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spk00: Hello and welcome to the Yext, Inc. first quarter fiscal 2024 financial results call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask a question. To ask a question, you may press star then one on your telephone keypad. To withdraw from the question queue, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Nils Erdmann, Senior Vice President, Investor Relations. Please go ahead.
spk03: Thank you, Operator, and good afternoon, everyone. Welcome to Yext's Fiscal First Quarter 2024 Earnings Conference Call. With me today are CEO and Chair of the Board, Mike Walrath, President and COO, Mark Farentino, and CFO, Daryl Bond. During this call, we will make forward-looking statements, including statements related to our future financial performance, expectations regarding the growth of our business, our outlook for the second quarter in fiscal year 2024, our strategy and estimates of financial and operating metrics, capital expenditures, and other indications of future opportunities, as further described in our first quarter earnings press release. These forward-looking statements are subject to certain risks, uncertainties, and assumptions, including those related to the exit's growth, the evolution of our industry, our product development and success, our management performance, and general economic and business conditions. These forward-looking statements represent our beliefs and assumptions only as of the date made, and we undertake no obligation to revise or update any statements to reflect changes that occur after this call. Further information on factors and other risks that could cause actual results to materially differ from these forward-looking statements is included in our reports filed with the SEC, including in the sections titled Special Note Regarding Forward-Looking Statements and Risk Factors in our most recent Form 10-K for the fiscal year ended January 31, 2023, and our press release that was issued this afternoon. During the call, we also refer to certain metrics, including non-GAAP financial measures, Reconciliations of the most comparable historical gap measures are available in the earnings press release, which is available at investors.yext.com. We also provide definitions of these metrics in the earnings press release. I will now turn the call over to Mike.
spk08: Thanks, Nils, and thanks, everyone, for joining us today. We are pleased to report solid Q1 results and a strong start to the year. We generated revenue of $99.5 million, non-gap earnings per share of $0.09, and over 14 million of adjusted EBITDA. Our non-GAAP EPS and adjusted EBITDA were the highest in Yext history, and we continue to hit new peak levels of efficiency and profitability. Our performance in the first quarter was a direct result of our continued execution on our priorities, creating value for our customers and improving productivity across the organization. Last year was a turning point for Yext, and we spent the better part of fiscal 23 reorganizing our team, reorienting ourselves around our customers to deliver the highest value and delivering tremendous product innovation. Our first quarter total non-GAAP cost of revenue and operating expenses totaled 89.7 million down from 106.2 million last year, a 16% decrease. We've hit the ground running in fiscal 2024. And in the first quarter, we continued to build awareness for the power of Yext Answers platform, and its ability to deliver and generate trusted answers across the full spectrum of digital experiences. Both new and existing customers are realizing how much our platform can enhance their digital transformation by reducing friction, streamlining operations, addressing customer pain points, and driving increased value. Our launches of Content Generation, Studio, and Yext Chat in beta have been catalysts for more in-depth discussions around generative AI. As DX becomes increasingly engaged in strategic discussions about the end-to-end customer journey through the digital experience, our conviction in the long-term opportunity of our platform grows stronger. In the last couple of weeks, we launched two new global campaigns focused on the importance of having a modern, composable, best-in-breed architecture that shows the possibilities of what customers can do with our AI-led DXP. Our go-to-market executive team has been in place for six months, and we're pleased with the progress we are making. While the full transformation of our go-to-market will take a couple more quarters, we are beginning to see increases in pipeline production and conversions, particularly with smaller enterprise customers. Our mid-market team benefits from shorter sales cycles and less complex integrations, and the uptake is a good indicator of how our value proposition is landing with customers. So while it is still early, we believe this momentum will eventually carry over to the larger enterprises as well. Our first quarter performance delivered against the goals we laid out in March and again in April during our investor day. We streamlined our operations and demonstrated even greater efficiency and profitability. And in spite of macroeconomic headwinds, we exceeded our revenue, adjusted EBITDA, and non-GAAP EPS targets for the quarter. We generated significant year-over-year profit growth And as Darrell will describe in more detail, we are raising all of our top and bottom line targets for the year. During our previous earnings call, we mentioned our multi-year plan to transition a portion of our services business to our systems integrator and partner ecosystem. As part of our restructuring plan, we reduced the size of our professional services organization. As expected, the shift in our services strategy had a modest impact on our retention and bookings in Q1. and we expect this to continue as we work through the renewals and build more partnerships throughout the year. The upside to this was felt immediately, and the margin profile of our business has increased significantly. This resulted in non-GAAP gross margin of 79.2% for the quarter, which exceeded our expectations and contributed to our bottom line beat. Overall, we experienced business conditions in Q1 that were similar to the previous several quarters. Our net retention rate for direct on the basis of ARR was consistent with the fourth quarter. We achieved year-over-year growth with a smaller sales organization, which indicates that our emphasis on productivity is having the desired effect. We've made steady progress in Q1 despite a continuing cost-conscious demand environment, and as our go-to-market and demand-gen engines begin to ramp, we're looking forward to picking up momentum. At the same time, our team remains committed to growing our business profitably and managing efficiently. I'm grateful for the commitment and efforts of our entire global team who are performing well in a challenging environment and staying focused on the significant opportunities ahead of us. With that, I'd now like to turn the call over to Mark.
