This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk08: 2021 earnings conference call. Joining us today for today's call are Zoar's founder and CEO, Team Zo, and CFO, Todd McElhatton. At this time, all participants are in a listen-only mode. After the presentation, there will be a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad at that time. With that, I would like to turn the call over to Carolyn Bass, Investor Relations. for introductory remarks. Please go ahead.
spk09: Thank you. Good afternoon, and welcome to Zora's third quarter fiscal 2021 earnings conference call. Joining me today are Tien Tso, Zora's founder and chief executive officer, and Todd McLehatton, Zora's chief financial officer. The purpose of today's call is to review our third quarter results, as well as provide our financial outlook for the upcoming quarter. Some of our discussion and responses today will include forward-looking statements, including with respect to our expectations, outlook, and financial guidance. So as a reminder, our actual results could differ materially as a result of a variety of factors. You can find information regarding those factors in the earnings release we issued today and in our most recent filings with the SEC. Finally, we will be referring to several non-GAAP financial measures today, and reconciliations to related GAAP measures are included in our earnings press release. As a reminder, last quarter we began to exclude litigation charges and benefits outside the ordinary course of business from our non-GAAP financial measures. For a copy of our earnings press release, links to our SEC filings, a replay of today's call, or to learn more about Zora, please visit our investor relations website at investor.zora.com. And with that, let me turn it over to Tina.
spk04: Thanks, Carolyn. And thank you everyone for joining us today on Zora's third quarter earnings call for fiscal 2021. I'm very pleased with our third quarter results. Let's walk through a few key highlights from the quarter. We exceeded expectations across our key financial metrics, including total revenue, subscription revenue, gross margin, operating income, and free cash flow. And this is even after backing out the impact of a one-time benefit that todd will discuss later in fact we reached a milestone of free cash flow break even one quarter ahead of plan we added 25 new customers in q3 including the largest deal in the company's history we closed six deals with over 500 000 in annual contract value we had over 100 upsells showing a strong continued potential of our land and expand go-to-market motion We helped 41 customers to go live. Over one-third of these go-lives involved a systems integration partner, showing strong progress in our alliances strategy. Finally, we had strong adoption of our most recent products. More than two-thirds of our customers are already using our platform capabilities like workflow, custom objects, and increased agility. And over a quarter of our customers are now using our analytics tool, which we just launched last quarter. These results show that we are making good progress on the themes that we outlined in previous quarters. First, in previous quarters, we've talked about how we believe that our market opportunity resonates with bigger companies, as changing customer preferences force big brands to rethink how they innovate and turn their customers into subscribers. And indeed, we are seeing more big brands embrace subscription models. Our enterprise pipeline continues to grow. We're seeing bigger deal sizes. Now, as we move up market, you may see the pace of net new customer ads per quarter be lighter than historical trends. But you'll also see overall ACV per customer trend higher. Second, as I mentioned on our last call, our platform is a critical part of our ability to meet the last mile needs of these larger companies. And indeed, our platform is resonating with our customers and prospects alike. The hardest part of running a subscription business is delivering the automation needed with agility. And our platform is truly what enables this. and differentiates Zora from other vendors in the marketplace. Our platform is a key reason why we have been successful and has allowed us to win deals that we otherwise would not have won. Third, you've heard us say that the system integrators are a really important partner in our journey, and those partners continue to deepen. Indeed, in Q3, SIs experienced increased demand for subscription and revenue automation offerings from their customers, and often relied on our technology to capitalize on this demand. Finally, you've heard us say in previous quarters that in order to scale to meet the demands of the marketplace, we needed to shift to a consistent way of selling, one that depends on systems and not just people, and one that works with enterprise accounts. We continue to see results from our go-to-market changes we implemented a year ago, which included refining our value-selling motion and our sales organization focus. I'll discuss this more in a few minutes. Let's drill into each of these four themes. First, we are seeing big brands