Appian Corporation (APPN) Earnings Call Transcript & Summary

All right. We'll get started. Thanks, everyone, for joining. I'm Kevin Kumar, I'm part of the software team here at Goldman. With us today, we have Mark Matheos, CFO of Appian; and Srinivas Anantha, part of the IR team. Thank you so much for being with us.

Thanks, Kevin. Appreciate it.

Yes. So to start things off, I thought it would be useful to maybe just give a quick summary of Appian and the history of the company for people who are newer to the story.

Yes, absolutely. So Appian's based out of Northern Virginia, we've been around for about 23 years now and the founder-led company specializing in this enterprise software space. We were the pioneers of Low-Code. We said as much in 2017 when we IPO-ed. And so we've evolved and matured as a company since then and have actually added to our platform, the process mining capabilities, and RPA capabilities as well. So we service major corporations, Fortune 500, Global 2000 companies in their automation, digital transformation efforts with our cornerstone workflow application builder. But really we help companies discover design and automate. So Discover is a process mining piece design is the bread and butter workflow where you're building an application. And then automation is RPA, AI, all the latest technologies to help people be more efficient in what they're doing and actually pivot and respond and build software quickly. We saw a lot of companies in the pandemic really shift towards that mindset where they needed to build software quickly and adapt to the changing environment. I think we're continuing to see that today, obviously, as a backdrop for the whole industry and the TAM as well.

Yes. You made an interesting point on being a pioneer for Low-Code. And obviously, there's been a lot more awareness of that capability. And I think it's a pretty broad term, and there's a lot of vendors out there that there's a lot of different point solutions. So maybe to hone in, what's the catalyst for adoption for Appian? Why do large enterprises choose a platform like Appian versus going with a couple of different point solutions or perhaps going the customer?

Sure. And it's typical that a customer has the problem at hand. They either have up in times legacy systems or maybe the acquired companies over time and they've got databases everywhere and then they're having trouble getting work done quickly and they're having their employees go into different areas. And so they look at Appian as a way to solve those problems, we get more efficiencies, it works faster and better. And then there's also companies who just want to enter a new line of business. We helped a large investment bank enter a new line of business as well. We operate the financial services space. That's one of our key verticals, but we also have healthcare, life sciences, government, pharma, and then some broad markets we could talk about. But it's basically `the different use cases are specific to each company and what they want to do. If it's a greenfield effort, they're often looking at us versus a [ custom ] code option, which we stay on record that Low-Code 10x faster than Java. So time is money, and I think everything that should be -- everything that can be built in Low-Code should be built in Low-Code. So we have some billing investment -- I mean, a compelling use case thesis for those folks who want something faster in the cloud, secure, and actually still very, very powerful in helping build mission-critical applications.

Right. And on that point, obviously, you're focused on some of the most complex large enterprises. And so when you go through that implementation and obviously, there's a land and expand motion there, how do organizations think about the ROI? Once they've deployed Appian and use that on a use case, do they monitor ROI? How do they think about that equation?

Yes. ROI is an interesting core competency at Appian. We've always -- I mean inherently, when you think about it, when you're building an application and you're trying to take out clunky systems or manual work, it's a bastion for efficiency. You got to think about how do you quantify that for the customer. We're actually using process mining to help do that. It's a built-in ROI calculator within our process mining functionality. So the before and after of how long it took to run the process before. And now that you've built the application, how much quicker it is, is really evident and easily calculatable in dollars or time or whatever factor you want. I think these days, with some companies facing challenges in the macro, it's resonating a little bit more than an even usual. So that's definitely a source.

