Appian Corporation
Q4 2020 Earnings Call Transcript

Published: 19 Feb 2021

[Operator:]

Greetings, and welcome to Appian Corporation Fourth Quarter and Full Year 2020 Earnings Conference Call. As a reminder, this conference is being recorded. I would now like to turn this conference over to your host, Mr. Scott Walker, Director of Investor Relations. Thank you. You may begin.

[Scott Walker:]

Thank you, operator. Good afternoon and thank you for joining us today to review Appian’s fourth quarter and full year 2020 financial results. With me on the call today are Matt Calkins, Chairman and Chief Executive Officer; and Mark Lynch, Chief Financial Officer. After prepared remarks, we will open up the call to a question-and-answer session.

[Matt Calkins:]

Thank you, Scott, and thank you, all, for joining us today. In the fourth quarter of 2020, Appian’s cloud subscription revenue grew 40% year over year to $36.9 million, and our adjusted EBITDA was a loss of $3.7 million. Subscriptions revenue grew by 33% to $56.1 million. Total revenue grew 19% year-over-year to $81.6 million. Our cloud subscription revenue retention rate was 119% as of December 31, 2020. For the full year Appian’s cloud subscription revenue grew 36% year-over-year to $129.2 million and our adjusted EBITDA was a loss $16.8 million. Subscriptions revenue grew 31% year-over-year to $198.7 million. Total revenue grew 17% year-over-year to $304.6 million. Both our fourth quarter and full year 2020 results exceeded our guidance. Our gross renewal rate was 99% as of the end of December higher than 96% at the end of the previous year.

[Mark Lynch:]

Thanks Matt. I’ll review the financial highlights of the quarter and full year and then we’ll provide details on our Q1 and full year 2021 guidance. Cloud subscription revenue for the fourth quarter was $36.9 million, an increase of 40% year-over-year and above the top end of our guidance. Our total subscriptions revenue was $56.1 million, an increase of 33% year-over-year. Subscriptions revenue was 69% of total revenue in the fourth quarter, an increase from 61% in the prior year period. Professional services revenue was $25.5 million down 4% from $26.5 million in the prior year period and down from $26.5 million in the prior quarter. Partners continue to be a larger part of our ecosystem and are increasingly helping us sell more software. All our services engagements, both cloud and on-prem, continue to be performed remotely.

[Operator:]

our first question comes from the line of Sanjit Singh with Morgan Stanley. Please proceed with your question.

[Sanjit Singh:]

And congrats on another year of 30% subscription growth and the cloud has been doing really well for several quarters now. So congrats to the team. Matt, I’ve two questions. They’re kind of longer term in nature. Which is kind of what is the growth equation for Appian look like over the next two, three, four, five years? I think you’re up to by my count 650 plus customers and so should we think about the growth equation as Appian getting to a 1,000 customers; 1,500 customers spending $1.5 million or $1 million overtime or do you think it’s going to be more of this longer tail because of sort of like in your remarks you’re talking so we’re talking about I don’t know 5,000 or 10,000 customers. Just wanted to get your latest view on the P times Q equation, if you will?

[Matt Calkins:]

That’s a great thing to ask about. I think we’re capable of capturing more of a tail than we have so far and I want to emphasize that is not our primary target even though it’s available to us and we’re going after it. I do not want to trade the largest organizations, the highest spending organization for the tail. We won’t do that. We’re going to emphasize big deals. We’re going to continue to emphasize important, high end, mission critical deployments and not lose sight of that. We know that’s our edge in this market and being the best at that gives us a carryover advantage in competing for less essential, less mission critical applications and perhaps for less feature conscious consumers. By becoming the standards that’s adopted by the high end cases and customers. We establish our capability to handle all the other cases. So we’re absolutely not moving away from the high end and the customer who’s willing to spend $500,000 or $1 million per year on this technology. But I believe that being strong with those customers will allow us to capture also a portion of the tail. So I think we’re going to expand in both directions. But we won’t lose track of the fact our priority is the large, the mission critical application.

[Sanjit Singh:]

That’s great to hear. And then sort of second question I want to that to mention is, to take us back to the IPO in 2017, the services mix was roughly half of the business and today I think in Q4, it’s in the low 30, I think it was 31% by my math and the question is that, is this 31% going into the mid 20s, 20% which would put you guys at a pretty standard software versus services mix or is should we not expect to trend back up because of COVID. My suspicion is that, it probably is sustainable because you’ve added so many new customers on this year. So it didn’t seem like services was a headwind -- necessarily impacted by COVID. But just wanted to double check on that line of thinking.