continue to embrace subscription models. We continue to move upmarket and sign partnerships with global enterprise companies. During this quarter, we signed agreements with big brands in our core markets of high-tech, media, manufacturing, including companies like Fuji Xerox, Ili Cafe, Decathlon, and one of the top three electronic retailers in the U.S. We continue to execute go-lives with big brands across industries. In media and publishing, companies like Thomson Reuters and Media24. In tech, manufacturing, including Bosch, Automotive Services, Sonos, Panasonic, and Siemens Smart Infrastructure. We continue to help big brands begin to turn their customers into subscribers. Elite Cafe is a very interesting use case here. We're helping them launch a subscription service that will give them regular touch points with the customer base, as well as a steady, predictable source of recurring revenue. And we're seeing this dynamic play out across the entire consumer, retail, and consumer packaged goods space. We continue to help our large manufacturing high-tech clients find new sources of growth. In Japan, with the addition of Fuji Xerox, we're now working with the top five multifunction printer manufacturers. We're helping all five of them launch flexible subscription services within a very competitive hardware market. And we continue to grow the number of our customers with ACB at or over $100,000. This group now constitutes over 90% of our business, reaching the total of 653 companies at the end of the third quarter. So these larger big brand enterprise customers ultimately represent a significant opportunity for expansion and growth as they continue to shift their businesses towards subscription models. Let me shift now to provide some more color on the progress of our platform offering. We believe that the success we've had in closing these large deals is in big part due to our Zorro Central platform, which is a suite of developer tools that we launched early this year. Its features are now being used by two-thirds of our customer base. This is a key competitive differentiator, particularly within the large enterprise fields. So why is a platform so important? Well, a key part of winning the subscription economy is delivering a great subscription experience. Think of your own life in space, how much of it is run by services that you access from your phone or laptop, whether it's for entertainment, work, food, health, learning, or more. Our expectations are changing and companies know they have to adapt to meet these expectations. But delivering a great subscriber experience is not easy. Every touchpoint from the customer, service activation, payments, usage, renewals, upgrades, suspensions, every touchpoint requires coordination across a plethora of actions. Customer-facing operations like charging credit cards, internal operations like provisioning or shipping, and even financial operations like chargebacks or recognizing revenue. That's why automation is so critical. You can't deliver a great subscriber experience without automation. For example, we work with nine of the top 20 largest auto manufacturers. We added another one this quarter. Now imagine millions of cars on the road, all powered by connected services. Our platform workloads will today enable our auto customers to successfully orchestrate a number of connected car services from finding parking spots, listening to music, or subscribing to add-on capabilities, thereby enhancing the value that they're delivering to their customers. However, when automating the old way by hard-coding integrations on legacy platforms, you lose your agility, and this is why our platform is so important. We deliver automation at scale while maintaining agility. In fact, as Porter, one of the top three electronic retailers in the US, cited our platform as the key factor in its buying decision because our platform tools will allow this company to quickly and efficiently launch and manage warranty programs, repair services, video streaming trials. These are real tangible benefits that this customer is using to enhance value with its own customers. In short, our platform tools allow companies to extend and integrate more into their business. It helps those companies solve their last-mile logistical needs, and it gives them much-needed agility, and it makes us more sticky as a result. Let me now review our progress with our system integration partners. As you know, the onset of this year, we have aligned our alliances team to deepen our relationship with our SIs. These efforts are beginning to bear fruit. Zora has established strong partnerships with Accenture, Capgemini, Deloitte, EY, and PwC, among others. In fact, in Q3, we expanded our SID relationships, including signing a formal agreement with a large technology services company who has embedded Zora into their enterprise solution stack for digital transformation initiatives. Our joint customers now include some of the world's largest automobile manufacturers, as well as Decathlon, a large retailer in France. We signed an agreement with PwC Consulting Japan to bring Adly service solutions to that