The way... Or ROI is I think it's also a differentiated factor of Appian platform is once you develop it. It can be natively deployed in the cloud or go in different kind of environment. In fact, when you compare it to past period itself, software development was done was everything was specific to that particular environment. So the cost actually doubled the triple. In this particular instance, we just develop once and it can be natively deployed in any environment. The other one that we are measuring is time and speed. That's one of the things we talk about the biggest differentiating factor of Appian platform. We have something called an Appian Guarantee, where we helped the customer to deploy that first application within 8 weeks. Today, I know the vendor has that. Again, those are some of the things, and those are ways you can measure the ROI. It's very visible to the customer when they look at...

Yes. No that makes sense. And Mark, you mentioned macro, maybe just diving to that for a minute. I think last quarter, CEO, Matt Calkins talked about maybe macro being more or Appian being bearish on macro, but positive on the company. And so I guess the question is how do you think about Appian and a more uncertain macro environment? Obviously, you're focused on the large enterprises, they have big budgets. And so can you talk about the demand environment, the visibility you have, and the resilience of the model in the step of macro backdrop?

Yes, sure. So I'll reiterate a little bit of what Matt said. We do obviously live in the real world. We know that the macro risk is out there. And we obviously think that the economy is in this transition point, and it's something we're taking seriously. We have not seen any material impact to our business. We have not seen material impact to our demand. We're still plugging along. And that doesn't mean we're going to close rises and pretend nothing was happening outside of us, but we're monitoring the situation. And I think we're in a really good position, and we aim to stay that way. Prior recessions and downturns have proven to be storms we've weathered pretty easily and we've grown through. I think the most recent one was COVID, and we grew really strongly in 2020. So we're not taking a stance where we're bracing for impact, but we're looking to keep growing the business but in a prudent way and cautiously. And I think when you look at some of the things we've talked about, when companies want to build applications to create efficiencies, that market is going to be alive and well. And I think we're happy to cater to the customer needs and use that flexibility that's embedded in our platform to respond to those differing needs.

On that last point, does the use cases shift at all? I mean you sell -- you have use cases in the back office, the front office. When macro changes, just the -- do you shift the tone of the value proposition? Is there any changes in terms of marketing and how you push the platform to the customer?

Yes. I think we have business on both front and back office. And it depends on who you ask, what gets weaker during a macro downturn, it depends on the company and their industry. But we're armed and ready for both scenarios. And we have really good use cases in both. But the common thread is still going to be ROI. It's depending on if you talk about cost savings or extra revenue, the return is going to be there. And we're doing a really good job arming our go-to-market with ROI capabilities, including, like I mentioned earlier, our process mining tool, which has embedded ROI functionality. Srinivas, do you want to add anything?

Yes. The way you should think about that is if you look at the use cases broadly, one of the use cases that customers use us for us driving operational efficiency. The other one is the customer journey, which includes customer onboarding, member enrollment. And the other one is the supply chain management. If [ it don’t ] anything in a tough environment, we would think companies would like to automate, for example, on the customer journey that will help drive additional cost efficiencies. On the operational efficiency, it's a similar phenomenon. If you look at supply chain, a number of companies are going through supply chain issues, there hasn't been a whole lot of digitalization done on that particular front, whether it's asset management, product management, vendor management. So we all think the use cases that customers are using us today will be much more relevant even in a tough environment.

That's great. And I wanted to -- I want to touch on process mining in a second. But maybe to talk a little bit about TAM. I know Appian has always had its core industries, financials, government, insurance, I think life sciences in there as well. So curious on how you think about the TAM within that core base of customers? And then more broadly, I think we've heard some emerging use cases in newer industries. So trying to understand the TAM and your core and then maybe some of these newer use cases that are emerging.

