Earnings Call Transcript - DOMO Q1 2024

Operator, Operator

Hello, and welcome to the Domo Q1 Fiscal Year 2024 Earnings Call. I will now turn the conference over to Peter Lowry, Domo Vice President of Investor Relations. Please go ahead.

Peter Lowry, Vice President of Investor Relations

Good afternoon, and welcome. On the call today, we have Josh James, our Founder and CEO; and David Jolley, our Chief Financial Officer. I'll lead off with our safe harbor statement and then onto the call. Our press release was issued after the market closed and is posted on the Investor Relations section of our website where this call is also being webcast. Statements made on this call include forward-looking statements related to our business under federal securities laws. These include statements about future prospects or financial projections, our cash requirements, plans and expectations for our pricing go-to-market strategy, product adoption and product impact. Our expectations for our sales team, new business opportunities and initiatives, the potential of AI and its impact on our business, and the impact of macroeconomic and other conditions on our business. These statements are subject to a variety of risks, uncertainties, and assumptions. For a discussion of these risks and uncertainties, please refer to documents we file with the SEC, including today's press release, our most recently filed annual report on Form 10-K and our most recently filed quarterly report on Form 10-Q. These documents contain and identify important risk factors and other information that may cause our actual results to differ materially from those contained in our forward-looking statements. In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of Domo's performance. Other than revenue, unless otherwise stated, we will be discussing our results of operations on a non-GAAP basis. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Please refer to the tables in our earnings press release for a reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measure, which we have posted to the Investor Relations section of our website. With that, I'll turn it over to Josh. Josh?

