Freshworks Inc. (FRSH) Earnings Call Transcript & Summary

Awesome. Hey, everyone. So welcome to today's session. We have Freshworks' CFO, Tyler. So Tyler, thanks so much for joining us.

Thanks for having us.

Perfect. And for those in audience that might not know me, my name is Taylor McGinnis, and I head up our coverage of the SMid-cap application and SaaS space here at UBS. So Tyler, thanks for joining. Let's dive in.

So maybe I think a good place to start would just be on what you guys are seeing in the demand environment. So if we look last quarter, you guys had good outperformance on revenue and billings. I think on an organic basis, it was maybe more in line to slightly below. So in terms of what happened in the quarter relative to your expectations, opining on that a little bit and to the extent if you guys are seeing any green shoots, like what areas those might be in?

Yes. So I think we have 2 sides of the business that we really think about now our CX products and our EX products. CX is really playing into a long tail of SMB and all the way kind of up, but really focused now on SMB low mid-market. And that's for literally 2.5 years now, seeing the most pressure, what we will call macro impact to the SMB space. That's one where we said in Q3, like maybe early signs of seeing a little bit of goodness, but not a trend yet. I mean that the agent expansion has been the biggest pressure on the business overall and its the decline rate of expansion in CX. And that rate of expansion is the one that's okay, maybe starting to level off a little bit, not coming back, but leveling off. At the same time, we've been very focused on the things that we have control over, which we think is churn and retention obviously being reflected in that and also just the health of the customer base in general. And we said, hey, the best churn rate we've ever had in CX ever. And then at the top of funnel, the conversion rates, starting to see some of the fruits of the labor we're doing there, and it's actually being reflected in a number of customers. So at over 800 net new which have been coming down kind of quarter-over-quarter and the last 3 quarters slightly starting to come up. So that's all goodness. I don't think it's a sign of macro coming back yet, but I think more of a sign that the work that we're doing internally is going okay. On the EX side of the business, that business is still doing great. And nothing in Q3, you asked, hey, did anything happen in Q3? Or was it different than what you expected? No, it's totally what we expected. Europe typically a little bit slower in Q3 which what we saw. EX is really playing mid-market, low enterprise. So it's much more of an enterprise sale, which is much more susceptible to kind of that enterprise motion, which typically has a recovery in Q4, so we got to go execute against that. So I would say no huge changes on the macro environment. I think expansion motions are still tough. But the markets that we're playing in are massive. So I think we just got to go execute on the stuff we're in control of.

Yes. Let's unpack the CX business because I think that, that was probably the biggest surprise of the quarter and seeing that acceleration to 10%. So one, the 10% acceleration in ARR, does that mean the quarter might have been a little bit more back-end loaded? Was there any of that? And then also 2, you mentioned that you were maybe seeing some green shoots in the level of decel or decline in that seat, maybe starting to like abate a little bit. So how much of that acceleration was really driven by your own execution on the new logo side versus macro getting a little bit better?

I would say the former. I think it's all execution on stuff we're control over. On the churn side, we've been very, very focused on looking at our current installed base and really making sure we're addressing their needs. Whether that's through a digital adoption program, making sure that we get kind of adoption utility up as much as possible with our existing installed base all the way through to literally list of bugs and things like that, making sure our engineering teams are addressing that fully. On the new customer capture I think we have not done ourselves a service in terms of how we've attacked the inbound top of funnel. And we really hadn't innovated on that in years, and we're starting to do that. We started talking about at our Investor Day 1.5 years ago and we call it PLG 2.0 product like Growth 2.0. So we're starting to see some of the signs that this is starting to work. I don't think this is a change in macro, I think it's more of the stuff we're in control of. Our top of funnel has always been pretty healthy. The conversion rates haven't been where they need to be. So I think this is all goodness. We got to see it happen in Q4 again and then in Q1, and we'll keep talking about it if we do think that it's actually going to change the tone of the business. The reality is that business it's about $350 million business, growing just under 10%, 10% with FX. Net dollar retention is still just slightly below 1, even though we just had the best churn quarter. We are just trying to make incremental improvements there. And then if things start to get really healthy again, that will really change the business model in general. CX is really important for us, and we're very focused on it. But the reality is the majority of our growth is going to come from EX, which is doing really, really well.

