E2open Parent Holdings, Inc.
Q1 2023 Earnings Call Transcript

Published: 11 Jul 2022

[Operator:]

Good afternoon and welcome to the E2open Q1 FY 2023 Earnings Presentation. At this time all participants are in a listen-only mode, but we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Adam Rogers. The floor is yours.

[Adam Rogers:]

Good afternoon, everyone. At this time, I would like to welcome you all to the E2open Fiscal First Quarter ‘23 Earnings Conference Call. I am Adam Rogers, Head of Investor Relations here at E2open. Today’s call will include recorded comments from our Chief Executive Officer, Michael Farlekas, followed by our Chief Financial Officer, Marje Armstrong, and then we’ll open up the call for a live Q&A session. A replay of this call will be available on our website. Information to access the replay is listed in today’s press release, which is available at e2open.com in the Investor Relations section. Before we begin, I’d like to remind everyone that during today’s call, we will be making forward-looking statements regarding future events and financial performance, including guidance for our fiscal second quarter and full year 2023. These forward-looking statements are subject to known and unknown risks and uncertainties. E2open cautions that these statements are not guarantees of future performance. We encourage you to review our most recent reports, including our 10-Q or any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock. And finally, we are not obligating ourselves to revise our results or these forward-looking statements in light of new information or future events. Also on today’s call, we will refer to certain non-GAAP financial measures. Reconciliations of non-GAAP to GAAP measures and certain additional information are included in today’s earnings press release, which can be viewed and downloaded from our Investor Relations website. And with that, we’ll begin by turning the call over to our CEO, Michael Farlekas.

[Michael Farlekas:]

Thank you, Adam, and thank you all for taking the time to join us for our first quarter earnings call for fiscal 2023. First, I would like to thank our nearly 3,800 team members for another great quarter. We are very proud to have achieved strong results in the first quarter that position us very well for the remainder of our fiscal year. During today’s call, I’ll cover our first quarter highlights, an update on market trends impacting global supply chains and our business, our progress on the long-term strategy we previously outlined, an update on our investments in growth, our brand relaunch and our efforts in ESG. And after those updates, I’ll turn the call over to our CFO, Marje Armstrong, to provide further details on our Q1 financial results. Let’s start with the first quarter. In Q1, we generated over $160 million in total revenue, $130 million of which was subscription revenue. For those new to our business, subscription revenue represents over 80% of our total revenue and produces approximately 80% gross margin. For Q1, organic subscription revenue grew over 12% on a constant currency basis compared to last year. Notably, we have delivered organic subscription growth acceleration in this quarter as well as for five of the six quarters we have been a publicly traded company. We also continued our strong track record of generating high margins and high free cash flow. Our Q1 adjusted EBITDA was $51 million, up 12% year-over-year and represented a 31% EBITDA margin. Furthermore, we generated over $41 million of unlevered free cash flow. This is equal to 80% of our EBITDA and 25% of our total revenue. We have built this business with a balanced approach to top line growth and profitability. This remains our focus. In summary, we’re off to a great start of the year. We are especially proud of our first quarter results in light of the macroeconomic and geopolitical turbulence that has been impacting virtually every business in the world in one way or the other. Given the quickly changing broader macro backdrop, I wanted to provide my perspective on how E2open is positioned in these evolving market conditions. The economy is slowing. We can clearly see this in our data from both, international and domestic transportation volumes, which are clearly trending lower. What’s making the overall demand slowdown more complex is that supply chain constraints continue to exist for many physical goods due to the remnants of COVID disruptions, the war in Ukraine and other geopolitical volatility. Global inflation is very real, given the lingering supply-side disruptions and geopolitical instability, which is further adding pressure to companies across the world. So, what does this mean for E2open? E2open’s unique position as the largest cloud supply chain software platform makes us more essential than ever for our clients at a time when navigating complex and ever-changing demand and supply problems requires more than just point solutions. E2open is uniquely positioned to capitalize on the broader focus of supply chains, given the breadth of our solutions we offer on the platform. My conversations with our client executives continue to focus on them building more agility and resiliency into their supply chain infrastructure, so they could be prepared for continued rapid market changes. We continue to hear from our clients that they are managing two significant trends

[Marje Armstrong:]