[Matt Calkins:]

Yes, well I think your suspicion is correct. That services will continue to shrink as a percentage of Appian’s revenue and yes it’s going down in the 20s and I think that every year it’s going to be smaller than the year it was before. I’m not saying it’s going to be 20s this year. I’m saying that’s the direction that’s going in. the trend was probably exacerbated a little bit by COVID and by the fact that it was more difficult to deliver a service than it was to deliver a product in 2020. But the trend holds, the trend will continue. It’s what we expect and it’s what we’re managing the business toward because we want to elevate partners and leverage their influence in major customers.

[Sanjit Singh:]

Got it and maybe if I can just sneak one in for Mark. Mark as it relates to the guidance. I know we’ve been talking about a couple of different things. Moving to one year auto renewals and the 606 headwind that potentially turns into a tailwind and into 2021. To what extent does this guidance sort of reflects those impacts and like a higher renewal base on a one-year auto renewals and then the impact from the headwind in 2020 that turns into a tailwind because of the 606 accounting. Was that sort of contemplated or embedded in your 2021 guidance framework?

[Mark Lynch:]

So I think there’s not really the tailwind that you guys are talking about because those multi-year deals that haven’t gone into the auto renewal. Some of them are coming up for renewal in 2021, some are coming in 2022, it’s not a material amount. But we’ve done a good job of migrating everybody over. So it’s not really that, a tailwind I would say that, that’s implicit in guide. I think what’s implicit in guide which is important, is that we expect right now that services will actually decline year-over-year and that’s what implied in guide. I think personally and Matt personally believes that the services will actually grow. But what we’ve got implied right now in the guide is a reduction in services to be. Candidly we don’t know how long COVID is going to last. If partners continue to bring 30%. The logos are going to get most of the services. So we’re just trying to be as we’ve been – we’ve been public for four years now. When we give guidance, we generally try to be conservative. In particular, we generally try to be conservative on that line item because we now have the visibility that we have in the software.

[Sanjit Singh:]

Understood. Thank you, Mark. Appreciated your response.

[Operator:]

Our next question comes from the line of Mohit Gogia with Barclays. Please proceed with your question.

[Mohit Gogia:]

So my question was around the expansion, right. So I think Matt, you mentioned that some of your even larger customer is seven figure ARR continue to expand. And I was just wondering, if you can give us some more color there as to, I mean you guys have pricing model around either number of apps or number of users. Right. So wondering if there’s sort of like a trend that you can see based on the expansions we’re – maybe it’s the number of apps that popped primarily by these expansions or you also see customers going from wall-to-wall within lines of businesses with the number of users. So any color on those two dimensions in driving the expansion. It would be very helpful and then I have a question for you, Mark.

[Matt Calkins:]

All right. We’re pleased with the expansion. I’m particularly pleased with the expansion as it pertains to customers who are already spending a lot with us. They’re seeing the value and they want to more and the fact that 81% of the seven figure ARR customers from last year wanted to buy more in 2020 represents not only great uptick but a great turnaround time. They saw the value so quickly and they wanted to expand. I’m particularly pleased with that. The expansion happens along multiple dimensions. You mentioned that we priced according to application and also according to user. Both of those are primary roots for expansion. Generally a customer decides which of the two pricing vectors they prefer to be on and then they stay with that vector and I would not say the one of the vectors is more conducive to growth than the other. Instead, I would say the growth occurs no matter which vector the customer choose and accordingly they pay more for either more applications or more users depending on whichever way they chose. We’re going to emphasize even more in 2020 and I believe that there’s a lot of potential there, not just at larger accounts but at all of them.

[Mohit Gogia:]

Great, my follow-up question is for Matt. Just on the dimensions, right. So we saw this tick up cloud subscription retention rate this quarter. For the higher end of the range you’ve been communicating. I mean this is another quarter of 40% about sub school and I think last time around you were sort of like alluding to some linearity helping it. But obviously given the performance this quarter I’m assuming this is becoming a more fundamental trend rather than something one-off. So can you help me unpack as to what the drivers there are? Obviously the land and expand motion is working. But just trying to figure out as to what is driving this 40% growth and how sustainable that is. Thanks guys for taking my questions.