spk02: Thanks, Mike. Back in March, we announced a strengthening of our Answers platform with new AI-enabled features as part of our Spring 23 release. Our innovative AI-driven solutions and our digital experience platform are driving considerable interest from new and existing customers. We launched a beta version of the XChat in February based on significant demand for chat from our customers, and we expect that chat will soon be included in our general release. Our recently launched studio and content generation features have also been well received, and we believe there's significant opportunity for us and our partners with these products. From our conversations with prospective and existing clients, It's clear that Yext is at the center of a massive transformation taking place that can help businesses leverage the power of AI. Our innovations across natural language processing, analytics, and security, as well as our leading technology integrations, are driving competitive wins in the marketplace and setting the table for sustainable long-term growth. Our innovative, composable product platform makes it easier for businesses to enhance their digital experiences, and we have some great customer examples from Q1. During the quarter, we expanded our position and added customer wins within the healthcare, financial services, technology, and consumer product sectors. Here are just a few examples. Our go-to-market team executed an impressive win back with a large healthcare provider This provider was a previous Yext customer that churned in 2020. They replaced Yext with another listings provider and since then has suffered from inaccuracies on Google, a lack of customer support, and an absence of analytics data. They were already familiar with our best-in-class listing solution and further impressed with the new features of our platform, such as Verifier, DirectAPI integrations, and new Apple Maps integrations, which won them back in Q1. Another Boomerang customer was TGI Fridays. After leaving Yext, they were in talks and close to signing with another listings provider. But after demonstrating the benefits of our composable platform and a head-to-head against the competitor, we were able to win them back. A few months ago, Yext was evaluated against several search providers and selected by Netgear to power the search experiences across all of their global sites, including e-commerce, support, community, and documentation. We're looking forward to a great partnership. One of the largest regional banks in the US became another great example of a customer visualizing Yext as a platform, as opposed to a point solution. By showcasing how Yext could not only replace an existing listing provider, but also enhance and improve their entire digital experience, we've been able to engage with the customer across several branches, loan officers, products, and FAQs of the organization. Our team provided quantitative analysis of their digital experience and provided examples of the incremental value that our platform could add relative to their in-house and third-party providers. As a result, the customer chose our platform and our suite of products to work with their existing systems and to manage their experiences across channels and different modalities. Bell Tone was a competitive win where we were able to demonstrate the advantages of our platform over various point solutions. Beltone had been using in-house tools in a competing listing solution, and they needed a platform that could streamline their existing process and manage the scope of their extensive network. The xDirect integrations and extensive publisher network helped earn us their listings business and they regarded our other products as compelling opportunities for us to scale in the future. Mathnasium needed a platform that could help them automate their existing highly manual listing process and scale across more than 1,000 franchise locations. We were able to win the business over several competitors because of our platform benefits, strong analytics, and superior technology. And finally, One of the world's largest producers of premium spirits was looking for ways to leverage AI generated content as part of its marketing effort. Consistent with what we have heard from numerous consumer brands, this customer wanted to explore cost-conscious ways to generate content without having to devote significant internal or external resources. By meeting with several of the company's C-level executives, we were able to showcase how Yext's AI-based products and platform capabilities could provide better digital experiences to their customers. Yext is in a strong position, particularly at this moment in time, to help businesses leverage AI-based technology and improve their digital experiences through our composable digital experience platform. I couldn't be more excited about the buzz around AI that's helping drive awareness among C-level executives and helping our teams demonstrate how powerful a partner Yext can be to businesses, particularly in today's environment. Now, I'll turn the call over to Daryl.