market. And several of our FIs have dramatically increased their number of certified partner consultants this year. Most importantly, we're seeing a number of our FI partners actively influencing and even sourcing new deal activity in Zora. In Q3, we increased the ACV of deals closed that were partner sourced by over 150% quarter over quarter. And we nearly doubled year over year ACV from deals sourced with partners. In fact, over one-third of the 41 goal lines we had this quarter involved an SI partner. We think we're still early in our SI initiatives, but we are pleased with our current progress and believe that we are well-positioned for continuing momentum in the SI ecosystem based on the quality of the global pipeline we see ahead. And, of course, as our business mix continues to shift towards subscriptions and away from services, we expect our overall gross margins to continue to improve. Finally, let me provide an update on how our new go-to-market changes are working. The short answer is they are working well. The past decade plus, we believe that Zora has built the most sophisticated industry-leading subscription management tools. With these products in our arsenal, we've opened up a large market opportunity, which will require changes in how we go to market. Specifically, we shifted our go-to-market focus on the enterprise space, where we believe we have the largest addressable market. We implemented a value selling methodology, one that emphasizes return on investments to our customers. We moved from a hunter-farmer model to having all sellers own their accounts throughout the entire customer relationship, meaning the higher quality relationships that drive upsell opportunities. We moved from individual selling to a team selling model with a full complement of skills needed to serve larger customers, including our newly formed subscribed strategy group. Everyone on the team is focused on the same set of customers, and this leads to higher levels of customer success. These changes are starting to pay off as evidenced by the number of enterprise customer wins in the quarter, the number of upsells, and the growth of our enterprise pipeline. All of these have also contributed to a steady improvement in win rates over the past year. In addition, when we monitor the distribution of attainment by sales team, we are seeing more consistent productivity throughout our sales organization, giving us increased confidence that these initiatives will contribute to additional scale in our go-to-market efforts. Lastly, we expect this to translate into higher net value retention over time, delivering greater lifetime value. In short, we believe we have made meaningful improvements in Zora's go-to-market initiatives, and we are poised for strong, long-term, continued execution as we look ahead. Now let me turn over the call to Todd to discuss our financials in more detail. Todd.
spk02: Thanks, Gene, and thanks to everyone for joining the call today. Our third quarter performance exceeded expectations across our key financial metrics. I'm particularly pleased with our ability to show additional leverage in our operating model. We posted break-even free cash flow one quarter ahead of plan. As we look ahead, we plan to drive additional margin improvements and build a more efficient company. Let me review our operating margins. Q3 was highlighted by good traction in the larger enterprise segment, as T noted earlier. Looking at our customers over $100,000 and higher in ACV, we ended with 653 customers, reflecting an 11% year-over-year growth. This customer group continues to represent 90% of our business. We added a total of 25 new customers in the quarter, and as T noted, the size of the customer deals we added was larger than historical levels, primarily as a result of our success selling in larger enterprises. In Q3, we closed six deals with ACV over $500,000, including the largest deal in the company's history. As we discussed on our Q2 call, we were impacted with a higher level of churn in the prior quarter as a result of the pandemic and M&A. As we shared with you, we expected the Q2 to be our toughest quarter for churn. This indeed transpired, and in Q3, we saw churn decrease 55% from the prior quarter and a return to our historical average. Long-term, we aim to improve this metric. In Q3, net dollar retention was flat quarter over quarter at 99%. As a reminder, we track net dollar retention on a trailing 12-month basis, and as a result, this is a lagging indicator. The higher level of churn we experienced in Q2 will weigh in on this metric looking ahead as we lapse this metric over time. Turning to transaction volume, our system's processed over $14 billion of volume in the quarter, which represents 31% year-over-year growth. Processed transaction volume is helpful in understanding of how much of our customer's business is running through our platform, but it does not track linearly to the quarterly revenue as our customers gain efficiencies as they scale. Next, let me review our Q3 financial results. Subscription revenue grew 15% year-over-year to $62 million, Note that Q3 subscription revenue included