Sure. Yes. I mean there's a good school of thought that says we should just keep going in our financial services, insurance, health care, government and don't worry about anything else because there's a lot to kill an eat there. But we do want to be balanced and I think there are emerging industries that are really, really strong areas for Appian to really make an impact in. Most recently, we've seen a lot of traction in manufacturing. We've actually helped to pivot off of what Sri just mentioned with supply chain prices all around the world. We've helped manufacturing companies to address supply chain management issues. Oftentimes the case is that those companies have trouble finding out where the supply chain issue is considering their network of systems and they're living in old systems, clunky systems, spreadsheets, and it takes them forever to figure out where the shortages are. And it's really easy to put Appian in there, plug-in all those systems into Appian. So you have one central source of truth for the management team to look at all the supply chain bottlenecks. We recently helped a major European U.K.-based auto manufacturer deal with Brexit in their parts distribution network. So they were getting transmissions from ZF, from Germany, for example, that they used to be. They can just go get them from the loading dock and start on in cars. Well, with Brexit, with an overnight customs rules that changed and are still dynamically changing, they needed a solution to help with that. And not to mention just -- not only just receiving parts, but sending parts to their dealership network throughout Europe was no longer, "Hey, put in the mail in send it to Italy, let's figure out what customs forms going to need." And so with Appian, now their whole team can just type in the address, it pre-populates all the forms we need. It's dynamic. It pulls in the latest regulatory forms that are ever-changing. And so you can imagine that, that's a huge impact and it was a slow-moving supply chain crunch just from a Brexit perspective was much, much improved after they installed Appian. That same company actually went and expanded and bought supply chain for overall supply chain management, not just for the shipping of parts. So manufacturing is one area. We've also got retail and some other areas that we're expanding into. We've got large global grocery stores. Also, common thread is supply chain there.

We look at TAM, both on a top-down and a bottoms-up basis. If you look at just the biggest verticals to your point, where the IT spending is concentrated or TAM is not going to be anything different. It's not like manufacturing is certainly going to become a top vertical for us. It will be very, very inconsistent. But when you look on a top-down basis, we have these 3 different products out there. On top of that, we have different solutions we're talking about. And then if you look on a bottoms-up basis, we focus largely on the Global 2000 customers. There's very a lot of information out there on how many applications are going to be built by these companies over the next 3 to 5 years. And if you look at our ASP trajectory or the ACV trajectory and assuming, "Hey, that goes at a consistent pace." That's the other way of looking at our TAM. So the TAM, give and take, it's a large opportunity. The penetration of Low-Code is still pretty tiny today. And as we brought in our platform, we believe there's a lot more opportunity to upsell within our existing customer base. But with these used cases, we'll be getting penetration with the new verticals, such as manufacturing, retail, the other ones where we have been finding success. For example, the other area is state and local, which we have been finding.

On the topic of deal sizes, it seems like average revenue per customer has been somewhat consistent in the last couple of years. I think you've balanced logo growth with expansion pretty well. But obviously, the platform has grown quite a bit. There's been a lot more capabilities added over the years. So thinking about how would you frame maybe the upside to that average deal size over time just given the more unified platform that you have today and a lot of the prebuilt solutions that you're offering customers.

Got it. In general, over time, all things equal, we expect those deal sizes will go up. As you said, it's been relatively consistent. Keep in mind today, still a majority of our revenue comes from workflow. RPA, we just launched it just mid-last year. So it's still early. Process mining came out of GA in April, May time frame. Again, it's still early. But also keep in mind, for all of these years, these have been distinct markets. But over time, as we said, RPN process mining are just features. They cannot be stand-alone products, and they need to be a part of a unified platform. It looks like the market is coming around to that narrative and you're increasingly seeing other companies increasingly talk about it. So there's definitely a lag. But over time, you should expect those ASPs or the deal sizes should expand on a consistent basis.

And this leads into my next question, which is around that unified platform. I think there's been a big focus around that. You now have automation, workflow, and process mining. Can you maybe talk about how your approach is maybe differentiated versus other vendors in the market? And yes, just how you're approaching that? How is that different from a lot of other vendors and what the value prop there?