Joshua James, CEO

Thank you, Pete, and thank you, everyone, for joining the call today. I'm going to touch on some of my key priorities in getting back to growth, highlight a few Q1 customer wins, give some product updates, including how we're thinking about recent developments in AI. In Q1, total revenue growth was 7%. Our subscription revenue growth was 10%, and billings declined 4%. These metrics highlight the fact that three months ago, we walked into a situation where there were disturbing trends and trajectories. We feel good as a team that we have been able to stabilize things and reenergize the organization and get us poised for the future. My top priority as CEO is to get our growth rate up and to do so in a financially responsible manner. What's going to bring us back to growth is a relentless focus on our customers, and a motivated and aligned sales team. I also think there's a lot of potential upside in how we price and go to market, which I will also talk about today. Focusing on our customers is exactly what I've been spending my time on since my return. It was a very productive quarter, and I couldn't be more excited about the feedback we're getting from customer interactions. As I visited with some of our largest customers and prospects, it's clear we are providing tremendous value to some of the best brands in the world. I heard numerous examples of how companies are using Domo to foster a data-driven culture that transforms curiosity into business impact. For example, the Chief Data Officer of one of our largest customers in Japan told me to expect broad adoption of Domo in the business. When I asked her why, she said it's simple. I tell them if you want to use our legacy solution that's bundled with other stuff and come to me for reports, you can do that, or you can just use Domo. This is an example of where our differentiation as a data experience platform really stands out. It frees IT and data professionals just like this customer from a backlog of data requests while equipping broader employees with information that will make their work more impactful. We had another Fortune 100 company's users demonstrate how much faster we add value with data integrations and no-code apps built in three or four hours, where our top two competitors didn't work after 18 months of trying. We expect a large upsell there. We also had great customer interactions at our annual user conference, Domopalooza, where we heard how companies like Ford, UHG, TaylorMade, and Sephora are transforming their companies with data. We launched our on-the-road customer connections tour and our Domo Central customer community hub with great success, and we're thrilled to see some of our largest international customers host their first annual Domo Day to rally their entire companies around the possibilities of our platform. And in Q1, we had a number of notable wins, all of which showcase our ability to unseat some significant competitors. First was a new logo win with a U.S.-based construction manufacturing holding company. The company was challenged to combine the disparate data across its multiple subsidiaries through its existing provider. They chose Domo, thanks to our ability to bring it all together under one master parent account with complete visibility through the ease of a mobile app. We also won business with a private equity firm that chose Domo to replace its existing BI solutions because they could not integrate all the data sources they needed to report on the performance of their portfolio companies. With Domo's robust connector library, the company is able to provide reporting across new and existing portfolio companies. And we've already started Q2 with an exciting new logo win, the Fortune 500 multinational lodging vendor chose Domo to share data with its hotel franchisees in a platform that is scalable, easy to use, and cost-effective. Domo replaced a technology from one of our most significant competitors. All of this shows the tremendous momentum we're seeing with customers around the world as we deliver agile data experiences that spark both curiosity and enable exponential business impact. Beyond a relentless focus on our customers, another growth driver is going to be an aligned and motivated sales force. We entered this year with much more stability in our sales force than we had last year, and I feel even more confident after Q1. I've been spending a lot of time with our sales force, and I can tell you that they are incredibly motivated to go execute against the targets we have all outlined, and that includes customers of all sizes. We've aligned the sales force very closely to how we were structured when we were executing consistently well in fiscal year '21 and '22. In Q1, we had just five sales reps leave the company in what is a seasonally high rep attrition quarter. We think it reflects a committed sales force. We also have a much tighter alignment between marketing and sales. The top of the funnel continues to grow, and although deals are taking longer in this environment, our pipeline is building. And then finally, I think we have upside in how we price and go to market with our products. We've been increasing our ability to provide access to Domo on a consumption pricing basis because we believe this will remove many of the barriers to adoption and better align our pricing to the value delivered to our customers. This allows us to offer our seat licenses to our customers for free. Our visualization and seats are free, and we just charge for consumption. We think this will dramatically alter our outcomes positively. We currently have over 150 customers on our consumption pricing model, which represents over 5% of our customer base and over 11% of our ARR. Initial feedback has been positive. The consumption model enables PLG, or product-led growth, where adoption drives upsell without the need to negotiate around seats. It makes the product more discoverable because a customer has access to the entire platform, and they only pay for what they use. In Q1, we have already seen significant upsells from companies wanting to take advantage of more premium Domo features by moving to a consumption model. For example, we are seeing our consumption customers expanding in areas like data science, whereas before they either didn't know it existed in our platform or they weren't willing to pay for it without trying it first. We've been very deliberate and careful about how we have tested and rolled it out, but we have almost a year's worth of data around it, and we are ready for prime time. At Domopalooza in March, we also announced a variety of product updates that allow users of any skill level to unlock new data, create new content, drive action and expand their impact on the business. As a result, we're seeing a significant rise in adoption as customers realize the value of our expanding product suite. Among these products are solutions that enhance our pro-code capabilities to increase Domo's appeal to data and IT professionals, most notably, Jupyter workspaces. We also shared several updates to low to mid-code features, including our Microsoft Office Suite integration and our variable solution, which are seeing rapid adoption across our customer base. All of these investments work together to make our customers even more successful, sharing data that is actionable for everyone, regardless of data acumen. The impact of our data experience platform is also earning us recognition from the industry analyst community. This quarter, Domo was named a leader in the Nucleus Research 2023 Analytics Technology Value Matrix for the third consecutive year. And for the seventh consecutive year, we were ranked the #1 vendor in the Dresner Advisory Services 2023 Cloud Computing and BI Market Study, beating out 17 other contenders. This type of recognition opens the door to new potential for increased opportunity with business and data leaders who want natural working environments that make data sharing effortless. All these investments make our customers even more successful at creating data experiences that are actionable for everyone. Clearly, it's an exciting time in our industry with emerging tech like large language models accelerating the proliferation of AI and ML. It has been incredible to see ChatGPT become a household resource in a matter of months and has highlighted the tremendous potential of these technologies. At Domo, we've always been excited about the promise of AI and are focused on integrating it in ways that add tangible value to our customers' data environments. True to our business, we tailor our AI solutions to benefit everyone across an organization from data scientists and app developers to business users and leaders, and AI is only as powerful as the data connected to it. We happen to have the most end-to-end connected data stack in the world, opening up numerous possibilities with workflows, alert-based actions, and automated apps. Businesses recognize the transformative potential of AI, but many grapple with how to optimally integrate and manage the diverse range of AI models available without being locked into a single one. Although these large language models have significant power, enterprise use cases are still nascent compared to the outcomes driving the hype cycle. What's different about our AI service layer is that it gives businesses the freedom to select and integrate models securely. And by simplifying and infusing flexibility into the process, businesses can take advantage of the power of AI without being bogged down by the complexities of the AI ecosystem. The result is that our customers have control over which models are used, how and when, it's easy to manage, deploy and optimize, and let users host their own models and solutions right in our data experience platform to support real-world use cases that matter to everyone, technical and business teams alike. And I'm excited to announce here today that our AI service layer will be available in June. I'm also excited to announce that our AI Text to SQL, our AI text to Beast Mode and our AI text generation are available now, accessed via a Domo Brick in the Domo app store. We believe we will be a powerful player in the AI field, as it develops. In closing, I've been back for a quarter. We have turned the ship around and are building momentum in the right direction. Over the next two to three quarters, I anticipate we will see these efforts start to show in renewed increasing growth rates. We have the right products, we have the market opportunity, and we have the sales capacity we need to grow. The entire company is energized to execute for the remainder of the year, and I'm very confident in our future.