[Mark Lynch:]

Yes, so I’ll take that. As we said in the prepared remarks. We’re at 30% plus growth, that’s how we viewed ourselves from the time of the IPO and we continue to see ourselves going forward. Having said that, there was no linearity phenomenon in this quarter. It was pretty typical back end loaded quarter. So was lot of the momentum of the business. A lot of its expansion. 50% more new logos this year, right. So that’s a big piece of it. The other big piece of – is re-expansion and Matt mentioned that 81% all of our in the seven figure AR customers bought more software in 2020 obviously that goes right to that in our calculation. So we see both expansion net new logos working to our benefit and I think going forward to 2021, Matt was saying low-code is a thing now and we’re getting more and more inbound interest in low-code platform. So we’re hoping to take advantage of that momentum.

[Mohit Gogia:]

Great, thanks for taking my questions guys.

[Operator:]

Our next question comes from the line of Bhavan Suri with William Blair. Please proceed with your question.

[Bhavan Suri:]

I guess I wanted to touch a little bit on the customers that adopted Appian over the past year. If you think about this cohort relative to past pre-COVID cohorts and maybe add partners to the second vector. I guess has there been any change in who’s buying, are used cases different, are landing ACV different, are deployment size different? I guess how do you see a pattern with some of the new used cases you’ve coursed partially because low-code has become more common maybe because of partners or has it been pretty consistent from say year and half, two years ago, pre-COVID?

[Matt Calkins:]

All right, let me talk about that. First of all I’m going to say, they’re largely the same. They haven’t changed all that much. A few dozen of them who bought into Appian because they wanted our workforce safety solution but that’s a small portion of our sales. And the dollars per customer is steady if you’re talking about licenses and it decreases only on the services side. So if you’re looking for any changes. I would say, it’s that our services component per customer has decreased. But our license has stayed equal almost exactly equal and the depth of their usage and the fact that they prefer platform, they come to us as a platform buyer that has remained constant.

[Bhavan Suri:]

Got you. So I want to take that and marry that with a comment you made that says, the large customers last year which expanded came in 80% plus came in bought again in 2020 and you’re excited about the able to realize mentality . And if we talked in the core thesis here which is, it’s a platform. You get in, you show the value of the low-code environment. They see how quickly you’ve been building application in a shorter amount of time, fewer. Human resources so to speak, shouldn’t that flywheel continue to accelerate. It’ll slow down at some point when you penetrate in organization. But we’ve got a way to go for any almost customer viewers. Shouldn’t that continue or maybe even accelerate as we begin to realize this is the best way to build new applications because they’ve got the speed, the project list they have from all the businesses to develop this. So should that again, I’m not saying it’s adding to it. But logically should that play out?

[Matt Calkins:]

Okay, let me address that in both on micro end and macro dimension. On a micro dimension, I think yes it should. We should see acceleration as we prove the concept and we sell more. We’re not saturating our customers. There’s more room to sell nearly everywhere and the more we prove our concept, the more benefit they get from each incremental purchase then I believe the conclusion will be yes, this is flywheel, we should expect to see further acceleration, that’s the micro answer. The macro answer is, we’re 30% grower and I don’t want to indicate that I expect anything other than that.

[Bhavan Suri:]

Fair enough and I’m going to squeeze one more quick one in here. I noticed you launched 14-day free trial version. Which is not something typically, which we associate with Appian sort of market generally enterprise focused. Could you just walk us through that? The strategic rationale behind us and kind of what are the objectives for that free trial?

[Matt Calkins:]

Okay. There’s good reasons why we would have a 14-day trial. First of all, even for enterprise software most of the sale is done before the customer contacts the vendor. And so putting a good foot forward in that hidden part of the sale is essential. Secondly, Appian shows well. I would prefer the experience of Appian’s first 14 days to the experience of our competitors first 14 days. So I think it that it does us good to allow the customer to explore and understand the difference and then furthermore, with our product you can actually do something in 14 days and then so, we would like to have them experience the accomplishment and that’s possible. I think for all these reasons it’s good for us. To be out there, selling in this manner and by the way it may appeal to a different kind of buyer. I think it was a really good step and we’ve been working on this for a while and we’ve experienced some good pipeline development as a result of our free trial. So yes, I think it suits our situation pretty well even though you might not have expected it from an enterprise software vendor.

[Bhavan Suri:]

Great, appreciate the color and candor, gents. Thank you.

[Operator:]

Our next question comes from the line of Chris Merwin with Goldman Sachs. Please proceed with your question.

