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spk_0: good day and thank you for standing by welcome to the smart sheet first quarter of fiscal twenty twenty two earnings conference call at this time all participants are all is normally mode after the speakers presentation they will be a question and answer session if you'd like to ask a question during the session you will need to pass star one on your telephone please be advised that today's conference is being recorded if you require any further assistance to stress star zero oh god he had the conference overdue speaker today air her head of a desk relations thank you please go ahead
spk_1: they can like good afternoon and welcome everyone to smoke sheets first quarter of fiscal year twenty twenty two earnings call we will be disgusting the results denounce enter press release issued after the market closed today with made it airs smart ceo mark mater and are see about pete got bull or chief strategy and product upsurge in feral was real available during the qnx today's call is being webcast and will also be available for replay on our investor relations website and investors that sparky dot com there's a slide presentation that accompanies pizza prepared remarks which can be viewed in the events section of our investor relations website during this call we will make forward looking statements within the meaning of the federal securities laws we have bases for looking statements largely on our current expectations and projections about future events financial trends and our expectations around the impact of coven ip and on our business these were looking statements are subject to a number of risks and other factors including but not limited to those described in our ethics he pilings available on our investor relations website and on sep website at www that se si dot gov although he believed that the expectations reflected in the forward looking statements are reasonable are actual results may differ materially and adversely all forward looking statements made during this call are based on information available to us as of today and we do not assume any obligation to a baby statements as a result of new information or future events except as required by law and it definitely the u s gap financials we will discuss certain non gap financial measures a reconciliation the most directly comparable us get measures is available in the presentation that accompanies this call which can also be found on our investor relations website with that let me turn the call over to mark
spk_2: thank you earn and thanks everyone for joining us today for a first quarter earnings call upon start off by thanking our customers whose belief in our vision motivates us and our team members who inspire me everyday with their drive and dedication q one was a strong quarter revenue grew thirty seven percent to one hundred and seventeen point one million dollars billings grew forty eight percent to one hundred and thirty two point eight million dollars and our dollar based in that retention rate improved by two points to hundred and twenty five percent we ended a quarter with over eight point five million users and que one our average domain annualized contract bout you were a cb grew forty one percent year over year to fifty four hundred and sixty one dollars and expansion within our base included three hundred and five companies increasing their annual recurring revenue or a or are by more than twenty five thousand dollars up from one hundred and seventy three companies and q one a blast year one hundred and sixteen increasingly rare i buy more than fifty thousand dollars up from fifty one in que one of last year and twenty nine increasing or a or are by more than one hundred thousand dollars up from fifteen and que one of last year we also continue to see strong growth within enterprises including united health amazon home depot mcdonald's netflix crowd strike meditate stanford university hewlett packard palette on the m were really an automotive california to par but of transportation variety than abby are tricks cardinal health under armour furtive sony pictures comcast workday united natural food decks com airbus into it astra zeneca disney he rose tbs st jude children's research hospital honeywell kaiser permanente sage group google booz allen hamilton united therapeutics aqua next stanley black and decker charter communications hub spot bed bath and beyond vf corp mcgraw hill f five black rock and salesforce dot com to name a few our our price customer deployments demonstrate smarties momentum and serving the strategic needs of those customers enterprise customers demand and deserve capability which platforms that can scale to support mission critical workflows while also meeting the requirements for advanced security and administration with a smarty platform customers can manage execution and change of scale run workflows across disparate systems and bundle these enterprise wide workflows and a curated experience to support a broad range of use cases that crossed apartments and functions and we deliver this while also providing customers with the security compliance manageability control and trust that they expect from their enterprise partners over the course of this fiscal year we will continue to invest in our offerings executing on a platform strategy that delivers even more value for our customers this is something that we are well positioned to do based on our fifteen years of operating experience fifteen years that have the other thousands of insights in a deep understanding of the enterprise we've taken this unique experience and perspective to evolve this margie platform in our vision for the future do you want was also a strong quarter for a government business with expansions coming from agencies such as the gs a nasa the us department of veterans affairs the department of commerce the us department of health and human services and the department of defense nasa's jet propulsion lab deployed smarty to support it's mars perseverance rover choosing our platform for the scheduling and fracking of the twenty seven hundred parts and seventeen thousand five hundred machining operations moving across eighteen departments with smartly this nasa team deploys process close to drive efficiency combine says comes to streamline customer communications and