spk05: Thanks, Mark. As our financial results demonstrate, the first quarter highlighted our continued operating efficiency and profitability. Our Q1 revenue of 99.5 million exceeded the high end of our guidance range. Revenue growth was approximately 2% in constant currency and 1% on as-reported basis. This represented a year-over-year negative impact of approximately 1.3 million due to FX. While still facing uncertainty in the macro environment, our newly reorganized sales and marketing teams are executing on a prudent and productivity-led growth strategy. We achieved year-over-year growth in the sales organization that is much leaner than it was a year ago, which indicates that our emphasis on productivity and accountability is delivering the desired outcome. Our growth in Q1 was driven by continued demand in our direct business. Our customer account for direct, excluding SMB, increased 5% year-over-year to over 2,970. Annual recurring revenue, or ARR, was $398.3 million, up 3% year-over-year in constant currency, as well as on an as-reported basis. Direct customers represented 82% of total ARR. Direct ARR at the end of Q1 totaled 326.1 million, an increase of 5% year-over-year in constant currency, as well as on an as-reported basis. Third-party resellers, which represented 18% of total ARR at the end of Q1, delivered ARR of $72.2 million, a decrease of 6% year-over-year in constant currency, as well as on an as-reported basis. As of the end of Q1, our net retention rate was 97% for our direct customers and 92% for our third-party resellers. These rates were consistent with our rates as of the end of Q4 and we're pleased with the level of stabilization that's occurring due to the efforts of our sales and customer success teams. Turning to non-GAAP results, which are reconciled to GAAP in our earnings press release, Q1 gross profit was $78.7 million, representing gross margin of 79.2% compared to 76.4% in the year-ago quarter. The positive impact to our gross margin was a result of the changes we described in Q4 related to the shifting of some of our lower margin services to our SI and partner ecosystem. These changes, as well as continued improvements in our operating efficiency, contributed to margin improvements that were better than anticipated. At the time of our Q4 earnings report in March, we expected gross margin improvement throughout the rest of the year that would eventually put us at the high end of our 75% to 80% range. However, we were able to implement organizational changes and recognize cost savings earlier than anticipated. We expect our gross margins for the remainder of our fiscal year to remain at the high end of this range. Our operating expenses in Q1 were $69 million, or 69% of revenue, compared to $82.9 million, or 84% of revenue, in the year-ago quarter. A key part of our operating expense discipline has been the realignment of our sales and marketing team, and our sales and marketing costs as a percentage of revenue were 40% in Q1 compared to 55% in the first quarter last year. Our Q1 net income was $10.6 million, compared to a net loss of $7.8 million in the year-ago quarter. Our Q1 net income per basic share was $0.09 compared to a net loss of $0.06 per basic share in the first quarter last year. Cash and cash equivalents were $217 million at the end of Q1 compared to $190 million at the end of the fourth quarter. The increase in our cash balance was driven primarily by collections, partially offset by continued share repurchases in Q1, which totaled $4.6 million, or 600,000 shares. Since the commencement of the program, our share repurchases have totaled $82 million, or 14.4 million shares. We intend to continue to maintain a strong balance sheet and cash position going forward and will remain open to buying back our stock at attractive prices. Net cash provided by operating activities for Q1 was $26.7 million, compared to $17.9 million in the year-ago quarter, and our CapEx was $900,000 compared to $1.6 million in Q1 last year. Turning to our outlook for the second quarter and full fiscal year 24, the macro environment remains challenging, and customer behavior across all businesses suggests continued uncertainty. Longer sales cycles, tighter budgets, and additional approval layers are common, and our guidance assumes that these weaker macro conditions and their effects will persist throughout this year. As of today, for the second quarter, we expect revenue in the range of 101.5 to 102.5 million, adjusted EBITDA in the range of 11 million to 12 million, and non-GAAP EPS in the range of 6 cents to 7 cents, which assumes a weighted average basic share count of approximately 124.6 million shares. For the full year fiscal 24, we expect revenue in the range of $404 million to $407 million, adjusted EBITDA in the range of $49 million to $51 million, and non-GAAP EPS in the range of $0.28 to $0.29, which assumes a weighted average basic share count of approximately 125.1 million shares. We are now ready to open up the line for questions.