Thank you, Michael, and good afternoon, everyone. It is a pleasure speaking to you today as the new CFO of E2open. I’m incredibly excited to join the talented team Michael has built, and I look forward to building on the strong trajectory E2open is on and helping scale the business. I have already had the privilege to meet many of you on the line, and I look forward to connecting with everyone in the future. Now, on to today’s business. First, I will review our fiscal first quarter results, then I will update you on our progress with the recent acquisitions of BluJay Solutions and Logistyx Technologies. And finally, I will finish the call with an update to our guidance. Thereafter, we’ll open the call to your questions. As a quick note, I will talk about our results on a non-GAAP basis. We show a reconciliation to GAAP measures in the press release, which is available in the Investor Relations section of our website at e2open.com. In addition, I will be referring to foreign exchange rate impacts on our results as well as constant currency growth rates. Approximately 15% of our revenues are in non-U.S. dollar-denominated currencies. The main currencies we have revenue exposure to are the euro and the British pound. FX exposure has not had a significant impact on E2open’s results in the past, since prior to the acquisition of BluJay and Logistyx, only 4% to 5% of our revenues came from non-U.S. dollar-denominated currencies. Considering our increased revenue exposure to foreign currency as well as the unprecedented volatility in the foreign exchange markets, with the euro down 15% in a year and 7% in the last three months alone, we find it relevant to disclose our exposures to foreign exchange rates. Given the continued strengthening of the dollar against many currencies, including the euro and the British pound, we faced a headwind to our Q1 total revenues on a year-over-year basis, and we are also expecting FX headwinds for the balance of the year. However, in terms of order of magnitude, the year-over-year FX impact on our revenues is less than 2% for the current fiscal year. Furthermore, we have natural hedges as a portion of our costs are also in non-U.S. dollar-denominated currencies. As a result, FX was a slight benefit to our EBITDA line in Q1 and we expect that trend to continue for the balance of the year. Moving on to our first quarter results. We’re very pleased with our first quarter results that achieved strong organic subscription revenue growth, profitability and free cash flow generation. In the fiscal first quarter of ‘23, we reported subscription revenue of $129.5 million, reflecting an organic revenue growth rate of 10.7% on a pro forma basis or 12.1% on a constant currency basis when adjusting for the negative $1.7 million year-over-year impact from foreign exchange fluctuations. Our strong year-over-year subscription revenue growth in Q1 was a result of seeing a full run rate on fiscal year ‘22 record bookings growth and continued momentum from both, new logos as well as cross-sell/upsell across our client portfolio. As a reminder, we introduced a new logo strategy last year, and the Q1 new logos as a percentage of total is now approaching a third of our bookings. Professional services and other revenue was $30.8 million, reflecting an organic growth rate of 6.3% on a pro forma basis or 8.2% on a constant currency basis when adjusting for a $600,000 year-over-year impact from foreign exchange fluctuations. Our subscription revenues are growing faster than our services revenues by design. As Michael has mentioned previously, we are strategically shifting our services revenues to new partnerships with system integrators as part of the planned expansion of our channel ecosystem in order to aid our future subscription revenue growth acceleration. We reported total revenue in the fiscal first quarter of $160.4 million, reflecting a total organic revenue growth rate of 9.8% on a pro forma basis or 11.4% on a constant currency basis when adjusting for a negative $2.3 million impact from foreign exchange fluctuations. Our gross profit was $111.3 million in the fiscal first quarter, reflecting a 9.3% increase on a pro forma basis or 10.3% increase on a constant currency basis. Gross margin was 69.4% or 69.1% on a constant currency basis for the first quarter of fiscal ‘23 compared to 69.7% in the comparable period in fiscal ‘22. Adjusted EBITDA was $51.4 million, reflecting a pro forma growth rate of 12.4% or 10.7% on a constant currency basis. The adjusted EBITDA margin was 31.6% or 31.1% on a constant currency basis for the first quarter of fiscal ‘23 as compared to EBITDA margin of 31.3% during Q1 of fiscal ‘22 on a pro forma basis. As mentioned before, natural cost hedges offset the negative FX impact to top line and lead to a slight FX benefit to the EBITDA line. Unlevered free cash flow for the first quarter, adjusted for M&A, was $41.3 million, which represents a flow-through of 80.3% of adjusted EBITDA. Adjusted earnings per share for the first quarter of ‘23 were $0.07. Driving bottom line profitability and free cash flow continue to be important priorities for us. In summary, we’re proud of our first quarter results and the continued momentum we see in our business. We plan to maintain a similar focus and balanced approach of driving top line growth as well as profitability and free cash flow going forward. I also want to provide a brief update on our recent acquisitions. We’re nearly complete with the execution phase of our integration of BluJay Solutions that closed on September 1, 2021. Total synergies related to the recent BluJay combination are projected to be more than $25 million, and we have actioned over 93% of these synergies as of the end of our fiscal first quarter. Total synergies related to the recent Logistyx combination were projected to be just over $10 million. We expect to achieve between 75% and 85% of run rate savings by the end of fiscal ‘23. Now on to guidance. We are maintaining our initial guidance ranges on a constant currency basis for fiscal ‘23 and are only adjusting our guidance to account for foreign exchange movements since our initial guidance was set. Given the FX volatility discussed earlier, we’re adjusting our full year revenue and gross margin guidance to account for the FX impact we’re seeing. As mentioned, approximately 15% of our revenues are from non-U.S. dollar-denominated currencies, with majority of the exposure to the euro and the British pound. We’re using €1.03 and £1.20 rates for our updated guidance versus €1.14 and £1.32 used in the initial guidance, which for the full year is having an approximately $7 million impact on our subscription revenue and $9 million for the total revenue. We’re also incorporating an approximate 50 basis point FX headwind into our gross margin guidance. We’re not adjusting our EBITDA guidance as we have natural cost hedges, and we continue to be committed to a balanced approach to revenue growth and profitability. As a result, we are reaffirming our prior EBITDA guidance range. Our GAAP subscription revenue for fiscal ‘23 is now expected to be in the range of $538 million to $546 million due to an approximate $7 