resource allocation as well as dashboards for management visibility of the frequent changes and priority involved with that such a significant endeavor notably nasa's flow of manufacturing data supported by an integrated workflow connecting smart she to other key systems like oracle yuppie and power beyond since day one customers have relied on smarty to empower individuals and enable teams the not simply get work done but to reimagine transform how work it's done today that means customers are able to rapidly build new solutions that benefit the whole organization and enable them to do their best were like managing corporate okay ours that into it or deliver going into and marketing solution it's now and every category leading software company we paid attention we listened and we've improved our solution to solve even bigger challenges in fact this year we're evolving the design of smarty to offer cleaner more modern and accessible look further simplifying the entire user experience we've also introduce workouts smarties know code platform for building a to web and mobile apps which further amplifies the power and usability solutions our customers are creating on the platform every day many enterprise customers solutions that previously required resource intensive development or modifications to costly legacy systems can now be quickly and efficiently solved using smarty customers to smart she'd for ability to deliberate scale respond to and deliver on change manners workflows across systems and build curated experience to solve strategic business problems
spk_3: whoever use marching across critical business units including facilities real estate engineering legal and marketing and by employing work apps supers performance marketing organization has been able to clarify and standardized team prophecies in addition to streamline user experience that work apps provides has made it easier than ever for these teams to locate their prior
spk_2: at ease and take action as we touched on last quarter we've also take on new approach to packaging to make it even easier for companies to acquire and deploy smarties premium capabilities at enterprise scale we call this sheet advance smart you to advance response to the demands of are growing customers by combining the ability to scale easily cross departments and functions with access to premium capabilities that saab high value business problems the business receives robust noko tools to automate workflows across systems the line global teams and build skeletal solutions while giving i t the control to manage risk and maintain compliance from skills based resource and content management to poor systems integration smarty to advance his enterprise ready i'd he endorsed and bill to unlock the true our business it's people initial customer reaction to smart she'd advances been very positive recently smarties advanced robot expansion with a regional academic health system with over thirteen thousand employees and fifteen hundred doctors that serves the population of one point nine million across new england
spk_3: over the past year departments including key a pharmacy finance emanate and i t have you smarty to improve process efficiencies and automate manual efforts which marching advance this medical centers i tpm oh will continue to leverage they're smart investment to help manage the significant system implementation projects that have resulted from organic growth
spk_2: for and acquisitions we plan to provide additional details on smart to advance at are engage conference on june eight to be the enterprise cwm platform of choice smarty to stoke is done building meaningful integrations that integrate critical systems that most organizations depend on to deliver and differentiate there were in may we further bolstered are enterprise offering with the new mcafee integration a product partnership that leverages mcafee cloud secure security platform to provide threat detection and to comply with data loss prevention policies marty customer base continues to expand within regulated industries the need for insight into specific risk related activities and data input is paramount customers need a way to identify and flag sensitive data across their entire smart environment in an easy and intuitive manner to help find and remediate sensitive data violations integrating with tools like mcafee provides assurance to our customers including see ios night he leaders that they're smarter environments are secure and in compliance in closing we've started the your off with strong momentum and a clear vision or growth ahead
spk_4: bellamy trying to call over to be to provide additional details are financial results thank you mark and good afternoon everyone we entered twenty twenty one with continued momentum are you want outperform and relative to our guidance with a function of solid fields execution large do volume and a demand environment that has been approaching prequels levels many of the pressures we saw last year or dissipating for example relative to que one of last year or two cycle then have shortened by playing conversion has improved and we thought significant growth in use of all sizes another important milestone to call out and disclosed in our didn't get fired after our last earnings call or sox material weaknesses were mediated as off the end of fiscal year twenty twenty one i will now go to a financial results for to one unless otherwise stated all references to our expenses and operating results are on a non get basis and i reconcile to our gap result in the owning release and the presentation that was posted before the call as previously mentioned first quarter revenue came in at one hundred and seventeen point one million dollars of thirty seven percent year over year subscription revenue with the hundred and eight million dollars representing year over year growth of forty percent services revenue with nine point one million dollars representing year over year growth of nine percent turn into buildings first quarter billings came and strong at one hundred and thirty two point eight million dollars representing year over year growth of forty eight percent approximately eighty eight percent of our subscription buildings were annual with over seven percent monthly quarterly semi annual and malta your buildings represented over four percent of the daughter moving on to a reported metrics we now have twelve thousand six hundred and fifty five customers beating us five thousand dollars or more per year one thousand six hundred and seventy four being fifty thousand dollars or more per year and six sixty one now being a hundred thousand dollars or more per year