Yes. And in terms of what all this means for the 4Q guidance is when we look beyond, I think the 4Q guide on an organic basis for both billings and revenue implies a little bit of an acceleration. So in terms of the assumptions embedded in that, is that just that the EX business tends to be more 4Q skewed, right? So you're going to see maybe the fruits of that. Does it assume a similar macro environment, maybe some improvement? Can you help unpack that a little bit?

It doesn't assume much improvement on macro. It does -- we do have Q4s tend to be much more enterprise influence. Actually, SMB actually has a lower Q4 typically because the SMBs acts like individuals that don't buy as much during the holiday seasons. So it will be probably more skewed toward the field motion, which means it will be more skewed to EX. Those deals are bigger. They have more annual and advanced characteristics and things like that, which have more billings influence. But it's not like we're not expecting any type of recovery. We're just expecting to go execute on what's right in front of us. And it's kind of the same for next year, actually. We gave a glimpse for next year, and we said low to mid-teens in terms of revenue growth. That one, we're still in Q4. We got to execute. We've got to get through those numbers that will have a big influence on what next year's revenue will be. We're still in the kind of the middle of the planning process, and so we'll update it at the end of the year. But we're saying, okay, that's what we see right now, which is kind of in line with what we see for Q4. What we are very comfortable about is the bottom line. So we said greater than 16%, non-GAAP operating profit and greater than 25% free cash flow margin, which we think we have a lot of control over and we're doing really well on. And so nothing like dramatically different in the business, but we're starting to see good -- early good signs. And we just got to keep executing.

Perfect. And before we get into next year, because I definitely have some questions around that. But when we think about the EX business, so you mentioned that, that business has been performing fairly well. If I look at the Analyst Day and some of the disclosures that you guys gave roughly, let's call it a year ago, I think that business was growing closer to 40%, and now don't get me wrong, 30%. It's still a very good growth rate in this type of environment. But that decel from 30% to 40% or 40% to 30% on an organic basis, how much of that was truly macro? Like what changed relative to your guys' initial expectations? Because I think the hope was that business could stay at a CAGR of, let's call it, low 30s. So can you help us understand what may have changed and how much of that is really attributed to macro?

Yes. I don't know if it's as much macro. I think it is execution. I think it's more law of larger numbers. So 40% at Investor Day, which was 6/30/2023 numbers, it was 30% in Q2, 30% in Q3 organic, 40% inorganic. And so it kind of maintained that 30% growth. We do expect there to be pressure on growth just as we get bigger. But the reality is, okay, that's ours to go capture from a new business and expansion perspective to keep it up there. And so our goal internally is not to let it decrease, but we have a lot of work to do. I do think everybody should focus on the organic numbers that we are trying to break out. We did do the Device42 acquisition. Didn't have a huge revenue installed base, and we actually were pretty open that we expect that installed base to have disruption to it because it was mainly through a partner competitor. And so we expect a lot of that to go away. The thesis of that buy was on cross-selling into our existing Freshservice installed base but also higher win rates, specifically as we're moving up enterprise, and we're competing more and more ServiceNow. And so that one is playing out, and that will play out all throughout next year.

That's really helpful. And then as we think about the EX business and the CX business and the growth rates that they're growing at and potentially the durability of those, any comments you can give there because you're seeing more stability in the environment, maybe some areas of green shoots, does that mean these growth rates maybe could be a little bit sticky going forward? And the reason why I ask is because I think if you run that math, you could come to a conclusion that low to mid-teens growth next year, like seems fairly prudent. So can you help us bridge that gap and how you're thinking about the growth of each of those?

No, I think that's a fair question. I think -- so we went through a strategic exercise kind of in -- at the same time, Dennis was appointed our CEO at the end of April, beginning of May, Board said, "Hey, you got to come back with a strategy." We took it seriously. We did a lot of work internally. We hired external firm to help us out. And we presented to the Board at the end of Q2 and then actually talked about our Q2 call. That strategy is, hey, really, growth is coming from EX and we are actually underinvested on EX, let's rectify that and really focus new investments as well as the outbound motion on EX, which is a big opportunity. CX, let's go focus on where we have a right to win, which is really SMB and mid-market, but really going to be SMB and commercial. So a lot of our new business acquisition and road map stuff is going to be focused on building for that segment for CX and then AI across all products. If you look at that, it's like we do expect there to be some disruption in what would have been mid-market and low enterprise acquisition on CX because we're not going to be attacking that. So we've built that in. At the same time, we actually think there's going to be some acceleration on the SMB side because we're focused there. On the EX side of the house, we are kind of modeling out what we see today and expansion rates that we see. And we're not being aggressive in terms of what acceleration because we have to let kind of the new motions play out, but we do expect that to actually maintain. When you look at the combination of the business, that's where you get to the low 13 kind of low to mid-teens is what we said, which is very similar to how we're ending this year from a billings perspective, right? And it's not anything dramatically different. We are going to have a pretty tough compare towards the end of the year because of the Device42 business that came in. And as I mentioned, there is a degradation of the business that we inherited. So you kind of have this pressure on their existing base that we have to rebuild, which was the thesis of the deal. And so that is kind of like a onetime year pressure that we're going to lap that on 6/30. So Q3 and Q4 of next year is actually going to have a tougher compare.