David Jolley, CFO

Thanks, Josh. I'm also very bullish about Domo's prospects after having been in the seat now for almost three months. In Q1, we posted 10% subscription revenue growth and 7% total revenue growth. We slightly exceeded the billings guidance we provided at the beginning of the quarter. We delivered Q1 billings of $70.3 million, a year-over-year decrease of a little under 4%. In reviewing the metrics that will impact the remainder of the year, our current RPO of $237.5 million grew 6% year-over-year, and our total RPO grew 1% to $356.7 million. Our ARR grew in line with our subscription revenue growth. An area where we saw continued success was multiyear contracts; on a dollar-weighted measure, we now have 65% of our customers in our multiyear contracts at the end of Q1, up from 64% a year ago. Our gross retention improved from Q4 and approached nearly 90%, and our net retention was just above 100%, down slightly from Q4. Excluding the impact of foreign currency fluctuations, our NRR would have been about 2% higher. Q1 total revenue was $79.5 million, a year-over-year increase of 7%. Subscription revenue represented 89% of total revenue and grew at 10% year-over-year. International revenue in the quarter represented 21% of total revenue, consistent with Q1 of last year. Our subscription gross margin was 85.9%, up 1.3 percentage points from Q1 of last year and up 0.3 percentage points from Q4, reflecting continued optimization of our third-party hosting services. In Q1, our non-GAAP operating margin was up 2.7 percentage points from a year ago. Non-GAAP operating margin primarily excludes stock-based compensation as well as executive severance, which was related to the transition of C-level executives. Our net loss was $6.1 million, down from $7.6 million a year ago, and our net loss per share was $0.17. This is based on 35.2 million weighted average shares outstanding, basic and diluted. In Q1, cash provided by operations was $800,000. In total, our cash balance declined just $0.5 million from last quarter to $66 million. We expect second quarter cash flow from operations to be slightly negative. However, we continue to expect a full year fiscal '24 forecast from operations to be positive. We believe we've got adequate cash in order to continue to pursue our business objectives. While we're pleased that our actual results for Q1 came in better than our original model expectations for sales rep attrition and gross retention, our Q2 and full-year guidance reflects continued conservatism about how the macro may impact conversion rates, timing, and resulting new business. For Q2, we are guiding to billings of about $69 million to $70 million, which is relatively flat sequentially, consistent with the trend we've seen over the past three years, and down 5% year-over-year. For full-year billings growth, we are providing a range of about $335 million to $353 million, representing a range of 4% to 9% growth. Looking ahead to the second half of the year, we continue to believe we're in a good position to accelerate our billings over the first half outlook as we expect growth in our ramped sales capacity to accelerate. Now to guidance for our GAAP metrics. For the second quarter of FY '24, we expect GAAP revenue to be in the range of $78.5 million to $79.5 million. We expect non-GAAP net loss per share basic and diluted of $0.07 to $0.11. This assumes 35.9 million weighted average shares outstanding, basic and diluted. For the full year of fiscal '24, we expect GAAP revenue to be in the range of $323 million to $330 million, representing year-over-year growth of 5% to 7%. We expect non-GAAP net loss per share basic and diluted of $0.27 to $0.39. This assumes 36.1 million weighted average shares outstanding, basic and diluted. Our EPS guidance implies a positive operating margin in Q2 and for the full year. Our annual guidance is consistent with the guidance we provided last quarter. In closing, we were able to achieve our Q1 results that were in line to slightly better than expectations as outlined in our guidance last quarter. We believe we have great alignment between sales and marketing and a sales force that is reenergized to hit their quotas, and we believe we're in a good position to accelerate our billings in the second half of the year as the sales reps we have on board continue to ramp.

Operator, Operator

Your first question comes from Derrick Wood with TD Cowen.

James Wood, Analyst

Josh, I know one of your key initiatives is to rebuild the large deal pipeline. Could you provide some insights on what that entails? Are you looking at reengaging with C-level executives at current customers or identifying larger new prospects? I'm curious about how those efforts have started and when you anticipate seeing results in terms of closed deals in the upcoming quarters.