spk_5: these customers segments now represent eighty three percent forty eight percent and thirty three percent respectively of totally are
spk_4: next our domain average a cv and you like contract value grew forty one percent year over year to five thousand four hundred and sixty one dollars we ended the quarter with a dollar be a niche attention rate of hundred and twenty five percent or two percentage point improvement from que for the put your hundred improve further and now round the down to six percent through the remainder of the year we expect our dollar beef that retention rate to train moderately higher no turning back to the financial a total gross margin was eighty percent one percentage point lower than the previous quarter due to a lower professional services gross margin are you a subscription gross margin was eighty five percent in line with the previous quarter we continued expect are gross margin for fiscal year twenty two to be between seventy nine and eighty one percent overall operating loss in the quarter with negative twelve million dollars or ten percent of revenue and improvement from sixteen percent of revenue a year ago this margin improvement with the function of came across a field in marketing line inherent in our model
spk_6: free cash flow with negative eight point two million dollars which over achieved against our guide
spk_4: now let me move on to guide for the second quarter of fiscal year twenty two weeks back revenue to be in the range of one hundred and twenty five two hundred twenty six million dollars building to be in the range of one hundred and thirty three two hundred thirty four million dollars non gaap operating loss to be in the range of a team to sixteen million dollars and non gaap net loss for sure to be between fourteen thousand and thirteen thin based and weighted average shares outstanding of a hundred and twenty five million our net free cash flow is expected to be in the range of negative seven to negative five million dollars given our strong q and result and continued momentum into business we are raising our full your twenty two revenue and billing guidance we now expect revenue to be in the range of five hundred and ten to five hundred and fifty million dollars representing growth of thirty two to thirty four percent billings are expected to be in the range of five hundred and ninety nine to six hundred and four million dollars representing group of thirty three to thirty four percent we expect non gosh non gaap operating lot to be the range of fifty five to forty five million dollars and non gaap net loss per share to be between forty fourth and and thirty six and for the are based on approximately hundred and twenty five million weighted average shares outstanding our free cash flow margin expectation and fiscal year twenty two is to be between negative six percent a negative four percent consistent with queue for this quarter of exemplified the strength and customers signal manifested in billings growth the signal is about environment of working vacation by users with enterprise grade extensibility this quarter thought excellent enterprise traction in larger deals with bigger volumes and so early resonance with are smart she'd advance offering and corruption or workflows be a workout we continue to see significant opportunities to invest behind the signal while managing the gosh burn effectively
spk_0: now let me turn it back to the operator for question operator at this time i'd like to remind everyone in order to ask a question you will need to press star one on your telephone to withdraw your question press the pound key for pause for a moment to compile the cuny roster
spk_7: your first question comes from mark my feet from jp morgan yeah much congrats on have a very strong result and got it
spk_8: he rattled off at the start is is pretty spectacular
spk_9: amazon to home depot to rise in the boss and and you you mentioned
spk_7: for oh sure a government agencies did you had done business with on top of that that how you feel about that
spk_2: double penetration their the enterprise and i guess i'm just wondering what we consider that left of customers have you actually finding that love competition off work at that the nuke did you see what whatever your down at the smb level everywhere we find ourselves in the jury markers or so early in the journey and you know we have now fifteen customers paying us over million bucks the see increased value i think that flight group that's coming up right behind them is indicative of us are messaging landing and them for valiant we're building i felt so most of these companies still represent bath of opportunity for us to deliver more value to them
spk_10: you know the thing that i look for his continued penetration to the fortune one of the fortune five or those numbers continue to go up a real must for average now an our job is to present value and deliver
spk_7: so we're really pleased to see it in i wouldn't when we highlight a handful of customers in the context of thousands of customers that expanded with us and quarter sell those happen to be some familiar names the list as land beyond that as well
spk_0: okay it
spk_7: a quick follow a bit maybe for pity you know have noticed up i think the last month the he had commissioned a survey
spk_4: edit shirt seventy one percent of our technology decision makers are kind of rethinking their their decisions around workhorse technology and the biggest my question is are you something that somehow in in the pipeline and with the billing strike there are you something that you decide on a hybrid workforce and then kind of in tandem with that they they see that as a reason to to use much more broadly