Sure. I can start. I mean the -- if you step back and just think about process finding, what is it? It helps companies identify where there are issues in their processes. It helps them identify what the process itself actually is. And then it provides opportunities -- it highlights the opportunities to get better and great efficiencies usually through building applications. And with the siloed process wining tools out there, you're inherently left wanting after you figure out what the process map looks like and where the [ log jams are ]. To go fix them, you need to talk to somebody else. And you need to bring a different vendor in, get another contract signed, but also get a different set of people in front of your business users who you have to bring up to speed with what's going on. So there's just contractual and vendor issues, but also day-to-day business issues with that model. I think us bringing it all in one platform is -- just makes a lot of sense. So in our product, you can go right from mapping out the processes to designing an application. And it's the blueprint that you're creating in the process modeling tool -- process mining tool that goes into a process modeler. I mean I showed you there that it's the same -- I use mining and modeler as the 2 steps. It sounds very similar, and it's all because it is -- you're all looking at the process. Why not go right into modeling and changing with our drag-and-drop interface how things are done, putting in bots, where it needs to be put in or AI or may need to build an integration systems and use Appian as that orchestration layer? It's all synergistic capability, and I think it streamlines the customer's experience as well.

I think the biggest differentiating is when you look at some of the pure players, we have a platform-first approach. We don't lead with RPA. We don't lead with process mining unlike some of the other renters. So it's a platform-first approach. The second one is we focus mainly on the high-end complex use cases. There are a number of players at the low end, which are more lightweight applications. We are not really there. We don't even focus at that. So those are the 2 ones. The second one is like you look at the type of use cases the customers are building today. One example that we talked about is a global investment bank, when they want to enter into a new line of business, they entire middle layer on the back end was built on Appian platform. And over time, they expanded into other areas like even contact center automation. So if you look at the type of use cases, it's at the most complex ones, and it's the platform for [ egos ]. We're also data agnostic approach. None of the other vendors offer this. Today, we give the customer the freedom to host their data wherever they want, whether it's in the cloud, on-prem or they can migrate around to the Appian platform. But today, we provide that flexibility to the customer. And they get the same benefit, whether they host the data in their own environment or our environment. So those are some of the biggest differentiated sectors.

Got it. No, that's super helpful. Another product question, there's been a lot more focus around prebuilt solutions. I know Appian has had a lot of success there with the government product. There's some newer products like KYC in the financial section. You brought a new SVP of Solutions to spearhead that. So maybe frame the longer-term opportunity, how big is that market? How should we think about how that impacts the model over time? And possibly, is this a way to enter more verticals. And how -- a lot of questions here, but how do the partners help with this as well in terms of building out more verticalized solutions?

So we've said one of our growth drivers, long-term growth drivers as associations. So the strategy there was essentially take whatever are the common use cases today that customers are deploying them and productizing them. Essentially, we're trying to use the buying friction with the vertical customer. To that effect, we recently brought in a senior executive out of AWS, and he reports directly to Matt Calkins, and he is going to build out the entire solution portfolio. One of the areas we found success was the government acquisition management solution. It's a set of 4 modules. Today, we expanded to another one with the vendor management. So it has 4 particular modules. Over time, what we begin to see, especially in the federal vertical is today, some of the customers who are buying that, they're binding their entire suite. They're not going with single modules. We have seen similar success within the financial services, whether it's know your customer or even in the insurance connected claims. Over time, as you take the solution and productize them, we will have an opportunity to attract a new set of customer bases and different articles. It also helps us speed up the sales cycle, which today is pretty long for us. So for time, we think it's a big opportunity, but it's still early.

Yes. And do you -- it's probably too early, but are you landing at all with these sets of solutions? Or is it more of an expansion within your core customer set? How does that motion look like?

Within the government acquisition management, we're actually landing those. As I said, customers today where buying it, they're actually buying it, the entire one. What we've also seen some of the partners do is taking some of them and repurposing them within other verticals. One of the examples we talked about is in the state and local government. One of our partners took this government acquisition management solution and repurposed it for state and local. And we have one of the biggest states in U.S. actually by the entire suite. So that's the strategy. Again, there are other places where customers are starting with one module, but over time, we are seeing them expanding into other modules.