David Jolley, CFO

Sorry, can you repeat that first question?

James Wood, Analyst

Yes. Can you hear me?

David Jolley, CFO

Yes.

Joshua James, CEO

Yes, we can now. We had to change rooms. We had a technical issue on our side. So yes please repeat.

James Wood, Analyst

Okay. Yes. So Josh, I was asking about the efforts in building large deal pipelines and I know that was going to be a big focus for you. Just was hoping to kind of hear what some of those initiatives look like? Is that trying to reengage with C-level folks at existing customers? Is that building up new large prospects? Just wondering how those efforts have gotten off the ground and how you're thinking about the sales cycles and when the dividend should start to pay off?

Joshua James, CEO

Yes, great. Yes, I mean it's not so much about the big deal pipeline; it's just reengaging with customers anywhere and everywhere. So any of the reps that have interesting relationships from conversations with customers and prospects, definitely trying to go out and see them. I'm sure I'm talking to at least one or two customers a day and a lot of travel. And just again, like I mentioned in the prepared remarks, trying to reengage the sales force, get everyone excited and make sure the whole company sees that we're leaning in, doing anything and everything we can to close the deals and then upsell. I would say in terms of the big deal pipeline, that's probably been the biggest difference maker: going into our current accounts where we already have established relationships where they are already thinking positively and they're predisposed to want to do more business with us, and finding the senior-level executives there, facilitating conversations, and that's worked. And we have found a bunch of opportunities, definitely increase the pipeline meaningfully for the enterprise business in particular. And in terms of when that will come to fruition when we'll start seeing those dollars, I think there's a chance that we could see some of that this quarter. Definitely, we'll see those things in Q3 and Q4 playing out. But yes, a lot of great conversations, a lot of customers leaning in. The macro is certainly not as positive as it has been historically as we all know. But one thing that we've seen with our customers, because we do help them save money, we do help them find revenue. If we already have a relationship, we're already an established vendor, we can find deals intra-quarter that aren't on their project list. And because they trust us, we can do a quick proof-of-concept and away we go. So I think we're going to find some contracts that way.

James Wood, Analyst

Yes, that's great to hear. On the consumption push, it sounds like there's a little bit of a change in focus here. Maybe stepping on the pedal a little bit more. Can you just talk about how broad you're going to try to push this? And when you do flip customers to consumption, is it kind of net neutral initially? And then do you see stronger expansion motions once you kind of get customers on board? And then just kind of a third part to that, is that a way to monetize some of the stuff you're doing with generative AI? It seems like that could be an easier way to monetize LLMs and some of the things that come with that?

Joshua James, CEO

Absolutely. Yes, we have added a lot of functionality to our platform over the years. However, when we charged per seat, customers had to obtain internal approval every time they wanted to try something new. Now, with our consumption model, everything is readily accessible, allowing them to experiment and only pay for what they use. This shift offers significantly more flexibility. Our data science initiatives are directly tied to conversations about AI, and we’ve already observed that our consumption customers have a take rate that is more than double that of our regular customers, even though these consumption customers have only been with us for a year. The difference in the uptake of additional products and services is striking. Regarding the pace of this transition, we are indeed accelerating our efforts. The more data we gather, the more enthusiasm we have, which boosts our confidence to dive deeper. I aimed to convey in my previous remarks that we've been careful and methodical in assessing this transition. Internally, we appreciate that this isn’t merely a change in pricing but a shift in our overall approach. We now have the opportunity to engage with our customers and assist them in improving their business without merely discussing seat counts. Our interactions are becoming more consultative. This strategy is also a response to Power BI. I’ve spoken with CIOs from Fortune 100 companies who claim that Power BI is free. I tell them we are free as well, which raises their eyebrows. Then I clarify that, like Power BI, our services incur costs based on usage, tied to their Azure accounts. This resonates well with our customers. If we don't have site-wide licensing, it means they are likely using our competitors. This will strengthen our existing relationships and open up more growth opportunities because customers are no longer limited to previously approved use cases; they can now explore new applications throughout their organizations. We've certainly observed that customers we sign up under the consumption model generate a significantly higher contract value after 12 months compared to those signed under traditional seat licenses. David, would you like to add anything to that?