spk_2: marcus as beat as i look at your what you asked we would describe our pipeline for this quarter as being very strong we found that the number of view we did with larger the conversion rate we found we're were stronger what exactly the drivers are sort of to be meal out but we that we thought traction the squadron how displayed out yeah we had one comic libya when current mark to what you're asking terms of what we see a scale i think the number of of people who can offer the controls and security and this and the functional scale elements you know that's something that we built over the last few years and when you're at that level there really hard requirements that you need to have a sort of past go and and i think we're we're really fortunate in that time we believe with the leaders there and you know the innovation keeps happening fast furiously we haven't gauge coming up on june eight we're releasing a bunch of stuff that can be super relevant to the super large environments but i think what's what's interesting about smart she'd advances
spk_7: not just for the super large it's how do you enable those growing companies who are not super are yet to capitalize on all that innovation
spk_0: and i think smart she'd advances can be really interesting offering to cater to both smaller growth companies as well as those who are very established charity
spk_11: excellent thank you very much
spk_2: your lungs question comes from dj hands from can card hey thanks that's a great gotta get maybe markets building up that last comment on smoky advanced if you're given the momentum with larger customers be a slight shift towards had of more strategic bundled sales to dc the composition of your salesforce changing at all you know who you're hiring just just curious how you feel like your staff the take on a console and we continue to have a real diversity in that group i think when you have the way we organize was across a commercial business we have a large enterprise business the wifi appetite for these solutions across both of those areas i would say that as we look to fully capitalize on the opportunity with the super large hiring in the large enterprise is very important to us and the areas that were focusing on now is not just creating product and pitching product but also helping people understand the journey of how you go from starting out with cw
spk_11: o am to actually scaling with it and that is not just a selling motion that is also a services motion really almost a consulting advisory role in helping people hit those different stages at the right time with the right tools this is not a self directed go on your own hope it works type approach and i think that that's what we're getting really dialed in right now
spk_12: yeah that makes sense it any a follow up with just a they did quite a pitcher your questions or look up at it as another vendor in the face going to and i feel process now i think a lot of investors are are contemplating your competitor differentiation a in a space and you've hit on summer this but since i'm it's a conversation on having a lot you know they they could just don't you like what would you highlight is kind of two or three key areas where you think smart she does is really differentiate the market yeah dj this gene perrault i'll take this one for us
spk_11: he has march an and p both have talked about in a program martin answers we've been very focused on being the enterprise leader in the pseudo me on space and and we really feel like our ability to execute project program process work flow at scale and across a diverse set of of depart
spk_0: month to use cases that really can support the entire enterprise is really a key part of our differentiation and yeah i think that doesn't mean we don't continue to serve
spk_13: teams and small departments and smaller companies really well to help them be more effective and driving work but progress it's really about having the that ability to scale and then do it securely in and with compliance very helpful thank you guys congrats your next question comes from stands lot confirm morgan stanley our topic is a much guys are of i wanted to go back to that the very impressive
spk_2: list of logos that are you measure of at very beginning of maybe help us to contextualize obvious well the just the scale of the new logo acquisition and the specially these large blog acquisition the you see on the platform are now versus the what you're saying ah be seen in possibly twenty twenty i used to challenge but at what are you seeing from us are just large logo lands are now versus added a year ago but i think is as we've shared and previous quarters when you serve the vast majority of companies in a certain segment like to forty five for example it's really not about landing more logos it's about serving them more fully so we are again when you look at those those mega caps
spk_13: it you could you look at it diversifying into new departments and adding more value but it's so it's almost more like departmental lambs as opposed to logo land so that's that's really are run book in terms of how are diversifying how are looking for brownie within companies and how we coach and enable those mobilizers that's really that's really are our primary run book think i think logo lands in terms of those next generation of major kept you know we target a very carefully in terms of where we spend our capital on who we try to bring to the platform try to identify those fast growers and get them to choose us early and we feel good about how that's going as well
spk_4: got it got it and that that that that makes hard fans and on libya or question a question for p just you're on the back of i have that the core selling motion from smash it is all about alien landing we'll with departmental deals and then expanding live within them and certainly sounds like that expand motion as really up taking very very nicely
spk_14: with and and that room your recession going up to one twenty five up how should we be thinking about net running your hash as we go forward through the rest the year and we're do think that there's a chance at me and maybe the back after this year maybe age of fiscal twenty three that we start you get back to like a pre pandemic level as far as and that running your attention
spk_0: then we really pleased with the were on their dollar dench hundred came out for the quarter in the first quarter where the net retention rate has gone up quarter over quarter that being said they did in my prepared remarks we expected to trend up moderately as we go through the year and then include the fact that there is potentially a headwind in qt as we bring on brand for to which we laughing at first year of but wanted to point to be expected to grow through the air got it thank you your next question comes from alex you can promote research a i think they're going question so the all star with the it's kind of the same question but that maybe a little bit
