated billing should improve throughout the year on a dollar-to-dollar basis. But you're right. The comps get easier, too, so the growth rate should be improved. But back to your question around maintenance, yeah, maintenance will decline probably by about a similar amount that it did in 2020. We continue to expect to see the migration continue to move forward. And so we expect to see a very similar reaction to maintenance revenue that you saw in 2020.
spk06: Thank you much.
spk09: And our next question is from Joe Goodwin with JMP Securities. Please proceed with your question.
spk07: Hey, guys. Thank you so much for taking my questions. First, is there any update on the number of bankruptcies? I know in 3Q there was nine. Have you guys discovered any additional ones there? Any update there?
spk03: You know what? We're very happy to say there have not been any incremental bankruptcies.
spk07: Awesome, great news. And then, Andres, you know, just curious, where are you spending most of your time today? I mean, what's your main focus? What do you really, you know, focus on right now?
spk10: Yeah, no, it's always on the go-to-market side and with our customers. I would say that the majority of my time is helping to support our full go-to-market team, and I love collaborating with customers, and I've spent quite a bit of time on that. So that's really where the focus is. And a lot of our investments, I would tell you, look, last year was a challenging year for us, but across every aspect of our business, we innovated. And we lean in very hard to our digital sales motion and a virtual first strategy across every aspect of our business to really advance us for the future and how we're engaging from a marketing, from a sales perspective, how we're transforming our sales motion and our industry focus and our enablement, both for sales and for partner ecosystem, as well as on the delivery and the CEO organization and our customer engagement has improved dramatically. And I would say really proud of the team for all the great efforts that they've done.
spk07: Thank you.
spk09: And just as a reminder, if you have any questions, you may press star 1 on your telephone keypad. Our next question is from Jason Salino with KeyBank Capital Markets. Please proceed with your question.
spk01: Hey, guys. Good afternoon. Nice to hear from you. Maybe first for Andres. You know, the B2B industries that you guys operate in, you have several, but I'm curious as to which ones might be holding in better or which ones might be seeing some, you know, earlier recovery trends.
spk10: Yeah, no, that's a great, great question. So we're seeing industries like chemical distribution, food, industrial manufacturing, those seem to be doing very well. And I would say, look, industries like distribution are moving very fast to a digital sales motion in moving beyond just powering the sales team. but powering their own e-commerce as well as marketplaces. And we're seeing a lot of industries like these, you know, drive very strategic initiatives beyond sales and to power these digital channels.
spk01: Okay, great. And then a quick one for Stephan. You know, Q4, you know, solid pre-cash flow quarter, EBITDA losses narrowed. But Q1 EBITDA guidance, a little step up on the loss. Is that just related to the timing of the hiring?
spk03: No, it's more just timing of how expenses fall. We always see the jump in payroll taxes and employee benefits that happen in the first quarter. There's also some company events that take place in the first quarter that drive up expenses. You should see expenses actually come down as we go throughout, especially on the OPEC side, see that come down as we get through those minimums. on the payroll taxes. So that's always a driver if you want, and that's the biggest reason why you see a dip in the EBITDA.
spk01: Great. Incredibly helpful. Thank you.
spk10: Thank you.
spk09: Ladies and gentlemen, we have reached the end of the question and answer session. I would like to turn the call back to Belinda Overlip for closing remarks.
spk00: Thank you for listening to today's call. We look forward to speaking with you at conferences and events this quarter. We will be attending the JMP Securities Technology Conference on March 1 and the Morgan Stanley TMT Conference on March 3. If you have any questions following today's call, please contact us at iratpros.com. Thank you and goodbye.
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