million negative impact from foreign exchange rate fluctuations versus prior guidance, which remains the same on a constant currency basis. Our prior subscription revenue guidance for fiscal year ‘23 was $545 million to $553 million. Total GAAP revenue for fiscal ‘23 is now expected to be in the range of $672 million to $680 million due to an approximate $9 million negative impact from foreign exchange rate fluctuations versus prior guidance of $681 million to $689 million. Non-GAAP gross profit margin is expected to be in the range of 68% to 70% versus prior guidance of 69% to 71% due to an approximate 50 basis-point negative impact from foreign exchange rate fluctuations. Adjusted EBITDA guidance is reaffirmed in the range of $217 million to $223 million. Now to give you a little more detail behind our full year guidance. We’re only adjusting our subscription revenue guidance to account for the FX impact at this time. We’re not making any changes to our constant currency subscription revenue guidance for fiscal ‘23. Our subscription revenue base is durable and predictable due to the long-term contracts we have in place with our customers. The average contract length is 3 years, but furthermore, the average life of our top 100 customer is 15 years. We continue to see demand building as evidenced by record levels of net pipeline growth, a good leading indicator. That said, our growth is a function of pipeline size, close rate and the length of our sales cycle. And as macro and geopolitical uncertainty evolves, we are closely monitoring these three variables. We have seen select delays in some deal closings, specifically in the Euro area as well as the tech sector, where our customers have been distracted by macro events. However, nothing that we can call a trend at this point. I would also note that our subscription revenue does not generally fluctuate with our clients’ transactional volumes. There are some components of our subscription revenue that have a variable component, specifically overages and stripping volumes. However, less than 5% of our subscription revenue is subject to some volume-based variability. Historically, that annual variability has been in the less than $1 million range. But again, we’re closely watching all the different dynamics in this unprecedented macro environment. While we do not specifically guide to the services revenue line item, it does impact our total revenue line. A couple of points to make around our services revenues. First, we have been deemphasizing the services revenue line item as part of a broader strategy shift to move those revenue streams over to system integrators, such as our most recently announced strategic partnership with Accenture and the partnership announced with KPMG earlier in the year. As a result, our services revenue growth is decoupling from our organic subscription revenue growth a bit faster than we anticipated. We believe the strategic partnership will help us further accelerate our organic subscription revenue growth in the coming years. Second, we’re starting to execute on incremental data subscription sales. Still early days but we see potential for data subscription sales to become an increasingly material part of our strategy going forward. Data sales come with lower service attach rate, which leads to lower services revenue growth. Finally, I would also note that we are seeing some incremental pressure on the services line item, as select customers are looking to postpone spend in light of broader macro uncertainty. We do not see this dynamic with our subscription revenue line, given the long-term contracts and customer tenure along with the fact that our software platform is essential for operations for our customers. However, we do see some incremental services spend slowdown with select customers. We’re still early in our fiscal year but we are closely watching these impacts on our service revenues. When you look at our full year total revenue line, these services revenue headwinds may weigh the total revenue line towards the lower end of the FX-adjusted range. In terms of gross margin guidance, while we have some natural cost hedges for our cost of revenue line item, they are not enough to offset the FX impact on revenues, which is why we are lowering our gross margin guidance to 68% to 70%. Finally, for our adjusted EBITDA, we are reiterating our prior guidance range of $217 million to $223 million. We have additional natural cost hedges in our operating expenses as many of our expenses are also non-U.S. dollar-denominated. In addition, we are committed to driving a balanced approach to top line growth and profitability, along with cash flow generation. Now, I would like to quickly touch on Q2 guidance. GAAP subscription revenue for the fiscal second quarter of ‘23 is expected to be in the range of $129 million to $132 million, including an approximate $3 million negative year-over-year impact from foreign exchange rate fluctuations. This guidance range represents a 7.8% organic growth rate at the midpoint or 10.2% on a constant currency basis. The year-over-year growth rate of our subscription revenues will fluctuate from quarter-to-quarter, depending on the timing of large deal closings and churn. As Michael had mentioned before, our growth rates should be looked at on a 12-month basis. Small dollar fluctuations can have a large impact on year-over-year growth rates. While we do not guide to quarterly services revenue, the annual dynamics described previously, including FX, our SI strategy, data sales and macro impact hold also for Q2. I also wanted to highlight that there is some quarterly variability to our cost base and some onetime items we need to call out for Q2 fiscal year ‘23 specifically. This year, merit increases for our employees took place in the current Q2 versus in Q3 for the last fiscal year, so there is a cost step-up from merit increases in Q2 this year versus Q3 last year. In addition, the current fiscal year ‘23 Q2 has onetime costs from our brand relaunch that took place in the quarter as well as additional marketing spend step-up for the plans communicated previously. These costs are incremental to the Q2 cost base versus last year. Finally, we also had large in-person customer events, including the Gartner Symposium that we were not able to have last year due to COVID. These Q2 cost items are included in our full year plan and EBITDA guidance that we have reiterated today. In summary, we are very pleased with our strong first quarter results. While there is certainly some turbulence in the global macro environment, we’re entering the remainder of our fiscal year very well positioned. Our business momentum is strong and we continue to deliver market-leading innovation that drives our customers’ digital transformation. Our growth algorithm and long-term outlook remain the same. We remain focused on executing our growth strategy to capitalize on the multibillion-dollar market opportunity that lies in front of us and continue to do that in a way that also balances our profitability and free cash flow. With that, Michael and I would now like to take your questions. Operator, we’re ready to begin the Q&A session.