spk_2: a little bit different depending on the segment that the you to take us into what you're seeing right now in those sales cycles around why that it isn't as simple as the pandemic your kind of created a pause that that has now become more clear in terms of the the strategy these companies are taking her back to their approach to to to the new way of working or is it something you found that that's really working now post pandemic in the cell cycle both at the enterprise level but then also on the federal side this is a vertical you we've talked about a lot and you guys are i think much further ahead than some your competitors getting traction here it seems at this kind of unlocked in a sense because we're hearing federal has meaningfully quicken their pace of digitization over the past few months and and even quarters and it seems like that's coming to bear in coming to fruition from your results but one of the get more color on those two aspects yeah i think in terms of last year alex i would classify as expansion rates went from extremely robust to robust as opposed to a pause they were still very favorable so business continue to expand it was really is really good to see in the last quarter across the major industries we serve see acceleration expansion rate take up some or to earn a dollar retention so i would say the the clarity around and conference that people have and investing in technology that seems to have improved but again it was not moving from a standstill it was moving from already moving to something that to be at a at a higher rate i would say the with also helpful is when you have the ability to present to people a more cohesive store as to how they can derive die from something they tend to buy more as opposed to having to navigate twenty premium capabilities would you can say okay here's choose one of three paths and hear the benefits and use or quickly you can move it easier for people
spk_0: so i think it's as much as market condition as it is to the inputs we're providing i think gonna government's side it remains a small but growing part of our business what i was happy to see the diversification who was buying it wasn't just and agency or to be saw diversification or diversity across some of the non military agencies and our first year the transaction which was on the backs of our i'll for authorization recently so again i think the table setting up nicely there for continued growth we're committed to that market and it's been a multiyear investment and expect that to hit to new heights this year perfect than than the maybe just for the the follow first congratulations on on filling on the getting rid of those material weaknesses
spk_4: in in in canada ten k that disclosure that you gave i wanted to have given the strength buildings billings given the commentary in in in terms of the renewal base from from last year how should we think about building seasonality as we as we go this year you gave the full year number of whitworth was there anything either one time i more or an item to consider you as we can look look at our models or for the balance of the year with respect to building that we take into account
spk_11: am i prepared remarks as i stated done it i've given you guidance for this squadron for the full year the only thing that i would tell you the feed nobody that you've been historically the changed we don't have food now the the region predictably gosh on which is historical that you carry forward the only thing i would tell you is and cute
spk_0: three reacquired brand folder and you remember that dub as part of the billings pick up in que three there was one time deferred revenue a blink that regard which won't repeat again in now and guilty of this year
spk_11: go grab on record
spk_15: thanks of
spk_4: your next question comes from we should jewelry and from or beefy a guy that that thanks so much for take my question outposts one of the start with with going back to the lodge customers and they're guy mark gary impressive list of of new logo and and expansions on pete last quarter you gave us and really shitty data points on the penetration rate and opportunity within your large customers and than that i think you talk ten k plus employees are obviously won't ask for an update on that every quarter but he didn't give us a sense for what progress or you're starting to see with some the initiative that you laid out last quarter to grow the opportunity within those customers and then i've got a follow up
spk_16: tory she
spk_11: as i mentioned last time or investment with pleaded and do what it called three areas and of one of them hit the ten thousand employees customers so it was about adding failed capacity we have added field capacity as we plan to forty one focus on all elements of enterprise sales team and across all
spk_17: there are other sales team that goes to court carrying capacity we've also invested in resources that support those sales team including people who helped with the customer outcomes in journey part of that conversation we've invested in those two on the field and go to market side of it additionally we've also invested in product capability
spk_4: in both investments are progressing or where we continue to widen the competitive mode as mark describing the things were which is completely differentiated from our competition so we're making excellent progress on all elements of the opponent articulated last quarter he added that had that helpful
spk_11: alan wanted to go to just a comment that was in that the deck ah which is around though the ramping had counting and services putting margin of vocation aside here the talk a little bit about what you know
spk_18: where the i guess what's driving that increase and services headcount other certain areas that you want to focus on or as if you know primarily just services or was running on and you're you're trying to get back to normal level backs
