Smartsheet Inc (SMAR) 2019 Q2 法說會逐字稿

Good afternoon.

My name is Chantal, and I will be your conference operator today.

At this time, I would like to welcome everyone to the Smartsheet, Inc.

Second Quarter Fiscal 2019 Earnings Conference Call.

(Operator Instructions)

Aaron Turner, Head of Investor Relations, you may begin your conference.

Thank you, Chantal.

Good afternoon, and welcome, everyone, to Smartsheet's Second Quarter Fiscal Year 2019 Earnings Call.

We will be discussing the results announced in our press release issued after the market closed today.

With me today are Smartsheet's CEO, Mark Mader; and our CFO, Jennifer Ceran.

Our SVP of Product, Gene Farrell, will also be available during the Q&A.

Today's call is being webcast and will also be available for replay on our Investor Relations website at investors.smartsheet.com.

There's a slide presentation that accompanies Jennifer's prepared remarks, which can be viewed in the Events section of our Investor Relations website.

During this call, we will make forward-looking statements within the meaning of the federal securities laws.

We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends.

These forward-looking statements are subject to a number of risks and other factors, including, but not limited to, those described in our SEC filings available on our Investor Relations website and on the SEC website at www.sec.gov.

Although we believe that the expectations reflected in these forward-looking statements are reasonable, our actual results may differ materially and adversely.

All forward-looking statements made during this call are based on information available to us as of today, and we do not assume any obligation to update these statements as a result of new information or future events, except as required by law.

In addition to U.S. GAAP financials, we will discuss certain non-GAAP financial measures.

A reconciliation to the most directly comparable U.S. GAAP measure is available in the presentation that accompanies this call, which can also be found on our Investor Relations website.

With that, let me turn the call over to Mark.

Thanks, Aaron.

Good afternoon, everyone, and thanks for joining us for today's call.

The momentum with which we began the year continued in Q2 with revenue reaching $42.4 million, representing year-over-year growth of 59%.

Our teams continue to execute with strong focus and commitment to customer success.

Through customer expansion combined with a lower attrition rate, our dollar-based net retention rate reached 131%.

We increased our presence in Fortune 500 companies to 72%, and the total number of all Smartsheet users across paid and collaborators is now more than 4.2 million.

Expansion within our base during the quarter included 26 companies increasing their annual recurring revenue by more than $50,000.

Notable expansions occurred at customers such as SAP, Dell, Hurley Medical Center and HP.

In numerous customer conversations this quarter, I repeatedly heard how Smartsheet is driving high-value automation and workflow consistency in areas such as project management, sales, marketing and finance.

For example, a Fortune 100 retailer and Smartsheet customer for over 5 years expanded by more than $100,000 in the quarter.

This customer upgraded to our enterprise plan and is using advanced features such as alerts, automation and dashboards to drive meaningful workflows across marketing, new store openings, supply chain management and process management.

Now a top 20 Smartsheet customer, their broader usage of the platform across an increasing number of teams is delivering efficiency throughout the organization.

As we've previously discussed, we optimized our sales motion at the beginning of the year to focus efforts around our high-potential accounts while enabling other prospects to our digital sales motion.

While there is still work to be done in this regard, we are pleased by the results we've seen thus far.

In June, we evolved our plan offerings to better meet the needs of customers who want to access high-value capabilities such as dashboards and automation.

By introducing an enterprise premier plan and discontinuing the team plan for new customers, we responded to customers' needs and simplified our online and assisted sales motions in the process.

We believe that access to these high-value features will drive stronger and more fruitful relationships over time.

The expansion of our international sales and support capacity remains on track.

Since we believe direct, time zone-appropriate engagement drives both better outcomes for customers and healthy expansion rates, starting in October, we will have our first EMEA sales team members on the ground in the U.K. with a plan to grow over time.

We look forward to delivering a deeper, more robust level of engagement for our international customers, which currently account for about 25% of our total account value.

Smartsheet's consistent performance over time is driven by a strong product portfolio that addresses a wide range of real-world challenges for business users.

We remain focused on delivering an increasingly valuable platform that empowers everyone to improve the way they work, connect, innovate and execute.