Perfect. And you alluded to this a little bit, but is there any way to get a sense of the expansion rates that might be embedded in that outlook? Or how to think about the mix of expansion versus new logo relative to what we're seeing this year if you are starting to see maybe that funnel activity and conversion rates start to improve?

Yes. We look at net dollar retention, and we also look, obviously, expansion and churn. The net dollar retention for the CX business, we said is just under 1 right now. And we don't expect it -- we haven't modeled in, oh my gosh, that's going to come up to single -- like high single digits or anything that we kind of think it's going to maintain. We're very focused on churn, but the reality is we don't have as much control over the expansion motion. That's where we've seen the most pressure. If that comes back at all, then this conversation is very, very different, right? But we just don't feel like that's in our control. On EX, that expansion motion, we have to play out. But our biggest kind of sales plays for the year as well as product plays are going to be Device42 integration, which is coming out in Q1. ESM, purpose-built workflow starting with HR. Enterprise-grade feature set, which is really about competitive dynamics and win rates and things like that, not as much of an expansion. But future stuff coming out later in the year, hopefully, will be stuff like MSP, purpose-built feature functionality for MSPs and for SLED, state and local. Those things aren't really going to be reflected in revenue throughout the year, but they should be reflected in bookings kind of back half of next year. But we have to get it out. We have to play it out and execute.

Yes. This is probably going to be the segue to talking about AI. But when you think about the biggest expansion opportunities that you have next year, let's say, seats remain subdued and you're still seeing some challenges there. What are the biggest expansion opportunities? Is that really AI or maybe there's some emerging functionality that you guys are excited about?

For CX, it's absolutely going to be AI. So what we're seeing on attach rates for -- so we have 2 AI products in market today. We have our Copilot, which is attached to an agent as an upsell is $29. And then we have our self-service and AI agent products, which are really about kind of L1 deflection through chat. For CX, the -- and not actually for across all products, what we said, the attach rates in new business are really, really healthy. Deals over $30,000 has greater than 50% attach on Copilot and SMB deals have double-digit attach on Copilot. And on the self-service products, they're not really attach rate. You get an entitlement to self-service. And as you use, you have to buy more bot sessions. Right now, it's 1,100 customers have had to buy more bot sessions. So it's an indicator of usage. As that comes up, then revenue will follow, right? That's all -- like the usage on the self-service is there and its existing customer. The attach rates are on new deals, which we would expect, okay, that's going to be going forward. And we're not actually asking customers to be binary whether you buy 100 agents, you have to buy 100 Copilot. We're actually allowing them to buy a subsegment and test and see value. The toughest on CX, but I actually think the biggest upside will be on upselling customers on Copilot in CX. And it's actually kind of hard because you get customers who are -- have already purpose-built training for their support agents and you have to change that training. It's a business process change. And so we're actually attacking cohorts of customers, and we're seeing good traction on that effort. It's just -- it's an effort, right? You have to go and do it. And so that actually, I think for CX is the main upside for next year. On EX, we actually have a bunch. We've got Device42, we've got ESM and we have AI capabilities. And so we're going to -- we have sales plays across all 3 of those.

Perfect. I want to get into Device42. But before that, let's dig into this AI conversation a little bit more. So when you think about the opportunity with CX, I know it's very early. I think even the numbers that you guys have disclosed suggested still low single-digit penetration across your entire customer base. But in terms of what you're seeing in that cohort of customers, any even high-level color you can give on when you add in AI or Copilot, what you're seeing in terms of average deal sizes? You mentioned that there's differences across customer segments for those larger customers, are they migrating to some of the higher-level packaging in order to get chat embedded? Any other color that you could share there, I think, would be really interesting.