[Chris Merwin:]

I wanted to ask about some of your fruition based app. And you talked a bit about how it has been doing lately. I think I saw that connected claim solution for insurance company. I imagine that may or may not actually compete with some of the vertical software vendor and maybe just a higher level, can you talk about are you trying to come in with net new solutions for companies as opposed to competing with any of these dedicated vendors in the space and just overall just talking about the traction of the solutions. Thanks so much.

[Matt Calkins:]

Sure. As Appian is a platform company and generally when we sell, we sell the platform. I believe that there are number of advantages that we could accrue from being more focused on solutions from cutting a cycle time of a sale to differentiating its competition to raising our price point partly due to that differentiation. I think that mostly however we’re still Platform Company and what benefits there are to be had from solutions are largely benefits that we might experience in the future. Right now our solutions are not the primary that we’re selling and most customers do not interact with an Appian solution. But we understand this to be an advantageous root for future which is why keep working on it and some customers of course are seeing terrific benefits. But I think mostly when they approach Appian they approach us for what we’re known for and that is, the platform. Down the road I look forward to us being known also for solutions and I think there’s a good potential for us.

[Chris Merwin:]

Okay, great. Thank you. And maybe just to follow-up on investments this year. I think Mark you talked about investing more in R&D and S&M. Can you maybe just go into a little bit more detail about how and why you’re ramping that spend? Obviously there’s a very long-term opportunity here but curious anything else you can comment about these investments you make in 2021?

[Mark Lynch:]

Yes, I mean as we’ve made some investments that in during 2020 and its senior executives who’ve brought in Senior Vice President in charge of customer success. A new CRO, a new CMO and thus far the new CRO has been here for nine months or so and we’re starting to see good traction. Our sales cycles one of things. The length of our sales cycles has historically been long and painful and they’re actually strong about 30% this year. We’ve got better and more efficient and so we’re seeing a lot of opportunities out there and we basically are – we want to hire sales reps pretty aggressively. On the same time, that we’re still – we’re not really well known like we’re not top of mind when you think of things. And so from marketing perspective with new CMO, we’ve given her additional budget. Matt has given her lot more budget than I wanted to. But we’ve given it to her and seriously and we wanted this, we want to get invest both in the marketing side as well as the sales. The TAM, as you guys know no matter how you slice it. It’s massive. So we just want to take advantage of it and we’re starting to see traction right now and momentum. So we’re pretty excited about where we’re headed and obviously we’re always looking to bring on smart software engineers to help out and build the platform.

[Matt Calkins:]

Yes and let me just add to that. This is really exciting moment in the history of this organization and we’re of course, a careful, conservative organization than we – we don’t like to spend too much. But I’ll take the fall for wanting to spend more on marketing right now. I think we should be expanding on all fronts. I think we should be hiring more account reps. We should be spending more in engineering. I’m more upset these days when we under spend than when we over spend our budget. I want to be sure that all the money we allocate is actually converted and we learn from. We grow from it. I think that we’ve reached a unique point in low-code and when we want to take advantage of it.

[Chris Merwin:]

Thanks guys. Thank you.

[Operator:]

Our next question comes from the line of George Kurosawa with KeyBank. Please proceed with your question.

[George Kurosawa:]

This is George on for Steve. I had a question about something you mentioned in the prepared remarks about pre-built partner solutions. I was just curious if you could maybe unpack a little – what are some of the kind of typical used cases for that ? And is it fair to think about that kind of following up on a previous question. It’s maybe like a stepping stone into more of a solution space. Thanks.

[Matt Calkins:]

I do think that they’re terrific stepping stone into the solution space and I believe that they’re going to make our reputation as a platform on which solutions can easily, efficiently and successfully be developed. These partner led solutions are typically industry specific. They reflect something that a team one of our partners has deep expertise in deploying. They’re already subject matter experts. They’ve already got the connections. They know who the buyers are. They know what the buyers problem is and they chose to build it once instead of end times for end buyers. This gives the buyer reassurance. others have done the same thing before that it’s predictable and that the seller truly knows how to solve the problem the buyer is experiencing. It’s a high credibility way for us to deliver a solution, maybe the most highest credibility way. I’m pleased with the progress so far. Many of our partners have done this or are planning to do this. And many solutions have been developed on the Appian platform by partners. I do believe that this is going to be a primary way that we’re established solutions .

[George Kurosawa:]

Great. Thank you very much. Just one quick follow-up. Obviously some really impressive results out of EMEA. Anything you would call out in terms of the drivers, did it feel like that was kind of improving demand environment or anything specific on your execution? That’s it from. Thank you.