[Operator:]

And the first question is coming from Taylor McGinnis with UBS.

[Taylor McGinnis:]

Yes. Hi. Thanks so much for taking my question. My first one is just one, Marje, if you don’t mind giving the -- for the full year guide for subscription revenue and total revenue. I think you just gave the constant currency adjustments, if I’m understanding that correctly relative to the last guide. So, what exactly is the constant currency guide that is embedded for the full year? And then, as the second part to this question, you talked about decision delays and a slowdown this past quarter. I’m curious if that impacted bookings and billings at all and if you’re able to quantify that. And then, when we think about the full year guide and the reaffirm, if that had any influence there. Thanks so much.

[Marje Armstrong:]

Thank you so much. In terms of the updated guidance, as we mentioned in the press release as well as in my prepared remarks, the impact from FX is the only adjustment that we’re making to our guidance ranges. And when you’re looking on full year basis, it is $7 million on -- for the subscription revenues and $9 million for the total revenues. Now, when you’re thinking about full year growth rates, I would say that the year-over-year impact is slightly larger, just given the FX fluctuations already happened prior to us setting the guidance. So, when you’re looking at full year guidance growth rates, the year-over-year impact for the subscription revenues is probably $9 million impact on a year-over-year basis and closer to $11 million on a year-over-year basis, if that makes sense. So, the guidance range adjustments were versus the prior initial guidance and the FX embedded in there. And I just gave you a couple of other pieces of information to understand how the year-over-year impact works as well. Does that answer your question?

[Taylor McGinnis:]

Yes. That’s perfect. That’s really helpful. And then, yes, just curious on to the second part of my question, just if there was some of the macro that you talked about, if that did have any impact relative to your expectations on bookings and billings, and if that influenced the reaffirmed revenue constant currency guide at all?