a one-time non-recurring benefit of $1.5 million, which we did not include in our Q3 guidance. Normalizing for this, our Q3 subscription revenue still came in above the high end of our guidance. Professional services revenue decreased 14% year-over-year to $15.2 million, primarily driven by the shifting of services work to our system integrator partners. This is in line with our strategy to improve our mix toward the higher margin subscription revenue. In Q3, subscription revenue represented 80% of total revenue. This is our highest level in over three years. This resulted in total revenue growing to $77.2 million for the quarter. Looking at our margins, we continue to make strides. We have been successful at driving the mix of subscription revenue as a higher percent of total revenue. As we drive more professional services to the SI channel, our gross margin improves. Non-GAAP blended gross margins closed the quarter at 63%, an improvement of over 500 basis points from Q3 in the prior year. Non-GAAP subscription gross margins were 78%. Non-GAAP services gross margin was 1%, consistently shared with you on past calls. We will continue to run services on a break-even basis and drive additional leverage as we engage with more of our trusted SI partners. Non-GAAP operating loss was break-even in the quarter, reflecting a $7.3 million improvement over the prior year. This was driven by reduced spend on T&E, events, and office spend, as well as the one-time benefit. The combination of effective cost management coupled with our improving gross margins led to a break-even, non-gap operating profit well ahead of expectations. Now, let's turn to billings and cash flow. Calculated subscriptions billings in Q3 was $70.8 million. reflecting growth of 14% year-over-year, a dramatic improvement from the prior quarter. We had planned for a modest improvement to the metric after the prior quarter, but we managed to outperform primarily due to our upmarket enterprise wins. Moving to our cash flow numbers, Q3 cash flow was breakeven, over $5 million ahead of expectations driven by lower costs, the one-time benefit, and strong collections activities during the quarter. Total CapEx for the quarter was $1.4 million net of insurance recoveries. For Q4, we expect to be cash flow positive, driven by the usual Q4 seasonality. As I mentioned last quarter, we believe it's important that we improve our operating leverage and create efficiencies in business, and I'm pleased we're making good progress on our free cash flow metric. Turning to cash, we ended the quarter with $178.8 million in cash and cash equivalents. roughly in line with the prior quarter. We continue to be prudent with respect to spending levels and have maintained a healthy cash position to manage the business. Our fully diluted share count as of the end of the quarter was approximately 131.8 million shares using the Treasury stock method. Overall, we reported solid performance in Q3. We see continued signs that our quarter-over-quarter enterprise pipeline is growing. We continue to be very disciplined in our investments. We have experienced success with larger customers and working with our SI partners. Now let's turn to our financial outlook. Our subscription business model continues to be resilient, but we continue to see economic uncertainty in the market. We are making a number of changes to the business and working to shift more services revenue to our SI partners. For fiscal Q4, we expect subscription revenue of $62 to $63 million, total revenue of $75 to $77 million, Non-GAAP operating loss of $5.5 to $4.5 million. A non-GAAP net loss per share of $0.06 to $0.05, assuming a weighted average share is outstanding, of approximately $120 million. We expect calculated subscription billings to grow approximately 8% to 10% year over year as we face a tough compare versus Q4 of last year when we posted our highest ever bookings quarter. In closing, on the guidance topic, while I expect near-term economic uncertainty to persist, we continue to be enthusiastic about Zora's long-term opportunity. The Zora team continues to make great slides and are optimistic about our long-term subscription revenue growth. As we look ahead to fiscal 2022, we will continue to invest in our go-to-market initiatives, which are showing traction, and to innovate on a product roadmap while remaining diligent and agile about the need to respond quickly to changes in the macro environment. Now, Tina and I will open up the call for your questions. Operator?
spk08: At this time, as a reminder, if you would like to ask a question, press star 1 on your telephone keypad now. And your first question comes from the line of Chris Murray from Goldman Sachs.
spk03: Hey, thanks so much for taking my question. So I wanted to ask about the large deal in the quarter. I think you mentioned it was the largest you ever signed. And could you share a bit more about maybe what industry the customer was in, what was included in that deal? Was it just the core billing product or was there a platform in there as well, maybe Red Pro, other things? I'd love just to hear a bit more about that deal. Thanks.