spk00: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw from the question queue, please press star then two. At this time, we will pause momentarily to assemble our roster. Today's first question comes from Tom White with D.A. Davidson. Please go ahead.
spk06: Great. Thanks for taking my question, guys. Nice start to the year. Two, if I could, Mike, maybe you could elaborate a bit more on kind of how you're progressing on some of the initiatives around sales productivity and building pipeline in some novel ways. And curious sort of where that stands and how you're currently thinking about, you know, potentially adding quota carrying reps this year. And then second question on net retention for direct, same as last quarter, 97%. I think historically it's been sort of 110, 112% range. Can you kind of refresh our memory or maybe is the market for an offering like yours today kind of meaningfully different in any way versus when you had retention in that higher range? Just kind of curious whether maybe the offerings were penetrated or anything like that, any color you can share that would be helpful, thanks.
spk08: Sure. Hey, Tom. So let me take the first one. I'll try to remember the second one while we do that, but you can refresh it for me. So progress on the sales and marketing side, I mentioned this in my comments, we've got an executive team now with Tom and Rayanne who are, together, have been in the seat for a little over half a year. And we're clearly seeing progress. I mean, we saw increased productivity in Q1. We saw growth with obviously a smaller expense on sales and marketing. That tells me that we're getting more from the machine. But I want to be careful not to indicate that the work is done there. So the work is clearly ongoing, and it takes, as I've said before, it takes It takes more than a couple of quarters to not just decide what you're going to fix, but then go ahead and fix it. And then obviously we have the sales cycles to think through as well. So the long range view on this is if it takes six to 12 months to fix it and six to nine months sales cycles, then you kind of hit full steam a few quarters down the road, clearly. As far as the productivity goes and the quota carrying reps, and we talked about this at Investor Day, this is the critical analysis for us. So we're doing, we're clearly doing with fewer reps today, you know, similar numbers that we've done historically. And, you know, the path to accelerating growth is obviously more sales capacity, but you really want to gate that by seeing the qualified pipeline building. And as I said before, we're going to be cautious about that because of the macro environment, because of these extensions that we're seeing, but also because there's a lot of new things being built here and we really want to make sure we have clear view to the quality of the pipeline that we're seeing. But things are moving. The campaigns that we launched just in the last few weeks are part of a demand generation strategy. that's highly analytical and geared towards building more demand. And as we see the demand build and we look at that pretty granularly, we'll be able to decide where will increased sales capacity convert into more ARR. Does that make sense? I don't know if we lost time, but I think the second question was on net retention rate and whether anything had fundamentally changed with the business from when we were in the 110 plus percent range. The short answer to the question for me is no. We want to be there or better. Clearly, we're taking, as we've said, we're taking some headwinds on here. with the defocusing of certain types of revenue that we talked about last quarter and during investor day. So it's having a really positive impact on our gross margins. But it's not going to help the net retention metric or the gross retention metric in the near term as we make these decisions around revenue that's far less efficient than we want it to. And I think that's part of the story there. I don't think there's anything structural about the business, if anything, with the breadth of our product and the product innovation that we're seeing. There should be more upsell opportunity ultimately and cross-sell opportunity that would drive that number back to and above 110% in the long run.
spk06: That's great. Thanks. I was on mute before, but I appreciate the call.
spk08: Oh, no problem.
spk00: The next question comes from Ryan McDonald with Needham. Please go ahead.