spk_0: rishi the simple answer to that is we finish queue for you remember with a very for a significant building number and that translates into just pure demand and meeting to fulfill their demand so harding head count on the services side of the way to fulfill that demand and this quote was about wrapping that go through a thing broad based demand which will not only into forbidden que one as well as i noted my prepared remarks
spk_11: wonderful thank you so much
spk_2: probably she
spk_12: your next question comes from march and buddy from william blur as perfect as thank you for taking my questions and their could work on the quarter of matter what i wanted to ask about work out a little bit i did you do some i'm korean president an adoption metric flat corner and in light of the enterprise frankly you're not started with the out be curious to know that he's playing at home or playing a role
spk_4: on a conversation with your customers at all is it still too early to tell and then how should we to think about that the monetization that might result from work out adoption
spk_12: yeah know allergy speak to that you're to one comment i would would start with is it's an element and it's an important element but it by no means is the only thing that's driving up and olives you speak to how it coincides with a smart she'd advances well
spk_2: yeah so urgent a good the way to figure out work absolute rule is the ability for a business user
spk_12: not having to rely on i t to build more curated ah have experiences whether be a desktop or mobile and and so what what we're seeing a year we launched imaging were what we're saying is really simple from customers is a really love the ability it to package of work flow into kind of a complete up like experience and bring in both elements of the smart she platform as well as the elements of their party platforms will be a dashboard from tableau or a a google doc into that overall experience and so it really is it brings out the solution level is where they're thing the most value and we're seeing her contained enthusiasm and adoption his customers or understanding building and and starting to deploy solutions and we have a number of things in the road map that are going to enable that parkas customer a scale that even more broadly
spk_2: the through could integration with control center and and other new capabilities that were her feedback from customer long importantly workouts is the enabling technology that combined with marshy advance which is really the premium capabilities that and able to work flow and and consistency scale change management and scale connecting workflows across systems and not just in a data synchronization way but also with things like
spk_12: validation and more complex workflows across as systems via bridge
spk_19: the or the launch of day shuttle which
spk_0: recently we recently announced which gives you the to both upload and offload data between smart another big systems those capabilities including advance combined with workouts really give us a pretty broad canvas to build solutions for customers across a really broad set to use cases
spk_19: escaping romanticization but the to eat your motivation question the that the thing i would just add there is the way that marshy bands is designed it's really designed to eliminate friction his customers grown expand with us but over time as a number of users that they have using the platform increases the the cost to advance goes up in connection with those connected users perfect but that's very helpful all an emetic i can follow up
spk_11: and we she's question around the services business i would be as you go deeper into the pilots with you know work out in advancing are a lot of be more sophisticated capability that bet that you're going out to be curious how you take the role of your partner's changes over time and would love to hear just we
spk_2: there you are today and in developing that partner ecosystem especially for the larger and i'd have to make the may want some more and top job
spk_20: services at the department chief
spk_0: he had any one of the things that that be highlighted was with this demand wave that that started with you for that's continued it's been an amazing opportunity for us to get our six hundred partners activated so when we think about delivery we don't think about just smart she delivering standalone we think about an opportunity to bring those people within the family and deliver alongside of us seating all of those served city many of those services companies on some cases those are on our services contracts we are paying them very good rate and were seating that knowledge within those teams which them go out and deliver standalone we do have other partners like slalom who are developing capabilities where we fully expect them to be deliver high value are skilled apply
spk_11: amazon sparky so i think this this demand and and my my any concern in terms of typing margins and services is a is is muted by the fact that we're enabling those goes partners and and i think next year we're going to be to very favorable position where you have hundreds of partners delivering on our behalf
spk_0: harvick vacuum and congrats again
spk_2: thanks your next question comes from scott earth from need them hi everyone can get gonna kick have to quarter here i guess i have two questions and first all don't know wants to take this pattern on the enterprise strength and in i guess general up sell strike we saw the net revenue retention obviously ticket to point it look at the company historically mostly that movement was around few expansions that you penetrated your customers more ah marquee spent a lotta time on and from the new modules and into early adoption there but we look up to it
spk_1: three years out of that net revenue retention are absolute customer shift from all what will be amelie feet driven before to something the and it's more of a mix of of module driving on was the driven
spk_21: i think it's gonna be a it's going to be a blends gotta make what what we're not doing is is putting her quote on ourselves and we must adhere to certain certain amount coming from users certain about coming from from capabilities i listened to the customer see where they are fine value the approach that we've taken to scaling work apps and monetizing is different from how we have license using the power