That empowerment, in turn, creates better experiences for employees, organizations and their customers and drives better business outcomes.

In Q2, we continued to deliver on our initiatives to integrate with popular messaging platforms, furthering Smartsheet's position as the neutral fabric between teams regardless of their corporate messaging standard.

In addition to our previously announced integrations with Slack and Workplace by Facebook, we launched an integration with Google Hangouts chat in July.

Integrating with the leading messaging applications remains an important aspect of our product road map, and you can expect further developments on this front as we move through the year.

This quarter, we also launched a set of prepackaged solutions called Accelerators for 3 distinct use cases: IT PMO, Professional Services and M&A.

By leveraging our insights and best practices, our customers were able to deploy Accelerators rapidly with confidence and at scale.

For example, a biomedical equipment manufacturer, Beckman Coulter, deployed our Professional Services Accelerator in less than 3 weeks to improve their customer on-boarding and equipment deployment process.

With our Accelerator, Beckman Coulter quickly gained visibility in real-time status updates to workloads that were previously managed using a less efficient combination of email and spreadsheets.

Although it's still early days for our Accelerator products, interest from both current and prospective customers is encouraging.

Given this early signal, we plan to roll out additional accelerators in the coming quarters.

We also added significant enhancements to our mobile capabilities in Q2, including a contextually aware editing experience.

With this touch-optimized experience, knowledge workers can be more productive from wherever they are, executing work through their mobile device.

We also introduced new mobile-only capabilities like bar code scanning, which our customers are deploying for a number of high-value use cases, including inventory tracking and supply chain management.

We expect mobile workloads and engagement with Smartsheet's platform to continue to increase over time.

From desktop to tablet to smartphone, we believe we are well suited to add value for our customers regardless of their device choice or work location.

These are just a handful of the product initiatives we've been working on, and we're excited to unveil additional offerings at our second annual ENGAGE global customer conference, October 1 through 4. Last year, we hosted our first ENGAGE conference with over 1,000 attendees.

And this year, with registered attendance outpacing last year's conference, ENGAGE '18 is set to be even bigger and better.

We look forward to seeing many of you there.

Before I turn it over to Jenny to provide more financial details on the quarter, I want to share my continued excitement for Smartsheet and the future.

I'm very pleased with our performance thus far in fiscal year '19 and the progress we're making against our strategic priorities.

Thank you to our dedicated Smartsheet team for your continued passion and commitment to our customers and to one another.

And thanks also to our customers and shareholders for your confidence in our service and in the future of our business.

Jenny?

Thanks, Mark, and welcome, everyone.

Overall, we delivered $42.4 million in revenue for the quarter, up 59% versus a year ago, driven by strong demand for our platform.

Billings came in at $52.2 million, up 55% versus the same quarter a year ago.

Our net dollar retention rate was 131%, an increase of 1 percentage point versus last quarter.

And our average annualized contract value or ACV per domain-based customer grew 49% year-over-year to $2,000.

Second quarter non-GAAP operating loss was $8.7 million as we continue to make investments in our platform and go-to-market capabilities, and non-GAAP net loss per share was $0.08.

Free cash flow was negative $4.2 million, driven by continued investments in the business, and we ended the quarter with a cash balance of $211 million.

Before I provide our outlook for the third quarter and the remainder of the year, let me provide you more details on the second quarter, starting with revenue.

Of our $42.4 million in total revenue, subscription revenue was $37.5 million, a 57% increase versus the year-ago quarter.

Services revenue came in at $4.9 million, up 71% versus a year ago.

Services revenue represented 12% of our total revenue, and we now expect it to be between 10% and 12% of total revenue for the remainder of this fiscal year.

I'll now turn to our quarterly business metrics.

Our total domain-based customer count at the end of the second quarter was 76,693.

These customers continue to represent approximately 96% of our total ACV, and ISP customers, which represent individual and very small teams using an ISP-based domain, represented the other 4%.

We saw very positive growth in our largest customers this quarter, with 4,956 customers now paying us $5,000 or more per year and 298 customers now paying us $50,000 or more per year.

These customer segments grew year-over-year by 76% and 146%, respectively, and now represent approximately 60% and 22% of total ACV.