spk04: All right. Thanks for taking my questions. Congrats on a nice quarter. Michael, maybe just to start on the chat, the X chat and some of the new sort of AI enhanced offerings that are in beta right now. It's great to see, obviously, the sort of early progress there and interest. But as you kind of go through the conversations, are you seeing more demand from sort of net new customers, prospective customers, the X, or more with the existing? And I guess based on the conversations you've had thus far, does Is there an opportunity here to sort of buck the broader macro trends of maybe tightening spend to sort of see shorter sales cycles for sort of a hot investment area?
spk08: Yeah, so I think it's early to comment too much on the specific products. Yes, Chad is still in beta content generation. We just launched and we feel there's a lot to come in that area. but clearly these are areas that companies are focused on figuring out how to make use of generative AI. And, you know, as we've said, we've been in that business for, you know, we've been heavily investing in that business the last five years. And so what I'm seeing in my conversations with customers is a tremendous amount of interest and the right amount of, you know, reticence also, you know, enterprises need to be careful with how they deploy these technologies. You know, there's a lot of generative stuff showing up and smart, smart management teams are thinking really carefully about this technology because we've all seen there's downside to it. So, you know, when you talk about, you know, outrunning the headwinds, I do think there are a number of opportunities for us there. One is, you know, we have not had, and I think this is well understood, we've not had a highly tuned and highly efficient demand generation machine or a machine that converts qualified demand as effectively as we'd like to bookings, and that's been the source of some of our frustrations on that side. So as we build that versus companies who have had really finely tuned go-to-market machines, we should have the ability to begin to outrun some of the macro headwinds. But we're staying really conservative on how we project that. given our, you know, beyond next quarter, we obviously have limited visibility into how the market is going to be and what those uncertainties are going to look like. So we're a funny mix of optimistic and seeing progress, but at the same time being, I think, very conservative about what the environment might bring to us.
spk04: It's a tricky balance, I get it, but that sounds great. Maybe I have a second question. I noticed in the prepared remarks there was sort of a a heightened level of focus maybe on the customer call-outs of a number of win-backs that you've had during the quarter. And I'm just curious, as you think about sort of the go-to-market strategy, are you placing an increased level of emphasis on winning back previously lost customers and maybe what you're doing there? And then is this really being driven by anything, any dynamics or evolving dynamics within the competitive landscape at all? Thanks.
spk08: Yeah, so I'll say some stuff about that, and Mark may want to add. So what I'm seeing is a couple of things. So I think when we recommitted ourselves to communicating better about the innovation that was happening through the listings and reviews products in particular, I think we've gotten better at talking about the innovation that's happening there. For a little while, I think we lost that thread. Maybe as importantly or more importantly, I think this environment makes it much harder on some of our smaller competitors to do deals that are uneconomic and to service their customers. Smaller private companies who have been attempting to compete with us here, they're living in a very different capital environment than they were living in a couple years ago and even last year. I think they have a lot less scale in their business. I suspect that one of the things we're seeing is that where some of these companies that don't have technology, technological parity, we're competing on services, are in a very different financial position now. And so we're going to continue to go after winning back customers and proving to these customers that we have the best set of solutions. And I think the other thing that's happening is in this environment, the consolidation play becomes really important. So being able to offer multiple and package and bundle together multiple services can help a lot in an environment where a lot of companies are looking for cost savings. And so I'd highlight those three things and say that that's driving it. Mark?
spk02: Yeah, I mean, the only thing that's just really piling on top of what Mike said is that, you know, we saw a few years ago a flight to low-cost, low-quality providers during the sort of some of the economic downturn that happened around COVID. And, you know, the old adage, you get what you pay for. And so a lot of these customers are starting to recognize that, you know, the sort of promises made for the price points that were made were just that. They were maybe false promises in some cases. So we're starting to see that recognition and the recognition of the quality of our product and what that quality does. And so, ultimately, you start to see those boomerangs coming back. In addition to that, because we have expanded our product set and really moved a lot of the existing products forward while adding new products, they see X not just as a point solution for a single product, but actually seeing us as a partner for multiple different areas. As Mike said, the consolidation of a single vendor that can help them in multiple areas. And that was some of the driving reasons behind some of those win-backs, as we talked about in the script.