David Jolley, CFO

What has impressed me is how careful we've been on the front end, not just in changing pricing but also in altering our approach to engaging with our customers. It's about helping them identify solutions that encourage further adoption, which requires our account executives to adjust their thinking. We've taken great care with this, and all indicators have been positive. Building on what Josh mentioned, our plan is to continue accelerating this approach. There are still some internal steps we need to take to ensure we have the right controls and processes from an accounting perspective, but we will focus on those while expanding our outreach to a larger segment of our account base.

Operator, Operator

Your next question comes from the line of Sanjit Singh with Morgan Stanley.

Unidentified Analyst, Analyst

Perfect. This is someone on for Sanjit. The announcements surrounding AI and the new consumption pricing are becoming quite significant. I have two questions regarding this. First, strategically, how are you approaching distributions and partnerships related to AI moving forward? Secondly, tactically, what are you observing with customers today? Are they hesitating and evaluating the environment, or are they already engaging more actively?

Joshua James, CEO

Yes. Customers are definitely already leaning into this. I think the biggest highlight for Domo is anybody out there that's trying to use data with artificial intelligence. To the extent that AI can be effective, it's limited by the data that it's connected to, the systems that it's connected to. And we happen to have the stack that's tightly integrated, and we would contend as the most integrated data stack in existence. And it's been a — it's been very difficult to build what we've built, but at the same time, we have all the metadata about the data that's inside our system. We know what connectors it came from, we know what's stored, where it's stored, how it's connected, how the data interplays, and can take that all the way into data science, machine learning, and AI. And we do have customers leaning in quite a meaningful way. And I think true to form, we've been pretty agnostic and we'll be agnostic about AI as well. So we'll integrate with the entire ecosystem, and if you want to come in and you found that there is a specialized AI focusing on, let's say, for instance, pricing or focusing on optimization of your supply chain, focusing on inventory levels, whatever it is that you find this AI model and you want to integrate and use that with the data that you have in Domo, we'll definitely facilitate that. So we're very excited about the prospects. We think it's going to help really leverage the uniqueness of what we have built here at Domo.

Operator, Operator

Your next question comes from the line of Patrick Walravens with JMP Securities.

Owen Hobbs, Analyst

This is Owen Hobbs on for Pat. So I was wondering if you guys could just give some commentary on what you're seeing in the demand environment for different geographies.

Joshua James, CEO

In the demand environment through different what?

Owen Hobbs, Analyst

Different geographies.

Joshua James, CEO

Right now, most regions are similar. The key observation we've made is that if you have a strong relationship with a customer, you're able to sell additional products. When you have an established connection with a prospect and have been collaborating with them for a quarter or two, plus they have identified an internal project, that's crucial. They have had sufficient time to make a case for investing in Domo, which leads to successful deals. On the other hand, deals that are not progressing in any region involve cold calls to accounts where we've only met once or twice at conferences or webinars, and where there is no identified project. Trying to create a project from scratch and getting it approved is extremely difficult at this time. What's happening now is that people are just pausing. We're not losing deals; we're still receiving leads, and the pipeline is growing with customers who aren't ready to decide yet. Hopefully, when the macro environment improves, we'll have numerous opportunities and projects from those we’ve been engaging with. In terms of regions, Japan continues to perform well for us. We made early investments there; it was actually the first country we entered before expanding to London, and it remains a strong market for us. Internationally, we are primarily concentrating on areas where we have existing customers and references. The most common new deals originate from a Domo customer who was a user at one of our previous clients, visits a new account, and then reaches out to us saying they want to replicate what they did before. Those are the deals we typically secure mid-quarter.

Owen Hobbs, Analyst

Great. And Josh, one for you. So this is your first full quarter back, I guess, in general, retrospectively, how do you feel you guys performed versus expectations coming in?

Joshua James, CEO

I believe we have a situation where the groundwork has already been laid. We assess the situation and aim to make the best of it while preparing for what lies ahead. Our focus is on leveraging our current assets effectively. We previously indicated that we weren’t underestimating challenges; rather, we were holding on and ensuring we optimized our resources to achieve cash flow breakeven and positive net operating margins despite the constraints. Our goal is to reposition assets wisely, regain our confidence, strengthen relationships with customers, close deals, and create momentum, as that enthusiasm is contagious. I spoke to our sales engineers yesterday and acknowledged the challenges in the broader market and how we have made internal adjustments. However, the team responded positively, indicating they understand the situation and are eager to pursue opportunities. It’s uplifting to gauge the team’s enthusiasm. We believe that consumption will significantly impact us, especially as we highlight our visualization layer and free access to our services. Transitioning our accounts to a consumption model is invigorating, particularly since we generated over $10 million from freemium last year. While we won’t provide ongoing updates, we want to emphasize the importance of that opportunity, which we are committed to enhancing. Consumption makes our conversations with customers much smoother, and there’s a palpable excitement about future possibilities. The integration of AI is a perfect fit for our company because we have a complete data platform and experience without relying on numerous partners. AI enhances the speed of our operations, which is another aspect we're thrilled about.