spk04: Yeah, sure. Thanks for the question, Chris. It was actually one of the top three electronic retailers. And it's a big, big strategic bet. If you look at what's going on in the retail industry, certainly we see the shift from retail stores to e-commerce going on right now. But I think the story is much, much deeper than that. The retailers are realizing that waiting for the customers to purchase something, right, to come to the website or to go to the store is not sufficient. They've got to deepen their relationships. They've got to have a lot more constant interactions with their customers. They've got these fantastic brands. But how do they translate those brands into a deep customer relationship, in other words, turn their customers into subscribers? The deal was for the billing product. I think of it as a broader subscription management system, and it was for the platform. And we do, you know, as we get into the implementation, as we continue to create customer success, we will have other opportunities to upsell the customers as well.
spk03: Great. Thanks. And maybe just a follow-up. You also mentioned in the prepared remarks that two-thirds of customers are using platform and I think a quarter of customers are using analytics. Obviously, very strong attach rates for both of those products. Can you talk a bit more about how you're charging for both of those and how we should think about the improving attach of platform and analytics benefiting net retention going forward?
spk04: Yeah, you can see the key part of our strategy in our ability to drive the dollar attention over time is we have a very sticky product. We've got a great customer base. You've seen us skew towards larger companies that are going to have longevity. And so the ability for us to go back and sell a broader suite of products after initial sales is really, really important. So the adoption of what we have, we're feeling really, really good about it. The products are priced in different ways. It really depends. But they're primarily based on the functionality of the system. And we're not at this point yet. We're ready to sort of break out our revenue by these different product lines. I think I'd like to see everything be a little bit more mature before we do that. But it's very promising that we're able to bring these new products to market as well.
spk02: Hey, Chris, this is Todd. Maybe a little bit. Hey, maybe a little bit more color, too. As customers are utilizing the platform, we'll have the ability to upgrade them. As you're aware, we've got three different additions to the platform. We have growth, we have enterprise, and we have nine. And so this will certainly give customers a reason to upgrade as they have more use of the platform and get more use out of the functionality.
spk03: Perfect. Thanks so much, and congrats on the results. Thanks, Chris.
spk08: And your next question comes from the line of Stan Vlotsky from Morgan Stanley.
spk00: Hi, everyone. This is Calvin on for Stan. I just have two questions for you guys. Can you hear me okay? Yeah, we can hear you, Calvin. Perfect. The first one is, what are you seeing out of your partner ecosystem? I know you mentioned it, and it sounds great. I just wanted to know, in terms of both as a go-to-market motion and how how partners are continuing to build out practices around you. Could you comment a little bit more on where you see that going and trending over the next few quarters?
spk04: We do really good. If you look at the statistics, we mentioned one-third of our customers that went live this past quarter, there was an SI involved in that implementation. I think that's the reality that we're going into, right? I know you phrased it as these SIs are building practices around Zorro. What these SIs are really doing is they're building practices around digital transformation. And they're realizing that this next phase of digital transformation is It's not just playing around with digital technology, but actually turning them into revenue, right, turning them into real revenue. And by and large, these tend to be subscription-based or recurring revenues. They're customer-centric revenues. And when you look at what's happening with the physical product space, right, manufacturing, they're all launching products that are connected to the Internet. And these companies are excited about the vast new revenue streams that are available to them. And so the SIs are really a big, big part of that. And so what we're seeing is as they're trying to build out their digital transformation or grow their digital transformation practices, we are a key part of that, right? Because it's all about monetizing your customer relationship, monetizing your digital initiatives. Our platform is really the best platform to do so. It's the only platform that gives you the insights, the agility, and the automation that will build an efficient economy.
spk00: Awesome. Thank you for that. And then on to my second question, could you comment a bit on sales productivity within the quarter? I know you mentioned that churn has returned to normal levels. And where do you see that going over the next few quarters, especially with COVID and with, you know, the overall macro environment?
spk03: Yeah, exactly.
spk00: No, go ahead, Todd.
spk02: Yeah, so, Calvin, I think we're, you know, we would look to stay at the historical levels that we've had so we feel like we'll be on the same range where we've been prior. The other thing that I guess I would say is, you know, from a sales productivity, we continue to see improvements in the productivity that we've seen from Salesforce, and, you know, we're really pleased with changes that have happened there and where we expect it to be.
spk00: Awesome. Thank you very much.
spk08: And your next question comes from the line of Brent Hill from Jefferies.