spk_4: past based on customer signal so i'm so i think we will continue to monitor we will continue to i fully expect us to continue to growing the capabilities elements further i think when you start introducing things like ten thousand feet and brand folder and you have those elements selling alongside are big tailwind opportunities for for for for diversifying that with the revenue streams so it's a it's again early days on smart advance and will be a little more fully report on that coming quarters
spk_22: tight knit i at i look at the incomes them and the quarter year sequential increase in sales and marketing is the largest in the customer in the company's history exploiting
spk_0: conference saw impact and in prior their quarters actually view that increases span it's it's about six and a half million dollars if we're break that up how much that it's headcount person maybe new marking programs that you're are targeting today thank you
spk_23: scott term you know you should think of this is sequential first to fall
spk_2: it's a signal element of how these dollars come out think you want typically there's a fair number of expenses which are quarter related i think you would see that overtime you're going to see the headcount parts of this increase because field in marketing is quarter driven large part that going to happen and we're going to be a good few to demand and then which is gonna make up as you think about the field in marketing at the present of revenue climb as we go through the year external jumping to fix again your next question comes from brand tell them jeffries he got joe entrepreneur really appreciate the question mark is an shame point you made on the mac the integration just curious of reason security breaches and concerned about third party security posture said no spurred and up sell the appears that include the access controls and governance capabilities and if you view that it's competitive differentiator anthem yorkers having some of these somebody is a elements wrote to the new to the portfolio
spk_23: but we i would expect this to be an increasing frequency of conversation as as you noted based on what's happening in market
spk_4: so many things are are difficult to respond to quickly so again in terms of things we got right in a few years ago we started investing in these areas me to put it in a strong position to have a really strong engagement when security and that hi i t bar
spk_23: is is is presented as presented to us to have to clear
spk_4: it's it's you know someone who's been with the business world fifteen years now i remember vividly when especially some of the institutions in the financial realm where it was quite tentative in terms of adopting fast and now that some of these controls and security measures measure in place we're starting to see movement and that's a really great find to see those very very critical companies pet giving us a passing grade and moving forward
spk_23: i often to air and impede maybe to the quick one for you any sense of what brand voter contributor billings live in the quarter
spk_0: we weren't pleased with our brand for their performance are you know we're not breaking our brand for her because he can really done that for the first year of acquisition but in general really pleased with then voters performance
spk_24: at at with a higher or lower than for you
spk_1: you know in general i think queen of bread for the did really well and dub i would say it exceeded plan in line with a lot of our other businesses i said we were sort of
spk_4: reporting a really strong quarter in and kids with consistent with that kind of a perform open present that your next question comes from michael turn from wells fargo securities a their thanks and good afternoon that the fifty k customer at really stands out as does the list of expansions previously reference mark what they're all the call not going to ask you to read through all those again but the strength certainly seems unique for que on the just wonder if there's anything you can add or out what drove that up thick and then the qt billing and guy calls for roughly flattish growth vs que one and some just wondering if there's anything abnormal and and the strike you saw here to call out that informs that sequential outlook or a far as maybe from conservative is the cute your outlook as well thank you
spk_2: i'm michael start with the buildings guide suited to the recap when we started the year or year on year group for que one represented approximately i'd call it thirty to thirty one percent you're on your growth and based on our guide for q to were calling a thirty seven to thirty eight percent you're on your growth and the reason we feed his confidence is because the what i stated my prepared remarks for que one larger number of deal in the pipeline shorter psycho times to close up and just generally tend to cross all what i call customers sizes and transaction so that the we were seeing it and what we're also sort of emphasizing is we did look at the annual guide on billings we've actually read that in excess of the beat and that's because we see this confidence piling to the rest the second part of it on that mark take them on your honor on the customer expansion side
spk_25: yeah it's really continuation of what we saw in queue for and i think the during his we talked about last year how our sales teams started to present value to people when people really we're we're we're far more demanding in terms of be able to articulate the value that one derived from doing so and cwm and from the patients i think a performance and on wanted
spk_0: we have multiple quarters now under our belts we're we're talking and present in that way
spk_26: and again as i said quarters ago i think that never goes out of favor so now when you have confidence growing in business combined with a presentation of value that leads to better thanks the that i think it was nothing i wouldn't say there was nothing there was nothing out of the ordinary we've had thousands of customers expanding every quarter for the last few quarters
spk_12: we simply shared some of those names with you today for helpful thank you so
spk_26: your next question comes from steve and years from keaton capital markets a great thanks her and my question is where the check i know the new lives better now for for a couple of months but it gets have you seen any kind of early impact from that a market they're driving better topic follow conversion or drive an existing customers add to these cases and quicker expansion there