I wanted to shift gears to usage of the platform. I think last year, you provided -- at the fourth quarter of last year, you produced some very useful usage metrics. I think 81% growth in workflows and 45% growth in logins. So I guess the question is, what's the best way to interpret that data? Presumably, usage will eventually lead to more revenue opportunities. But how should we think about that very fast growth that you're seeing in usage across the platform today?

I think one of the reasons we want to put that data out as we've been getting a lot of questions from me and say, "Hey, can you just talk about the usage? And what are exactly customers using for?" Again, to your point, yes, over time, higher usage should lead to higher revenue. But today, Matt has been out there. He wants to see more usage. He wants that [ things ] over time will lead to a higher stickiness. And over time, we should also be able to be monetized that. Our sole focus has been today to drive our platform adoption today. We are deploying the same strategy with process mining today with RPA. We've launched other couple of new products. We want to see that usage built out, and we'll have an opportunity to monetize down the road.

Yes, it's another data point. When we talk about the mission criticality of Appian applications, it shows anybody who's interested that we're not just selling stuff that people put on the shelf and maybe occasionally use. It's embedded with the core objectives of our customers. And the usage data really helps add a data point to support that.

Yes. I'll pause there to see if there's any questions from the audience. One right there.

[indiscernible]. Yes. The question was on the lawsuits with Pega. I think that has had any impact from a deal perspective or a win rate perspective?

Yes. So I think we're a little bit early to have a conclusive statement on that. But it's certainly a qualitative data point that we are sharing with our customers. Our customers are sophisticated. They understand the landscape here and in the government area, especially, but also just large corporations that have a diligence effort when they're acquiring new vendors. They're going to ask our questions and those questions might be even harder when you've got a lawsuit overhanging your company. We're happy to be on this side of the lawsuit, obviously, but we're trying to look at the market opportunity and ways to highlight our further competitive advantage over Pega.

Maybe to follow-up just broadly on competitive dynamics. I know you've talked about Pega being the main competitor that you run into the most. But as Low-Code is continuing to grow, and you've seen a lot more vendors enter the space. So curious, are you seeing any changes there? Do you run into -- I think you've talked about ServiceNow, Salesforce, some of the bigger companies out systems, a few others that are out there. So curious if anything has changed from kind of a competitive dynamic.

It's an interesting dynamic. Like we look at all the deals, both I've entered in the pipeline for a long time. We evaluate today why we win, why we lose. And today, the #1 competitor that we still see is Pega. Then after that, it tails off. ServiceNow, there are certain verticals we see ServiceNow a bit more compared to others. Salesforce, we don't see them that often. With respect to the private guys out systems, again, it's more developer-focused. We don't really play in that area. So we don't really see them. Our rates have been very, very consistent across all of these. In fact, they've improved once we added more products across all of these vendors. So the competitive dynamic hasn't really changed. Again, to your point, there are a lot of vendors talking about it. We are tracking all of this but nothing materially has changed. I think even some of the deals that we talk about, like customer wins, we talked about a number of ones on the earnings call. Some of those wins are historically either operated in a Salesforce environment or a ServiceNow environment. Despite that, we still win those deals with those customers. And I think part of the reason is being the neutrality aspect about our platform. Our platform works very well, whether it's in a ServiceNow environment, Salesforce environment. I think that's, again, a key point. If you're a customer trying to develop new applications and looking to deploy them in multiple environments.

The only thing I'd add is we often still see the build versus buy decision. So the internal developers that a company might have are, in essence, part of the competitive bid. But we're easily able to show companies that we have a symbiotic relationship with the development teams. We get on the development road map and try to talk to the CIO about what they need to build and who they can build it with. And like I said earlier, if you're going to build in Low-Code, why use High-Code developers for it?