As of the end of the quarter, our average ACV per domain-based customer increased 49% compared to the same period a year ago as customers continued to deploy Smartsheet into more areas across their organizations.

And as I mentioned earlier, our dollar-based net retention rate was 131%.

We now expect dollar net retention rate to be above 126% for the remainder of this fiscal year.

Next, I'll provide color on the rest of our income statement and a few highlights from our balance sheet.

Unless otherwise stated, all references to our expenses and operating results are on a non-GAAP basis and are reconciled to our GAAP results in the earnings release that was posted before the call.

In the second quarter, overall gross margin was 82% versus 80% a year ago and 80% in the prior quarter.

Subscription gross margin was 88%, 1 percentage point more than the prior quarter.

The improvement was driven primarily by cost efficiencies and hosting-related services.

As we continue to migrate services to the public cloud, support international expansion and serve the government sector industry, we expect our gross margin to more closely reflect our long-term margin of 78% to 80% over time.

Professional services margin was 30%, up from 29% in Q1, driven by higher utilization of our consulting staff and continued strength in training.

As we add headcount to support growth, we expect the professional services margin to be closer to our annual target of 20% in the second half of this fiscal year.

Turning to our operating expenses.

General and administrative costs in the second quarter were $7.4 million, representing 17% of total revenue, up from 16% of revenue in the same quarter a year ago and in line with the prior quarter as we continue to absorb the incremental cost of operating as a public company.

Research and development was $13 million or 31% of total revenue.

This compares to 27% of revenue a year ago and 34% of revenue in the prior quarter.

We plan to continue to make substantial investments in our product to support the expanding appetite of our enterprise customers for more capabilities.

Finally, sales and marketing expense was $22.9 million or 54% of revenue versus 62% of revenue a year ago and 60% of revenue in the prior quarter.

We expect sales and marketing as a percent of revenue to increase in the third quarter as we incur incremental costs for our ENGAGE customer conference and our marketing initiative.

Over time, we expect to realize leverage across all of our operating spend categories as we scale the business, but our near-term focus continues to be enhancing our product and driving growth in market adoption.

Turning to operating loss and free cash flow.

Operating loss was $8.7 million, representing a negative operating margin of 21%.

Approximately 68% of our total expense is headcount-related, and we added 74 employees across of the organization during the quarter.

Free cash flow was negative $4.2 million, which includes CapEx spend, capitalized internal-use software and principal payments on leases totaling 7% of revenue.

The increase in CapEx spend relative to the prior quarter is related primarily to the expansion of our Boston office.

Now turning to billings.

Our second quarter billings were $52.2 million, up 55% versus a year ago.

Approximately 88% of our subscription billings were annual and the remainder were monthly, with quarterly and multiyear billings representing about 1% of the total.

In the second quarter, we billed a larger number of enterprise renewals, including the renewal for our largest customer.

In the third quarter, we have fewer large enterprise renewals.

As such, we expect our third quarter billings to be lower in absolute dollars than the second quarter, which is consistent with our year-ago trend.

I will now provide our guidance for the third quarter and the full fiscal year 2019.

This guidance reflects our plan to reinvest the majority of upside back into the business, specifically in our product capabilities and our sales and marketing efforts, which includes the increased marketing cost mentioned earlier.

For the third quarter, we expect total revenue of $43.5 million to $44.5 million, representing year-over-year growth of 48% to 51%.

We expect non-GAAP operating loss to come in between $17 million and $16 million and non-GAAP net loss per share to be between $0.16 and $0.15 based on weighted average shares outstanding of 102.8 million.

For the full fiscal year, we expect total revenue to be in the range of $167 million to $169 million, representing growth of 50% to 52%.

Non-GAAP operating loss is expected to be between $57 million and $53 million.

We expect non-GAAP net loss per share of between $0.56 and $0.52 for the year based on approximately 99.2 million weighted average shares outstanding.

For fiscal year 2019, we expect billings to be in the range of $201 million to $204 million, representing growth of 48% to 50% versus last year.

As I mentioned earlier, we expect billings in the third quarter to be lower in absolute dollars than the second quarter due to the timing of larger enterprise renewal.