I think it's pretty new. What I can say is that the Copilot pricing is holding up. So at $29, the ARPUs that we're seeing is actually holding up and the discounts would be -- are proportional to the discount on a deal, right? So if it's a 30% off deal in enterprise, the Copilots can be 30% off as well. The utility -- the early signs of utility are actually really good. And so I think you got to get these products in, you got to see customers see value and then you earn the right to go sell them, right? And that is really what I think the future is going to be based off of. So as we can demonstrate utility and value and efficiency, they will buy more. So we even have a strategy of if a customer is not buying it, we'll give it away for free for 6 months and just say, hey, go use it. And then theoretically, at 6 months, we can turn it off. There's no risk to us or it's going to be an upsell natural in there. And I actually sometimes like those deals better than selling it on the initial land because then it's just a built-in upsell motion. And so we're starting to do those as a kind of a sales play as well. I do think it's early on the total -- what is it going to mean for incremental value in general to ARR. Right now, ARPAs are going up, and we actually haven't seen any seat degradation that we would say is as a result of AI. It's just -- we're not seeing that at all. Theoretically, over time, the expectation is you would see some of that, right? Or at least you'd see efficiencies so that customers wouldn't have to buy more agents because they can do more with less. But the pricing was designed to anticipate that. So we'll see.

That's perfect. Yes, because I think that was going to be my next question, right? So what's the risk of you get some seat degradation and maybe ARPU like stays the same as it was before, but it sounds like you guys incorporated that in your outlook, and you expect it to be accretive. So in terms of what gives you comfort in that, is that because you have some customers, let's say, that are a little bit further along. You've seen them go through that journey. You're not -- maybe they are like taking down seats, but you're seeing the offset be much greater. What's giving you guys that visibility and comfort that, that will be like the outcome? I know it's a tough question, but...

No, it's not -- I just think it's early, right? I do -- I think adoption on all these products are still early. Right now, for the customers that we do have that are early adopters and they've been using it, they're not reducing counts. And so that's, I think, the early signs. And we literally can't point to a single customer that's doing that as a result of Freddy capabilities. But they are giving us feedback that they're making their agents much more effective, which is great. And that's what Copilot is supposed to do. I think the thing that's the earliest is going to be on the self-service. Like we've had self-service for a long time, which is kind of customized bots and really built for specific workflows. AI agent is the latest version of that, and we still have to have some innovation to combine these 2, but AI agent is truly conversational and really pointing at your knowledge articles internally. And we've proven that we can get a customer up and running like 30 days on that and really have a high level of deflection on easy L1 stuff. And I think over time, that's the one that's kind of noise for a lot of companies and to be able to reduce that and get their support CX people really focused on harder issues is going to be the big win there. And so -- but again, it's early.

Yes. Yes, I wanted to ask you about Freddy AI agent because I thought that, that was a really interesting announcement. So in terms of how that differs from some of the self-service offerings you've had before, can you elaborate on that a little bit more? And it sounds like part of the goal is to speed up, right, the pace of adoption here. So what were you seeing in the market that maybe was the catalyst for that?

Yes, I think all of the LLM capabilities make -- allow you to have a conversational interface and to truly make a conversation with intelligence that it can learn over time. The thing that we don't have, so we have 2 versions today and customers can choose which one. We're seeing more of the SMBs choose now AI agent, which is brand new. It's only -- it's been out for 3 months, but it's been beta for longer than that. And what they're saying, okay, if we can point back to our knowledge articles and all of our facts internally, that can solve a ton of that frontline customer issue coming in. The more sophisticated customers are going to be like, well, actually, I want that chat capability to actually do true workflows for customers. So not like a conversational, but hey, if I'm an airline company, we have a bunch of airline companies, my ticket got canceled, I need to rebook. Being able to tie that chat session into, say, an order management system or a ticketing system, that's what we don't have on the AI agent right now, and that's what we will come out with. And so that's where you have the bifurcation, right? And so there's still a set of customers who want to have that more sophisticated prebuilt bot experience but can handle the complex workflows versus just the ones that would be answering questions based on a knowledge articles or facts. They will come together over time. That's our next big innovation that will come out, right? But we don't have a date for that yet.

Perfect. Maybe let's switch gears to Device42. So I think there's 2 big questions that we get, which is, one, the time to when this will really be a bigger cross-sell opportunity. So it sounds like that there's some tinkering that has to be done to make this more cloud enabled, right? So I'd be curious, one, on that.