[Marje Armstrong:]

Yes, absolutely. So, as we -- we’re trying to be very transparent with what we’re seeing in the broader macro environment, just given all the different dynamics. As we mentioned, we did see select deals closing slower, especially in the Euro area as well as the tech sector. However, these are very select. We wouldn’t call it a trend by any means at this point but we are watching it really closely. And to specifically answer your question as well, these impacts and potential volatility is all within our guidance range. So, when you’re looking at our guidance, all these new dynamics are factored in to our guidance.

[Operator:]

The next question is coming from Chad Bennett with Craig-Hallum.

[Chad Bennett:]

Maybe for Marje, first of all, good to kind of meet you formally here on the call and welcome to the E2. I guess, I don’t know if you had it in the script but did you indicate how much Logistyx contributed in the quarter and if your view on that business implied in the guide has changed? I think, last quarter, they talked about $40 million in total revenue contribution for the year and then I think $28 million to subscription. Can you give any kind of update there, kind of contribution in the quarter and how you’re thinking about it for the year, if anything changed?

[Marje Armstrong:]

Yes, absolutely. Nothing has changed at the moment. We’re still very, very early on Logistyx, and we’re working through the sort of initial phases of the integration. We will definitely come back and update you as we have more information. But at this current time, everything that we are seeing is factored into our guidance and we do not have anything specific to note. But again, as we are getting deeper and deeper into integrating that business and have any sort of changes to update you, we will certainly do that.

[Chad Bennett:]

Okay. And then just contribution for the quarter?

[Michael Farlekas:]

Yes. Chad, we generally don’t -- as we integrate these companies fully, we don’t really think about the problem in that way in terms of breaking out contributions for the quarter. But we do give a complete pro forma in our tables, so you can understand the organic growth rate of our overall business.

[Chad Bennett:]

Okay. And then just kind of curious on the FX, and I understand for everybody, rates have moved dramatically against the dollar. But if I think about -- and again, not that Marje, you were kind of here, so to speak, but the FX impact in the quarter is pretty dramatic, considering the Company reported at the end of April and we didn’t really hear about FX impact. And then, I think in May, actually, and it’s a one-off -- well, it is year-to-date. The euro actually appreciated versus the dollar in May somewhat. So, I just -- like did the FX impact in the quarter, was that -- I don’t know how to say it. I mean, was that surprising or because it seemed like the data was there leading up to it?

[Marje Armstrong:]

Yes. I think, as you noted, I’ve been here for less than two months, but I would say, obviously, I’ve dug into all this in great detail. And what I would say is there is always a question of how much does FX can we absorb and at what point do we start disclosing impacts. And given that the FX moves had not been as dramatic, it did not seem like it was something that should have been specifically disclosed at the time. However, the combination of these historical moves in FX rates, when you’re looking at the last three months, rates are down 7%. And just kind of taking a fresh look at the business where the FX exposure has increased post the acquisitions from prior -- last year prior to the last two acquisitions, it was closer to 4% to 5% and now around 15%. The combination of these drastic moves with FX markets as well as increased exposure, it just seems prudent to disclose and really give you more detail around what the FX impact is on our business going forward. Now, in terms of how often we’ll update our guidance, we will update that as FX rates move. I would also note that in terms of the business, when you get to the EBITDA line, we actually -- you can see that in the press release disclosures, we actually had a slight benefit. So, as you walk all the way down the P&L, it is actually a slight net benefit. We’re lucky to have natural hedges in the business. So, in a way, these moves, although they have an impact on our top line at the current time, they are neutralized. And so, the overall impact on the business is muted, thanks to the natural cost hedges. Does that help?

[Chad Bennett:]

Yes. No, absolutely. And then maybe one last one, if I could. Just, Michael, you obviously touched on M&A and kind of how successful you’ve been in integrating these acquisitions and cross-sell/upsell over the last seven years and 14 of them, and you think you have a 10x opportunity just in the base you have today. Just maybe for both of you, just kind of how do you think about capital allocation today and maybe appetite for M&A in these times and versus kind of delevering and so forth? Kind of has your view changed on capital allocation versus maybe six or nine months ago?