We are also updating our free cash flow guidance for the year to be up to negative $24 million as we continue to make investments in our business and leave flexibility in the second half to do more based on strategic priorities.

We expect cash burn to be equally distributed between the third and fourth quarters.

To recap, we were very pleased with our second quarter results as demand for our work execution platform remained robust.

We continued to develop new products and features such as our Accelerators and enhancements to our mobile solution.

And as we look forward to the remainder of the year, we plan to continue making investments that help our customers reap even more benefits from our platform.

And with that, we'll now turn it back to the operator to take your questions.

Operator?

(Operator Instructions) Your first question comes from Stan Zlotsky with Morgan Stanley.

Maybe just starting on the first one, which is you are seeing a great momentum within the larger customers, particularly the $5,000, especially the greater than the $50k ACV customers, which, I presume, is a function of the strategic sales force that you've been really building out.

Maybe just some qualitative comment on how the broader sales -- the strategic sales force is -- has performed into the first half of the year and how it's looking for the second half of the year, especially with the enterprise -- the heavy enterprise skew that we tend to see in the back half of fiscal year.

And then a quick follow-up.

Yes.

This is Mark, Stan.

I would say it's a combination of 2 things: one, the people; and then the offerings that those people are able to bring in the market.

And I think the company has really made progress from having a horizontal platform or tools that people can use to their advantage to now strategic reps being able to go in with solutions.

And that is distinctly different than selling licenses that enable people.

So it's the combination of one and the other.

I would say that strategic sales team is growing, and we're able to be in market with people.

When I visit some of our larger customers and I see how they respond to our team being in their buildings, helping them and helping counsel on how they can best take advantage, people are responding really well.

We exited last year with a pretty small strategic team, call it 5%, 5% of our total quota-carrying rep base.

As that team has more than doubled in size now and we look to tripling that, we're looking to make sure that those type -- that type of behavior and that type of response from customers stays in place.

But I would say it's a balance.

It's a balance between having people in market and then changing the offering that we are able to show them.

Perfect.

And that actually, I think, segues well into my second question, which is the Accelerators, which, I think, is a very interesting portion of your product portfolio, especially considering the 2,000-plus use cases that you already have in the system.

So just to the Accelerators that you already announced, what are some other use cases that you think would be a great opportunity for these Accelerators?

And maybe just remind us, how are these Accelerators priced when you walk into a customer?

Thanks, Stan.

This is Gene Farrell.

Let me start first with kind of how we structured Accelerators, and I'll talk about use cases.

So accelerators are a packaged solution, so they have a -- typically, they're sold with a combination of reoccurring software revenue for the actual solution itself and then a services package that's usually for some customization and then on-boarding services.

So the idea is that this becomes something that customers can get started with really quickly.

It doesn't require a heavy consulting engagement to get going.

And we are actually seeing demand across almost every kind of vertical and horizontal use case for higher-value solutions.

We chose the first 3 really based on where we saw the most customer demand, and our plan is to announce additional Accelerators over the balance of the year.

Our next wave of Accelerators are going to focus on a specific vertical around sales processes.

And I can't get into the specifics of the exact Accelerators we'll be launching, but you'll see more announcements on that in the coming months.

And then pricing, sorry.

And then the third thing you asked is around pricing.

And today, our Accelerators pricing varies by the type of solution, but all of them are priced in the 5 figures.

Your next question comes from John DiFucci with Jefferies.

I have one question, but I think there's 3 questions in my question, so I'll just ask this one.

First of all, the results look really strong, and we calculate that new subscription annual contract value accelerated in the quarter.

The year-over-year growth rate increased.

First, I guess, I know that's not a term, something you're going to talk about in detail, but is that directionally accurate?

And second, is that -- it sounds like that's more to do with your expand.

The land-and-expand model is more to do with the expand.

It sounds like it's really working really well.

And if that's the case, capturing new customers can result in meaningful traction over, perhaps, a longer period than we've seen from other software businesses.

So if you could talk a little bit about how that effort's going on, where you're focusing on new customers.

All right.

Well, I'll take the first 2. This is Jenny.

On the subscription growth that you mentioned, the way we calculated the growth rates were about the same.

Well, they were the same as Q1.

So we were happy with the performance.