spk07: Hey, guys. This is Lux Soda here for Brent Hill. Congrats on a nice quarter. It's good to see some improvement. I wanted to ask a question on, you know, the go-to-market motion and the pipelines, if you will. It sounds like you guys are having increased enterprise traction recently. And one of the themes that we've seen in our partner checks is that, you know, the front office was sort of the focus in 2020, but in 2021, the focus is going to be, you know, back office digital transformation. And so maybe as you look to the next year, what are you seeing out there in the pipeline? Is there sort of like a pent-up demand that we could see come back next year?
spk04: Yeah, I would say... if you if you look at if you if you the definition of the world is front office and back office that might be a little bit dated right and that that division made a lot of sense when you were shipping product the front office sold the product the back office fulfilled it accounted for it you know collected for it and it's a very product-centric view of the world and if you look at the companies that are subscription businesses have always been subscription businesses you know for example the telecom companies they don't look at it like that they start with the customer and they build great subscriber experiences for those customers. And those subscriber experiences have to span the front office and they have to span the back office, right, whether it's calling the call center or changing your credit card on your billing account or spinning up some more servers on a Sunday night without having to talk to a salesperson. Those are the things that are the most important. And what companies are realizing is if they're going to win in the future, Just think about your own life right now, sitting at home, picking up your phone, and then food shows up, right? You get work done. Entertainment shows up. Those are the subscription experiences you will demand going forward. Companies realize that, and they realize that in order to do so, they have to put in a customer-centric subscription management platform. And so what we're seeing on a broader sense is the COVID shelter-in-place situation. It's only accelerating companies' efforts to say, we have to go build customer-centric business models. That's really the business model of the future.
spk07: Got it. And maybe one additional one on the go-to-market changes. It sounds like you're having some traction with that. I guess in terms of the competitors you're seeing as you go more upmarket, Are you mainly replacing like Excel systems or is it more legacy competitors who weren't meeting the needs? Thank you.
spk04: Yeah, we definitely, you know, we replaced homegrown billing systems. We replaced Excel spreadsheets. A lot of times we're doing launches where it's a greenfield opportunity. It's the first time they're actually launching a subscription business, so it's a brand-new application. In those situations, you know, we're able to get customers up and running. you know, in 90 days or less. And I would say, though, that as we go upmarket and as subscriptions are becoming more mainstream, one of the things that you're going to see us focus more on, this is where the platform is really, really important, is how do I integrate this thing within my existing enterprise application backbone? It's okay to launch something on the side, but when the subscription starts becoming 5%, 10%, 20%, 30% of my revenues, then integrating into my existing enterprise software backbone is really, really important. And we're doing a lot of those type of work, you know, with the big companies.
spk07: Awesome. I'll pass it over. Thank you.
spk08: And your next question comes from the line of Joseph Boppy from Tannic Corp.
spk06: Hey, guys. Good afternoon. Nice to see the good results here. You know, Tien, it seems like, you know, we heard a lot more about platform this quarter than the last couple. I'm just kind of wondering, you know, number one, if you kind of see this quarter as a little bit of a breakout on that product. And then secondly, it would be interesting to get a little bit of a metric on, you know, where platform was last quarter in terms of customer usage and then maybe a follow-up after that.
spk04: Yeah, it's a great question. I think about the platform all the time. In the gradual evolution of a software company, especially something we do, which is a mission-critical system, the platform strategies become really important. These large companies, right, this last mile customization, a lot of times that's where their secret sauce lies. And so the ability for them to customize the system to meet their exact needs is really, really important. And our platform continues to advance. I mean, every quarter there's new capabilities, right? Most recently we talked about launching custom objects, custom query capabilities, but other things are, you know, we're cooking in the labs, if you will. And those tools continue to evolve to help companies do some pretty amazing things. And so I'm trying to remember what we said last quarter in terms of adoption, but it was south of the two-thirds number we said today. And so our expectation really is that every one of our companies will ultimately use the platform because they all have specific needs that they want to do that the platform really enables.