[Matt Calkins:]

Yes, if I’d attribute that strong EMEA performance to one thing, it would be partners. Partners really came through for us. I think that we solved the need for them. They needed to deploy an agile solution to help their customers change in a tempestuous year and they turned to Appian because they knew it worked and they drove us into many new opportunities. So their trust in us. Our confidence in being able to solve problems together and the urgency of the problems that faced everybody last year. This is what I would attribute that growth to above all the partners.

[Operator:]

Our next question comes from the line of Jack Andrews with Needham. Please proceed with your question.

[Jack Andrews:]

I wanted to ask a little bit more about just given your comments about how the profile of low-code platforms has risen substantially in the last year. Could you talk a little bit more about the changes you’re seeing in terms of just the deal processes you mentioned a moment ago that deal cycles are compressing which is great. I assume that relates to the fact that you need to spend less time educating people about the value proposition. But what else is happening behind the scenes because so many vendors these days say that they’re in the low-code market. So should we think of more head-to-head bake offs or what else is happening in this market now that it’s becoming more mainstream.

[Matt Calkins:]

Yes I believe mainstreaming low-code will result in shorter sales cycles. Although the interpretation of the definition of low-code is still an issue and different vendors may call themselves low-code. But really represent very different products. That’s why I made a point of saying that in our opinion low-code was not a citizen developer tool at least not exclusively. We believe in low-code for mission critical applications. It’s more difficult. It’s more valuable and if you think low-code’s reputation was made in 2020 when businesses needed to deal with change then you must believe low-code belongs in mission critical applications because those are the applications that organizations needed to change. So we’re satisfying the most valuable demand in the low-code industry and not everyone is, not everyone calls them low-code can do that or want to do that. So low-code still something of an enigma and therefore there’ll be some explaining that goes into selling it. You still got to explain what is low-code in order to connect with the customer. Be sure you’re on the same page. However it should be faster. By the way, the acceleration we saw last year it’s about 30% faster deal cycle and sales cycles that I don’t believe was very much affected by a new mutual understanding or higher profile for low-code. I would say that happened for a reasons of its own and that whatever benefit we get from low-code going household has yet to be seen.

[Jack Andrews:]

That’s great. Appreciated your perspective on that. Just as a follow-up question. When you think about the new logos that were delivered by your partner ecosystem over the last year. Could you just talk about other characteristics of these new logos that are maybe different than Appian was capturing historically through your direct salesforce or partners helped new verticals that you haven’t got into or how do we think about the potential changing mix overtime given that contribution?

[Matt Calkins:]

For the most they’re alike. There are few niche cases in which a partners built a solution that appeals to a certain customer that we would not have been able to appeal to in the past and that is the minority of the cases. For the most part, the partners are sourcing exactly the kind of customers that Appian would like to source but maybe doesn’t have the relationship with or does have the reputation and the established connection with. So the partners are really emphasizing what we already found in our customers.

[Jack Andrews:]

Great. Thanks for taking my questions.

[Operator:]

Our next question comes from the line of Derrick Wood with Cowen. Please proceed with your question.

[Unidentified Participant:]

It’s Andrew on for Derrick. Thanks. And congrats to a strong finish to the year. Just wanted to ask about the government performance in the quarter versus your expectations and any color on the pipeline for this year and given the strong logo growth there. What type of expansion cadence should we expect out of that this year?

[Matt Calkins:]

Well I’d like to say that government performance was in 2020 that was more in Q3 than in the other quarters. But this is a really solid year for Appian in the federal space. And we advance scenarios that we hadn’t always advanced in. so we have a higher profile now. We got a building reputation and we’ve got some new terrific winning used cases that are leading to expansion and good adoption and you know how the government works where if you establish value, word gets out fast. And so we’ve been fortunate enough to have the opportunity a few times over the past year to demonstrate value in high profile example in the government sometime in defense and we’ve done well. With those opportunities and I think we’re selling seeds that are going to turn into good things down the road by providing real value in high profile federal opportunities.

[Unidentified Participant:]

Great and then Matt on the partner front, any new initiatives planned there for this year to keep that strong momentum going and are you seeing in lean even more into their practices given how strong this year was?

[Matt Calkins:]

Yes, definitely. I think 2020 we’ve got more partner momentum in the federal space than I’ve ever seen and we were programmatic, institutional support. We were very pleased with the cooperation we’ve got and winning leads to wining in situations like this. So I believe that it sets the stage for 2021.