Tinkering, it sounds like my technical...

Yes, I think we might be putting -- maybe putting it lightly. But in terms of what needs to be done there, right, to really facilitate that cross-sell opportunity and also to, I would imagine the integration piece is one. Could you maybe give us an update on that journey? And when you expect to be finished with that such that this can be, you could see like an acceleration, I guess, in that cross-sell momentum?

Sure. so there's, I think, 3 main things that are coming out with Device42. First is that press service, we already had like ITAM, which actually had pretty good capabilities, especially for some cloud offerings and arguably, maybe even easier to use than what Device42 had for really light, simple ITAM. So one thing is actually building into Device42 equal and better capabilities than what traditional Freshservice had. So there's going to be no confusion on do I use the legacy Freshservice stuff or do I use Device42. So that one is already being solved. Integration into Freshservice, which is really being able to take all of the Device42 data and present it to the agent and admin sitting in Freshservice, that integration is coming out in Q1. And that's actually going to be the biggest kind of catalyst for that cross-sell into our existing installed base. So we can go to them demo out a product that looks and is seamless to their current Freshservice agent and admin. And that, I think, is going to be one of the things that allow us to go really penetrate our existing installed base. Moving Device42 to the cloud is on-prem business today with a control unit that has to be on-prem and then a thin client out there on all the devices. The think client will stay. Moving that on-premise to be part of a multi-tenant solution in the cloud with Freshservice, that's scheduled for the end of 2025. And I think that's going to be more -- it's definitely going to help from a selling perspective to a customer that they don't have to actually have to go do that and put it in, but it's actually more of a -- it's going to have a financial impact as well because the revenue recognition is different, right, for the on-prem stuff. And so that again, it's going to be at the end of 2025. Integration is Q1. So we've already started those cross-sell motions in anticipation of that. And the sales cycles for Device42 a little bit longer because it's a little bit more complex solution, but they're starting right now.

Perfect. And can you give us a sense of how ITAM compares in terms of average deal size to what you see with Freshservice today, just so we can gauge how big of an opportunity this could be?

Yes, I think it's going to vary, but it's anywhere from, I would call it, like a 20% to 50% uplift on deals. And so that was one of the impetus to buy, right? It is truly an enterprise-grade solution. If you are a smaller company, you don't need ITAM. So it's actually not going to be relevant for a certain part of our existing installed base, specifically kind of that lower mid-market kind of customers that we have, which are really Freshservice might be their very first ITSM solution. They might not need robust ITAM. But as we're getting to kind of a lower enterprise, that 10,000 to 20,000 employee organization, the actual footprint that they have is really pretty complex, and that's where it can actually be a pretty good upsell.

Perfect. And one question we've been getting from investors on Device42 is when you look at the guide, I think this last quarter, we saw a contribution of $8 million. It looks like the guide implies something of $4 million. So I think there are some questions on why might you see some of that volatility from one quarter to the next. So do you mind just offering some thoughts there? And as a second part to that question, I think you've also been getting questions on, well, when you look into next year. Is there the risk that this becomes a bigger headwind. So yes, anything you could share there would be helpful.

Yes. The -- so Q3 came in higher than what we had actually originally kind of guided and forecasted, and we said $4 million for Q4. We have to make an estimate on the deal term. Because it's a term license, a 1-year deal is actually dramatically different than a 3-year deal in terms of how much revenue we recognize because 3-year deal has -- it's almost -- it's like 80-20, 70-30, 60-40 is the way you kind of think about it, where that for a 3-year deal, 60% of all 3 years is recognized in advance, whereas for a 1-year deal, it's 80%, right, and the way the term license. So we had a higher percentage of 3-year deals in Q3 than what we had anticipated. The Q4 estimate of $4 million anticipates that it's going to be back to kind of a norm. And there's 2 things. It's the new deals, what the duration is and then the renewals that are coming up, what those durations are, and they both can impact. And so it's an imperfect science right now, I'd say.

Perfect. Awesome. And then maybe let's shift to margins. So when we think about the like approximately 13% headcount reduction, I guess why now? And when you think about where those layoffs happen, how you're trying to align costs? Maybe you could provide a little bit more color there? And is this -- is the goal of this to take those savings, realign and invest all that back into the business? Or might you actually see some of that fall to the bottom line?