spk04: Awesome. I appreciate the color. Congrats again. Thanks.
spk00: The next question comes from Rohit Kulkarni with Roth MKM. Please go ahead.
spk01: Hey, thanks. A couple questions and a nice, nice quarter. One is on just AI and where are you with getting the products to market and how any feedback that you may have had from customers that may be looking at demos. I thought the demos that you had at the investor day were pretty impressive and very fleshed out. So would love to get an update on anything new with regards to getting real product in real customers' hands from an AI perspective. And then, again, to follow up on the boomerang customers, that was very interesting and thanks for all the color. Maybe talk about how much of an opportunity do you have in terms of getting those boomerang customers back in versus upsell versus net new customer wins? If you had to choose or prioritize over the next six months your renewed go-to-market strategy, how would you prioritize that boomerang versus upsells or cross-sells versus net new wins.
spk08: So Mark, we lost a little of the first question, but I think it was around momentum of the AI products in the market and what we're hearing from customers around some of the newer products like chat and content generation. And Mark can give you probably some more color on that.
spk02: Yeah, I mean, it's been really amazing with what's been happening in market right now. I mean, we're being helped by an overall interest in AI, an overall interest in what generative AI can do for organizations. What I think is where we're in a really special position is that, you know, what we bring to the market right now is not just hype. It's not just a story. It's actually tangible products, tangible ways that they can leverage generative AI inside of their enterprise, inside of their companies. And so that has definitely given us an advantage in these conversations where, you know, maybe the initial interest in understanding what AI can do for the enterprise is maybe what got us in the door. But then we quickly turn that into something tactical, something real as we show them, you know, actual product. And we show them, you know, how their lives and how the lives of their employees of the teams will be enhanced and increased in productivity that we're seeing across the board, that we will see across the board by leveraging some of our products. And then on the chat side, this very new and natural customer experience is really what's captivating a lot of the imagination of some of the folks that we're talking to about this. And it's such a demonstrable product and it's such a demonstrable set of products. The AI, you can show it, you can see it. It's not a sort of a hypothetical. And that has really spurred on a ton of interest And ultimately, when we're in the room, though, we, of course, share the broader set of products that we have. So it becomes a gateway or an entryway for us to have a larger conversation around the entire platform.
spk08: And there's a lot more on that front coming. I mean, you know, we've been doing this for a long time, and we've got a really robust product roadmap. So we're, you know, it's super energizing to have these conversations with customers. I think on your question about, you know, focus on boomerang customers versus upsell versus new, Um, it's, it's all of the above and it's, it's basically prioritizing the customer opportunity. Interestingly, one of the things I think I was, um, engaged with a customer, um, just this week who had, who had been one of our listings only customers who had left us. And one of the customers I talked to were, you know, in those early discussions where it became clear that, um, service had been an issue and, uh, focus had felt like an issue. Um, this customer, um, opportunity showed up as an opportunity to do everything but listings. And, you know, I think, you know, somewhat tentatively and as we updated, you know, this has been a few years, so as we updated the set of products and solutions, you know, I think eyes were opened with respect to the opportunity to consolidate functions and how far the platform had advanced over the last two or three years. And what was initially a discussion about the non-listings products became a full platform, has become a full platform discussion around, you know, what would ultimately be a boomerang customer on listings. And so, you know, it underscores, I think, what we're seeing anecdotally in the market, which is, you know, broadly, and everybody's talking about it, how can I, and we're doing it inside our own business, how can I have less software contracts and, you know, less shelfware and less things that I'm not using well and instead focusing on a broader platform of services that work really well together and are built to be integrated with my other systems. But we will continue to pursue all qualified demand across all those different categories as aggressively as we can.
spk01: Great. Thanks, Mike. Thanks, Mark.
spk00: As a reminder, to ask a question, you may press star then 1. The next question comes from Arjun Bhatia with William Blair. Please go ahead.