Yes.

And then maybe shifting gears. I wanted to talk about go-to-market. I know you brought in a new CRO. There's a growing set of solutions across the platform. So just curious how you're positioning the Salesforce to sell into the large enterprise. It seems like the selling motion has evolved over the last couple of years. Obviously, there's a focus on improving efficiency and productivity. So can you maybe just give a high-level overview of where we're at now today with the Salesforce?

Sure. Yes. We have a new sales leader, Chris Jones. He's our CRO across our predecessor left in June. So we had a couple of months where we needed to fill that role. It doesn't represent a shift in our strategy. We're looking at Chris Jones as a great hire and a fantastic person with really good experience. He also brings experience in the channels and partners area, which I think is going to be a key part of our go-to-market. I mean it is today, but from expanding that further, I think you can help us. Value selling has been side of the name of the game for Appian sales and trying to get efficiency and trying to speed up those sales cycles. We've been able to shorten sales cycles, but they're still candidly longer than we want them to be. So I think we're trying to get those further shorter and just keep going with this efficiency strategy in the sales team. But we're looking forward to what Chris will do. We're not looking them to fix or change direction or anything like that, but just keep going on this sales efficiency train and then double down on partners.

Yes. On the sales cycles point, I think you talked about solutions being one way of heating that up. I think you also have a free trial program that's helping there. I mean are these the types of things that move the needle there in terms of sales cycles?

Yes. I mean, look, the old 3 or 4 years ago, the way to sell Appian and the way we would sell is this horizontal approach, and it was great. But you still had to get the person on the other side of the table to understand what Appian could do, what use cases that could build and it was a user imagination, and we'll get to the point where the lightbulb turns on and you'll buy it. I think we're trying to get that lightbulb to turn on weight earlier. And one of those ways is offering up these solutions that are prepackaged in a sense to help pain points that many companies have. And I think we're going to keep looking at accelerators, but I want to reiterate, partners are one of those. Like when you -- when we go to these large enterprises, and we were co-selling with the KPMGs of the world, things go better. And I think that's going to be another way that we can markedly increase our sales efficiency and ensure our sales cycles.

Yes. Wanted to -- on the partner point. I think services revenues saw an uptick last quarter. I think there was some commentary around Appian making tweaks to the way that you're partnering with your SIs and the broader partner ecosystem. So maybe give us a rundown of what those changes are and what are the potential implications in terms of the customer relationship, potentially? And could that lead to a more stronger expansion motion? Just trying to understand that relationship.

You go ahead. But not really changes just so that, Kevin. We didn't make any changes. It's that we launched some new offering.

Yes. So the traditional Appian services were these expert delivery services where we built applications. We went to companies and we sat down with them and we went through these development sprints and collaboratively build our applications. We're still doing that, but we're really not focusing on growing that as much as we are partner-friendly services. So we've got 2 offerings that are, I would describe, supplementary services and they're time-based, actually, that you purchase a subscription to these services. And one of them is called Boost, which is specifically catered towards services where the partner is doing the delivery. The partner is building the application, and they just want Appian experts in the background to help advise if there's anything that comes up that's complex. Obviously, we're dealing with customers that have very complex issues on their side, right? And Appian might be super fast and easy to use. But when you're trying to plug into a system that they put up in 1997, there might be some hair on that. And so Appian experts are standing at the ready, and that's another more even revenue stream in the services space for us. The other one is called Accelerate, where we have top Appian architects available to the customer, and that is for when they're building their own deployments or when they're just trying to run their Appian environment and they need on-call expertise as well. So those are not standing in the way of partners at all that helping that channel. And I think we found that when Appian services are involved in some level, expansion actually is significantly better. And we've got data on that. Any time you have Appian experts on the scene at any level, it doesn't mean they have to build the apps themselves. But if they're involved with the customer, customers a better outcome, and then they go down that path of buying more applications, and that's why you see some of our -- most of our customers have multiple applications. Some have dozens.