spk06: Okay, that's great. And then, Todd, maybe on net retention, I know it's a trailing 12-month metric, but I think in Keen's prepared remarks that you had 100 upsells in the quarter. and is there any way to look at net dollar retention or kind of a view of it or, you know, an opinion on it kind of on a run rate basis or, you know, kind of excluding a little bit of the kind of one-timers in Q2 just to kind of get a feel for, you know, the cadence of the business on that metric at least right now? Thanks a lot.
spk02: Yeah. So thanks a lot, Joe. So I think I would look at net retention, you know, as you said, it's trailing metric. We feel really good about the upsells we had, but I think, you know, more importantly, you know, if you look at the actual dollar churn, That decreased 55% from Q2. We said we thought Q2 would be our toughest, and that definitely turned out to be the case. But more importantly, when we look at the retention, we actually improved year over year. So from my perspective, I think that gives the color that we're on the right track with retention, and we'll aim not only to keep the churn down, but continue to move forward on the upsells.
spk06: uh great thanks and then just maybe i'll just sneak one more in is it fair to say that you know with some of these you know you're signing bigger and bigger enterprises is it fair to say that most of them are coming on line initially at that kind of um 500k acv metric that you call out for larger deals or do they actually start sometimes smaller thanks a lot
spk04: I'll go into that. It is a range, and it's a little bit part of what we do. We can do anything from a small launch, all right? And so there's a company that says, I'm going to get into subscriptions. I'm not really sure how. But look, let's put an idea together. Let's launch something. Typically, you find that you've got pent-up demand in your customer base because of the power of your brand, the power of your customers, and you'd be pleasantly surprised by the success of the launch. All the way to, look, I already got a subscription business. right and i've got a billion dollars that i need to move on to your platform that's going to be the foundation for my growth going forward and so you're going to see deal sizes really range uh quite a bit as a result and i think that's the power of of the pricing capability and quite frankly that's the power of subscription businesses and cloud businesses in circle and in general right the ability to size uh the usage inside the consumption to to to the appropriate thing the company wants to start with but have a path to grow with them over time to be worth seven digits or more.
spk06: Fair enough. Thanks so much, guys.
spk08: And it looks like we have time for one more question, and that will be from Scott Berg from Needham.
spk05: Hi, Tina and Todd. Thanks for taking my questions. First of all, Tina, you talked about kind of the recovery of the business. I guess just more specifically, Zooming out a little bit is, if you look at the deals that you've signed recently and that are maybe in the pipeline over the next couple quarters, is the composition of those deals, those transactions, any different than maybe how customers would buy the Zora Central platform pre-pandemic?
spk02: team do we have you on good I thought it was just me let's see if team comes back on Scott I think the answer to the question there, Scott, is, you know, we have been seeing that we've got a little bit more flexibility from a standpoint of, you know, being able to start as teams said earlier, start with a small launch or, you know, do something larger. And I think this quarter we saw that we certainly had a nice traction with St. Gilles starting larger.
spk05: Kind of helpful. And then just as a quick follow-up, Todd, you'd mentioned your subscription revenues were 80% of the overall revenue mix in the quarter. 80-20 certainly is a good level and healthier than what we've seen historically out of the company. But with the push to partners, what should that mix be going forward? Is 80-20 kind of the plateau level here, or do you actually see that mix progressing further?
spk02: I don't know that we've given specific guidance on where we'd see that, but, you know, I could certainly see it going lower. Um, I think it's certainly really important for us to have a healthy SI community. Um, you know, as they build practices, we're happy for them to take the, uh, the SI work on. And also, you know, it gives us an opportunity to, you know, continue to build, um, to build a pipeline, which we saw really good traction from this quarter. So from my perspective, you know, I can certainly see it going, uh, you know, longer term below the, uh, the 20% services.
spk05: Great. That's all I have. Thanks for taking my questions.
spk01: All right.
spk02: Thanks, Scott.
spk08: And now I will turn the call back over to management for any final remarks.
spk01: I want to thank everybody for joining us in the Q3 earnings call. And with that, I will close the session. Thank you very much.
spk08: Thank you for joining today's conference call. You may now disconnect your line.
Disclaimer