[Unidentified Participant:]

Great thanks guys.

[Operator:]

Our next question comes from the line of Brett Knoblauch with Berenberg Capital Markets. Please proceed with your question.

[Brett Knoblauch:]

I might have missed it. But did you guys provide an update with number of customers with $1 million plus in ARR? And then as you look at your 2021 guide, what percentage of those customers will purchase more software? Do you think it will be similar to the 81% you saw in 2020?

[Matt Calkins:]

All right, well I don’t have a number for you. But I will say that I’m enthusiastic about our expansion prospects in the year ahead because I’m enthusiastic about the value we’re delivering right now. Not for nothing because Appian come out Number One in the Gartner Peer Insights poll that just shift this month. By the way that’s absolutely fresh analyst update. Appian comes out. We have not only – did we get top marks from our customers but we were – we got the number one count of response also. Some companies try to get a high average by having just a few customers respond. Appian had not only the top marks but the top count of reviews and we were the only listed in the leader quadrant for companies over $10 billion or companies between $1 billion and $10 billion. So the entire big company side of low-code. We were left as the sole leader. So I feel great about the value we’re delivering and the recession we’re getting from our customers today and I believe that there’s no better predictor for expansion than customer satisfaction. So on that basis, not so good.

[Brett Knoblauch:]

Got you and maybe just one follow-up. When you’re investments in your sales team. How has salesforce productivity obviously the channel partner there performing greatly? But when your direct salesforce and how that performed in 2020 compared ?

[Matt Calkins:]

Yes, I’d say 2020 better than 2019 in terms of a salesforce efficiency. I see it rising and I feel good about 2021 as well. We’re in a good position to continue to increase salesforce efficiency.

[Mark Lynch:]

Yes it definitely proved in 2020. There’s definitely more room for improvement. But the sales executive team is focused on that. So we’re looking – obviously squeeze out more efficiencies out of the current and existing sales force. But we’re also looking to aggressively ramp headcount in the salesforce as well.

[Brett Knoblauch:]

Got it. Thanks guys.

[Operator:]

And our final question comes from the line of Fred with Macquarie. Please proceed with your question.

[Unidentified Participant:]

I might ask here that, subscription revenue per customer remained about flat year-over-year while you’ve accelerated customer ads and also expand your net retention rate? Would I be interpreting this dynamic correctly is you seeing more upsell among the existing customers offset by some new customers landing with lower ASPs?

[Mark Lynch:]

Let me do the ASP.

[Matt Calkins:]

Go ahead.

[Mark Lynch:]

The ASP is a – similar year-over-year, right. So it’s really more subscription software both in the expansion side as well as the net new logo. So when we land, we generally land in kind of $100,000 to $120,000-ish range even higher. I’m being told here to. The workforce safety some of the solutions are little lower but our ASPs have been basically very steady year-over-year and so it’s like I said, we ticked up 119 from in our perspective obviously it reflects expansion. It also reflects to Matt’s point happy customers. Our gross renewal rate was 99% which is really I don’t think it can get any higher. Right? So we’re happy with both of those metrics. But your point on the subscriptions revenue being steady year-over-year is a good one.

[Unidentified Participant:]

Thank you. That’s helpful color there. And then just there’s a second follow-up question. I’d like to explore your platform in a little more depth. I’m curious how frequently do you see your customer building apps on their own that are robust enough that. If Appian built them you’ll be able to charge for them on say, per app basis.

[Matt Calkins:]

All right, customer build unique applications for the most part. There are only a few examples of applications which are the same for one customer to another. Those are good candidates for reselling. But most of what customers build is suitable for their environment specifically. So the first thing I would want to say to your question is because we’re unique and because we allow customers to express their own uniqueness be it they’re strategic, they’re enterprise, they’re infrastructure whatever uniqueness. There wouldn’t be a direct portability of an application from one customer to the others. However do they build things that are of a quality that other customers would want, do they create IP that other customers would want? Do they create IP that other customers would find of value? I believe, yes. The answer would be, yes, to those questions. Which is to say that expertise is being created out there, that would have value. But of course it’s not on the market. In some cases the customer has even asked us if they could resell a solution that they create. We have yet to enter into an agreement like that. But once in a while it is floated by a customer who feels very strongly about the quality of the application that they’ve created on our platform.

[Unidentified Participant:]

Helpful color. Thank you.

[Operator:]

And with that, this concludes today question-and-answer session as well as today’s conference call. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.