That's helpful. And then pivoting a bit to cloud growth. Appian's had very consistent and strong cloud growth over the last several years, 30-plus percent. So just curious how you think about the sustainability of that growth profile. And as Appian matures, how you think about maybe that mix of logo versus expansion as part of that growth algorithm going forward?

The growth has been very consistent. If you look at historically, 70%, 75% of the growth comes from existing customers. The rest comes from new customers. We don't think there will be any big change to that cadence of growth going forward. If you look at the TAM and with our platform expansion with some of the new products that we launched, we feel that, over the longer term, that growth is very, very sustainable. But just going back to the way we have focused is the Global 2000 customers is -- we still think despite some of the larger customers, there's a huge upsell opportunity in [ existing ] customer base. We don't even today, penetrate even 10% of the available TAM within our existing customers. And then if you look at the new customers today, the customer count we disclose once every year, there's still a huge opportunity set. And as RPA and process mining becomes more mainstream for the next couple of years, we think there's an opportunity for deal sizes to go up, the ASPs to go up. So we feel very good about that third sustainability, you have 30% growth over a period of time.

Yes. And then on cloud versus on-premise. Obviously, I think cloud has grown a bit faster than on-premise. But how do you think about that mix? And taking a step back, is there any difference in terms of unit economics between a cloud customer and a non-cloud customer? Or is the focus more on the net new ARR growth? How should we think about that mix? Does it -- is there any differences in retention or churn between these steps of customers? Or is the total growth a more important metric? There is no difference in unit economics between cloud and on-prem. And keep in mind, today, the on-prem, there are some customers who just want to be on-prem. The product essentially it's the same. They get the same features, maybe the cadence of upgrade, there's a lag between cloud versus on-prem. But for us, when we look at internally, it's the same. The retention rate is 90% plus, very consistent across all the churn metrics are very, very consistent across it. The expansion mode is slightly faster on the cloud versus the on-prem just because of the deal sizes, but unit economics are no different.

And then one question on investment priorities. Obviously, Appian has been in growth mode since the IPO sales and marketing R&D have been outpacing revenue as you attack that opportunity. So just wondering how you think of the balance of growth versus investment, particularly in the back half of this year. And as part of that question, it sounded like last quarter, maybe there was an opportunity to push a little bit harder just given your lead in the market. So wondering how you're thinking about that balance at this point in Appian's growth trajectory.

When we look at investments, we take a very disciplined approach. Just as a reminder for folks who are new Appian was bootstrapped. Even before going public, all the rate was $10 million of outside capital. So the management takes a very disciplined approach when they think about new investment. To your point, in the near term, there is this -- we're taking the delicate balance between growth versus investment, frankly, with the product expansion, with the platform expansion and then competitively because of the lawsuit dynamic, "Hey, is there an opportunity for us to step on the pedal a bit more and try to gain that mind share or we just take that same disciplined approach?" Again, these are all the things that are discussed on an every quarter. The most important thing for us is when we look at our customer unit economics, they've been very, very consistent. Our retention rate has been 98% to 99%. The LTE 2 CAC has been north of 7%. It's been much higher. So when we look at those unit economics, it screams for higher investment. But having said that, we are cognizant about the current macro environment. So we'll take that same disciplined approach going forward. We've never been a company saying, "Hey, growth at any cost. We've never taken that approach." We've also talked about, "Hey, investments peaking in 2022, and you should see steady operating leverage going forward." The areas of operating leverage or sales and marketing, we've seen sales productivity improved, but there's still substantial room. R&D is another area. We've recently launched a new R&D center in India. We think not only from an operational efficiency, but there should be other cost efficiencies that can be gained over a period of time.

Any other questions from the audience before we finish it off. Thank you so much. Thanks having us and appreciate it.

Thank you. All right.

Thank you.