spk07: Hi, thank you. This is Chris. I'm for Arjun. So the first thing I wanted to talk about was obviously the generative AI space in general, in general is evolving very quickly. Have you seen much buyer hesitation due to just how quickly the space is moving and maybe some of the larger customers wanting to wait, kind of let things settle down a bit before making, long-term commitments or purchasing decisions? And if so, what's the right message to get past that adoption barrier?
spk08: Yeah, so Mark will talk about the detail. I'll give you this color. I think keep in mind that ChatGPT, the sort of lightning bolt that changed the market was six months ago, right? And so in normal course, we've talked about enterprise cycles of six to nine months. Everyone's talking about the elongation. I think that that's clearly being seen. So So we're probably still three months from the deal cycles, three to six months from the deal cycles in the industry that might have started around generative I from actually getting to the end of the road. And so I think it's really early to opine on the willingness or reluctance of enterprises to kind of dive into these things. I do think every business in the world has this problem, which is, if you fear it too much, you're going to be left behind and your competitors are going to use it. If you don't fear it enough, you're going to make mistakes and you're going to be embarrassed or worse in regulated industries and things like that. And so it's a little bit of the Goldilocks thing where you should have a healthy fear about how to bring these things to your business, but it shouldn't paralyze you from making use of them because if companies who refuse to take advantage of these technologies are going to have a really hard time competing with companies who are modernizing their digital experience platforms and really focusing on delivering a consumer-grade digital experience. So that's my high-level view, and Mark may have specific customer stuff.
spk02: Yeah, I mean, anecdotally, everything that Mike said is backed up by what we're seeing in market right now. I'm not seeing a hesitation. I'm not seeing a sort of fear of new technology. What I'm seeing is the normal sort of buying cycle that you would expect for any piece of technology. When you're talking about something like Chat specifically I mean that is a major channel for digital experience The cycles on the on those types of products so they should be thoughtful they should be you know sort of span the normal set of steps and and you know piloting phase and and you know the rest of the processes that you need to go through when you're when you're changing a you know in many cases are adding a dominant digital experience channel to your lineup, so In many cases, actually, it's quite the opposite, is that this technology is now opening up new use cases that maybe before the previous version of chat technology would have never been considered, which I still think is one of the cooler parts of this that we're seeing is that there's new use cases that are coming up that had really never been considered before.
spk08: Did you have another one, Chris?
spk07: Yeah. Yeah. No, thank you. That was all really helpful color. Um, one other one was, uh, so it seems like nearly every company that we're talking to is, uh, we're hearing about how quickly product roadmaps are kind of evolving and shifting to meet the surge in demand for generative AI. Given that you've had a bit of a headstart in this space, are you seeing much of that dynamic kind of play out internally for you as well? Um, just generally, how are you thinking about product strategy in the current market?
spk08: Yeah, I mean, I think the beauty of being too far ahead of this curve is that it's created probably a lot less disruption, you know, internally in terms of having to reprioritize the whole roadmap and catch up. You know, we're seeing this every day where, you know, everybody seems to have, you know, their generative. Lots of companies have never talked about generative until a couple quarters ago or now have strategies built around it. And we think that's good, and we think that that's drawing attention to it, but we've been at this for a really long time, and we've been able to keep our heads down and deliver really significant product innovation without getting distracted or having to reorient. I think we're always reorienting our prioritization around what our customers want and where the market's going, and every good product company does that, but we just have the benefit of having you know, been, I think, trying to break this wall down for a number of years that lets us feel really confident that the prioritization we have is good.
spk02: Yeah, I think the foresight that we had in heading down this path a few years ago is definitely, you know, paying dividends right now. So there's, you know, the sort of ebbs and flows of our product roadmap are mostly driven by customer need in general. That's been our orientation around product roadmap for a while. Let's look at the set of things that are, the set of customer problems that are out there that we can help them with, and we will. We have had multiple forms of different types of AI, generative AI, different transformer-based models that have been things we built on part of our roadmap and for quite some time. So there hasn't been a lot of radical knee-jerk change because in a lot of ways, the market is coming to us, which has been terrific.
spk00: This concludes our question and answer session, and the call has now concluded. Thank you for attending today's presentation. You may now disconnect.
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