[Michael Farlekas:]

Well, certainly, the capital markets have changed pretty dramatically in the past four, five months. So, obviously, we take a close look at that. The reason we think about M&A is because it’s strategically accretive for the business and financially accretive for our shareholders, and that’s really the fundamental capital allocation model we deploy. So, as obviously software valuations have come down, we believe over time, there will be a lot of opportunities for growing companies that are profitable to be able to exercise M&A in the future. So, fair to say that we are watching the markets very closely. We also understand our leverage position and that will be baked into our capital allocation model going forward. But in these times, we’re a large company and we have a lot of profitability and we’re growing. So, that puts us in a very good position organically and also a very good position inorganically.

[Operator:]

Up next, we have Mark Schappel with Loop Capital.

[Mark Schappel:]

Michael, I appreciate your macro comments and what you’re seeing in your transportation volumes in your prepared remarks. But given that the fact that you are seeing the beginning of a slowdown in your business, why not use this opportunity to trim your total revenue guidance for more than just what you’re doing for FX?

[Michael Farlekas:]

Yes. It’s a great question. I mean, we kind of talked about it. I think the answer is we didn’t really see a need to, given the resiliency and durability we have in our revenue model, and obviously, our bookings performance and pipeline performance. So, we think our guidance is appropriate for what we see in the market and we pay very close attention to it. Again, we don’t -- we’re not that affected by transportation volumes or transactional volumes in our clients’ business. So, it’s a pretty important thing for us to really focus on is that even though volumes are up or down, our customers generally don’t pay us based on that. So, we think our revenue model is durable and we’re very comfortable with the guidance we set.

[Mark Schappel:]

Okay, great. Thanks. And then given the decision delays that you noted in your prepared remarks, just walk us through one more time why the Company is still ramping up its go-to-market hiring and investments?

[Michael Farlekas:]

Yes. I mean, it’s the same kind of answer, which is we are balancing profitability and growth, we always have. And every dollar we make and invest in the business is against a very specific capital allocation market. And at this moment, we see enough evidence of our progression to continue. But obviously, we have a lot of control over that spend. And if there was a point in time where we thought that we needed to balance more profitability over future growth, we would certainly do so. And I will say one last comment is if we have seen enough activity that caused a trend, we would say so. I think right now, everybody is trying to deal with a lot of changes in the marketplace. And obviously, we’re not immune to that. But overall, we have a very durable business. We are growing double digits and we’re very profitable. That puts us in a great position to, as I said, grow organically in this market and lean in where others really have to lean out.

[Operator:]

We have one remaining question coming from David Ridley-Lane with Bank of America.

[David Ridley-Lane:]

This is David Ridley-Lane on for Andrew Obin. Quick question. Do you have trend data around competitive win/loss rates? I know you’ve made investments in new logo sales headcount. It’s great to see that you’re getting a return on that with the mix there going up. But I’m wondering, are you also seeing this broader E2open platform results in better win rates and competitive situations?

[Michael Farlekas:]

We track our win rates very closely. And the most important data point we really track is our yield on our pipeline. As Marje noted, our pipeline continues to grow on a net basis, meaning we grow it in excess of what we close. And we track very closely what our yield is within each quarter. And that data says the trend is continuing that we’ve seen over the past really two or three years now, which is -- except for COVID, that our pipeline is growing and our yield on that pipeline has been extremely consistent. It bounces around a little bit quarter-to-quarter but very consistent. So, we feel pretty bullish on our ability to build pipeline and close pipeline. In terms of win rates, what we really see is where we can articulate a broad need for our platform, like I talked about, our win rates are extraordinarily high. So, we are seeing our ability to get higher in an organization earlier. And I think I’ve said in the past, that’s because more C-level people are taking really ownership of the supply chain problem versus in the past, it was much more a divisional level or a functional level leader. We think that’s contributing to our overall success.

[David Ridley-Lane:]

Got it. And then you did call out growth in data-related sales. Are you starting to see some of the earlier partnerships like with Dun & Bradstreet start to yield more meaningful incremental revenue?

[Michael Farlekas:]

We are, and many of those come with revenue from the very start. So, we are starting to see incremental revenue from those partnerships. And we do have the ability to think about our network and charge for access to our network in other ways. So, we think we’re very early days but we think that’s an important piece of our story, which is we have a very, very large network and we can think about different ways to add value to the ecosystem and then be able to monetize that to some degree.

[Operator:]

We have no further questions in queue. Thank you, ladies and gentlemen. This does conclude today’s conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.