Operator, Operator

And your final question comes from Eric Martinuzzi with Lake Street Capital Markets.

Eric Martinuzzi, Analyst

Yes. I just wanted to confirm the billing guide for Q2 is that $69 million to $70 million?

David Jolley, CFO

Yes, that's right.

Eric Martinuzzi, Analyst

Okay. Assuming we reach the midpoint, we would see a decline of about 4% for the first half of the year. To achieve that full year midpoint range, we need to see billings growth in the double digits for Q3 and Q4. I'm curious about what you're observing in the pipeline that gives you confidence to maintain the guidance for the year, considering the Q2 billings outlook.

David Jolley, CFO

Yes. So a couple of observations there. Going back, if you look at our historical results over the last three years, Q1 and Q2 are very close from a billing standpoint. So that's pretty consistent with what we've seen over the last several cycles. And there is a bit of seasonality in the buying patterns of our clients. And so we've historically seen just a natural increase. I think the thing that adds to that for us this year is we added a lot of new sales reps in the third quarter and fourth quarter of last year, and it takes some time for those reps to ramp. And so we see a natural or full ramping of those reps in Q3 and Q4. And as a result — and that's really how we evaluate their performance once they've been ramped, and they're really familiar with the product, the offerings, and the accounts. And so as they become fully ramped in Q3 and Q4, there is a natural acceleration. And so that's what's — that's built into the model. So that was a — that's a conscious that's not just to push everything back to the back end of the year. It truly is based on how we've built our sales executives.

Eric Martinuzzi, Analyst

Okay. And then, Josh, maybe if you could speak for changes that have been made on the, I guess, maybe a sales management question. I don't know if Jeff is available or not, but the CRO changes since taken over 90 days ago, everything from training, mentorship, travel, demos, what changes have been made with the new hires here versus how they were handled before.

Joshua James, CEO

Yes. I believe Jeff is a well-recognized figure. He previously had most of the team working with him and had established relationships with the international teams through joint sales events. He is highly respected, and there are various approaches to doing things. At this point, we anticipate seeing some positive momentum as a result. The team is energized and enthusiastic, with a strong sense of competition and camaraderie, creating a unified atmosphere across the organization that I've not seen in my 13 years here. While there was excitement in the early years due to uncertainty, the last seven or eight years have felt more cohesive than ever. Jeff certainly contributes to this environment, as he emphasizes rigor and has high expectations. Most of the managers have emerged from his team, along with a few others he has brought in and some long-standing members. Overall, the sentiment is very positive. The team and representatives are excited, particularly about the changes we're implementing, especially with AI. The ability to get our diverse products into the hands of customers for them to try and use, leading to upsells driven by genuine customer success rather than persuasion, creates an enjoyable experience for our sales representatives. I think people are genuinely optimistic about the future in that aspect.

David Jolley, CFO

Yes. I’d like to mention that it's not just Jeff Skousen who is new here. We also have Mark Maughan in a new role, but he's been with us for a long time and is highly respected throughout the organization. He was one of the top-rated individuals in management, and now he has much more responsibility. This situation allows him to demonstrate his capabilities, which has generated excitement within the organization. We've also seen positive feedback. Daren Thayne was initially responsible for the entire product but shifted over to engineering services to spend more time with customers, as we needed to better understand the market at that point. Now he's back in charge of the product, and he brings a fresh perspective that is invigorating. His enthusiasm, along with that of his team, has notably increased the pace of innovation. Additionally, with David Jolley also being new, there is a renewed energy throughout the entire organization. Wendy is relatively new too, and together, we have a new team eager to showcase what we can achieve. It feels like we have a fresh start, especially considering that we have $300 million in recurring revenue, a strong customer base, and a significant platform that we've invested heavily in. We are positioned well for the future, particularly if the macro environment improves. With the increasing sales capacity, we believe there are still opportunities for good growth ahead.

Operator, Operator

This concludes today's conference call. We thank you for your participation. You may now disconnect your lines.

Joshua James, CEO

All right. Thanks so much. Appreciate it.