spk_2: it in a in a than i will help
spk_12: yeah hi steve i'll take this one and i would say that your phase one has has launched we view the the you are modernisation is starting with of incredible motors approach over the course of this year and them will be ongoing and big is the biggest uptick we've seen has really been an engagement user engagement and and overall coach speed of learning and and understanding the platform and and i think will continue to see that as a as a net positive as we as we continue to make improvements encampments but that's that's really the the big benefit we've seen so far okay great aunt and and i made a few i conditions in the past couple years particularly focused on on the market in side and will add some of the newer models there but guess what have you kind of seen as you go back in the in the customer than in train drive to the to the market apartments and she made the acquisitions and and what kind of strength of you
spk_0: same specifically for for marketing use cases and the new products are being rolled out but i think you her one of the examples in march two per remark talking about uber and using work ups in their marketing group we we've got countless others handles and customers that are using us for marketing use case
spk_11: and i as we have rolled out integrations with grandfather improved integrations would ten thousand feet worse were seeing a lot of interest and it's obviously a very
spk_0: the top of mind space is a lot of there's lot of folks
spk_4: going after that segment but we feel really good about are offering and the unique value that we can deliver combining sparky and grandfather and ten thousand feet and then the he had a lot of cape royds we've added to proofing and and content management and and were club okay great thanks for reading my question your next question comes from grandmother from bamberg i got it thanks take my question maybe or or on the margin fraud
spk_27: and i get the kind of goes the rednecks how sweet think about that panning out for for the rest of the year she we assume services growth the at my level to but we thought in this corner and maybe green best incremental gross profits from or subscription gross margin than in business
spk_0: brett i think you've asked two questions they'll try and answer both them wondered about the outlook on margins are to start with that first
spk_28: you don't we reported a quarter where we beat are op margin and are free cash flow guidance for the quarter
spk_19: but the quarter also gave us a lot of signals in terms of the size of the opportunity we fully intend to invest you know based on our original died for the court for the year
spk_29: and take the amount we've over performed and put it toward the investment capital we've tended to that's one part of your question the second part of your question was on services margin
spk_2: i think you should start you should see or services margin as we get through this initial period of from thing of headcount start approach where we have historically been and the to take a few quarters to get through our ramp utilization i'm sort of a new people and team
spk_30: perfect like it
spk_12: course your next question comes from terry tillman from truest this is your news all the carried take taken the question i'm you've owned grandfather forbid now i'm just remembering them
spk_2: you're going back to the question that are edited out progress and other happened you on how are you thinking about emanate going forward with your app period of the pipeline and did you have valuations are
spk_12: a joe
spk_30: but your we require grandfather yeah
spk_31: i guess was the
spk_12: third quarter and of our third quarter of last year and your we've we've to a really good about the integration with your were really good about the way the team's performing and yet it is a we your we can we feel better and better about over acquisitions as we can to see them we're kind of come into our product offering in the synergy with customers so we we read your really blessed there i would say from up emanate going for we will continue to to view in a as both a lever to accelerate value delivery for customers were we see key capabilities that and enhance the
spk_30: utility we can deliver to customers and improve engagement or a customer experience but we're also you know
spk_0: evaluating causally and and looking at are there more strategic emanate
spk_30: wu's that we could make to
spk_12: accelerate growth in a more
spk_0: exponential way i guess is where i think about it and create more step change and so i would say that none of that is you off the table it's kind of those things fit into how we think about our growth strategy over time
spk_32: i'm but we're also we also think that part of a you them in a is ensuring both strategic fit and yo deals with make sense from a value perspective and so the last party your question how do i feel about valuations yeah i think in some situations there there's great value be had in other situations yes over the multiples are are are pretty lofty right now and you really have to be thoughtful and clear on what
spk_2: the combined entity is going to create for you long term in order to to really get comfortable with with spending it at those levels so and i'm not singling you think send sandy that's got how we think about the the landscape today and abigail continue to see as be active does your last question comes from boeing unkempt from city group hi this is going on for tyler bad see i'm just given the importance of advisory talking all that you mention car sales jj the landmark in dried up so how do you feel about the field ability town for sale to execute the international markets and how would you characterize cells productivity
spk_0: he an international markets relative to what you feel and
spk_1: more established and black market
spk_0: during one of the things that served a real attribute of these types of up this platform approaches that when you engage with someone initially in a comprehensive way they become trained on how to deploy it so when we think about investing of services services team with one of our large customers who scaling with smart you advance
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