I think we're going to see just efficiencies in general, to answer the last part of your question. We gave a glimpse of next year. We said that low to mid-teens on top line. We have to finish up the planning and get through Q4, but we're very confident on our bottom line. So greater than 16% non-GAAP operating margin, greater than 25% free cash flow. It does assume that we are actually going to reinvest some of the savings that we just had in the reduction in force that we made, which was 13% across the board. The question of why now, it really was very much aligned with that strategy exercise I just mentioned. So that strategy exercise is all about focus, all about go-to-market focus and how we're going to go to market next year on EX and CX, but also on the products that we're doing and what we're building. And so every single department actually participated in that, but it was actually disproportionately kind of weighted against the go-to-market side, which is okay. It was also very much focused on making sure we have the right people in the right roles, just not a lot of people. I still think we have the capability to even be better on efficiency and where it's going to place out over the years. I mean we've gone from 0% free cash flow margin when we went public 3 years ago to now 25% next year, which I think is pretty good. And I think we can continue down that path. On the go-to-market side, we're very focused on efficiencies, but we're not going to be -- we're not going to sacrifice growth for dollars on the bottom line. I think we can do both. If we feel like we can lean in and grow faster, we're absolutely going to do it, right? But I think we're appropriately funded right now.

Perfect. And yes, I would agree, I think that the 16% and 25% operating income margin and then on the cash flow side, definitely stood out, right? So in terms of those areas, because you did say you are reinvesting some of that. So in terms of the areas of the business that you found that you are able to drive more cost savings and more operating efficiencies, can you give us a little bit more color on what that is?

Yes. So on the go-to-market side, we're kind of restructuring a little bit that CX is going to be very much inbound led and really focusing on SMB and low mid-market. EX is going to be outbound, and it's going to be fed by some inbound, but our entire field motion is going to be really focused on EX. We're also going to look at what we call Tier 3 and Tier 4 countries, and those are really going to be partner first. And to the extent that we had started to build out employee bases in countries, we're probably going to retrench and make sure those are partner only. And so these are all things that are all about focus that will lead to efficiencies in some regard, but actually doubling down in others where I think that we have a lot of capacity to grow specifically in the countries in our backyard that we can be very focused on. On the engineering side, it's the same thing. We moved 200 engineers from our CX team into our EX team. We are streamlining a lot of the engineering efforts, but also streamlining a lot of the products that we're focused on and where we're putting the innovation dollars, and we're going to continue to see that thing. We actually also have a lot of products that we've been building that we don't necessarily monetize. And the thing is if we don't have a specific strategy on how we're actually going to influence the top line, then we shouldn't be doing it. And that is part of the strategy efforts as well. The other piece of the business, like on G&A, those are just economies of scale. We'll get that over time. One area that we've done really well on is gross margins. We're already at 85%. I don't expect us to get much better at it, but we've proven that we can run a plus $700 million business at a really efficient rate that is as good as much larger peers of ours, and I think that is a competitive advantage, and we're going to play into that and continue to do so.

Perfect. And then the follow-up question to that is always anytime you're shifting things around the business, there's always this question of does that -- could you see disruption risk off the back of that? So in terms of what you guys are seeing today, what you're embedding into the guide next year, is that a consideration at all?

I think there is -- we have embedded some disruption, right, a little bit. Like if outbound is not focused on CX, then we don't expect to close much business on the outbound. So we've built that in for CX. Our Freshsales and Freshmarketer products, we've combined that into CX. And if we're not going to aggressively go pursue new business there, then we should expect that to tail off a little bit. And so we've built a little bit of that in and -- but we're not abandoning any of that. So we'll see how it all plays out. I think from an innovation perspective, that doesn't necessarily get reflected in numbers, but will get reflected in kind of products and just the pace of innovation. We've also made 2 recent new hires. We've hired a CTO in Murali, and we just hired -- we announced our brand-new CPO in Srini, who just came -- they're both out of our San Mateo headquarters. Murli came from ServiceNow and Srini just came from RingCentral. One product, very much CX background with EX and one very much EX focused. And it's really just getting a ton of domain expertise in that they're going to look at their teams as well and continue to make changes. Kind of same evolution that we went through on the field -- on the go-to-market side this year, I would expect. They will have their footprints on the product and engineering side.

Perfect. Awesome. Well, that's all that we have time for. So Tyler, thank you so much for attending, and thanks for everyone listening in as well, too.

Thank you.