With respect to -- we are doing about 3 quarters of our booking -- or expansion.

1 quarter is new.

That's where it's trending now.

Expansion is definitely an important part of the play here given that people land pretty small and then grow over time.

Do you want to talk a little bit about the strategy for new?

Yes.

On the new side, John, it's really across a couple of dimensions.

The first is acquiring larger entities that have high potential to invest and to really generate value with our platform over time.

So that -- that's indicative, like the 26 Fortune 500 that we added this last quarter.

And then other investments that are continuing on the digital motion, which really cater to a very deep stack of potential buyers.

We think there's still considerable work that we can perform on that front, which is servicing solutions, making it very high-velocity sales, low touch.

And I would say more of the emphasis this year in the dollars have been deployed against the higher potential, and we think there's great opportunity for the rest of this year and next year in terms of optimizing the digital sales motion.

And it's kind of interesting because the digital sales motion is what the company was -- really commenced on and was shaped around, and then we extended into a sales-assisted motion.

And really, for rest of this year or maybe next year, it's going to be balanced across both.

Great.

That's helpful.

If I could just -- I just thought of a follow-up, Mark, when you were talking about that.

Can you tell us -- I know it's really early, but can you talk a little bit about international traction?

I know you just -- sort of just started to put salespeople in international regions, but are you seeing any uptick there yet?

Or is it just too early for that?

Yes.

What we're starting to see -- what gives us confidence about getting team over there is in the last quarter, we already had dedicated territories covering the region.

So those were sales individuals and customer success people reaching over to Europe from Boston.

And the customer reaction we found from having dedicated coverage, even a couple thousand miles away, was very positive.

So what we're starting to see evidences of -- starting to see evidence of in international is really the belief that the remote territory should be able to produce expansion rates now, I guess, to what we have here in the U.S. And there's nothing -- people have needs globally, and if you cater to those needs in a comprehensive way, they should respond.

So the evidence we saw last quarter on the international direct territories out of Boston positive, gave us a lot of confidence in continuing to -- with that plan that we had set forth in the beginning of the year, which was to get people on the ground over there.

Your next question comes from Bhavan Suri with William Blair.

I'll try to keep it to 2 specifically here.

But first, just on the R&D spend, as you think about sort of R&D, how do you think about spreading that between, obviously, Accelerators, which are driving great growth, and then sort of just product enhancements, product expansion and sort of new feature functionality outside of Accelerators, connectors, whatever it is?

How should we think about how you guys think about that?

Bhavan, this is Gene Farrell.

I would say that for us, it's -- I would -- so let me start by saying that about 95% of our road map, really, is driven by feedback and input we get from customers.

And we've been spending a lot of time with customers.

We actually just had our first product advisory committee a couple of weeks ago and had 11 of our customers in and deeply engaging around our road map and in the areas we're investing.

And I would tell you that we're really trying to balance a combination of how do we address known pain points or improvements that we can make in our existing offer and for our customers that said, hey, I love this feature, but if you could just have it do this or if you could just add this capability.

And so we'll continue to invest in the core and then really investing in how do we move to support higher value, more complex use cases for customers.

And that's what you're seeing with Accelerators.

That's what you're seeing with the investments we're making in automation and workflow and really being able to support where customers have said, hey, I really like what you're doing here, but I want to be able to support these more complicated workflows or more complex workflows.

And so you'll continue to see us investing there.

And then I'd say the third area is really around driving engagement overall with our platform, both between our existing customers and then the partners that want to try and engage and build solutions on top of our platform.

And so we're building features that enable that both end users to be able to do more and partners to be able to build solutions on top of us.

And obviously, the expansion piece has worked out well, so congrats there.

I guess one for the team there.

So when you look at the sales priority, you've obviously had a ton of the free collaborators.

And I guess I'd love to understand some of the strategies you're deploying, so maybe a little more tactical question.

But sort of what strategies have been deployed to increase the conversion rates from free to sort of paid?

How do we think about how you guys are tackling that market, think about saying we've got a ton in the pipeline?

If I think about the funnel, it's huge on the free side but the sort of conversion piece.

And have you seen that accelerate?

Yes.

I think that the way that we think about collaborators is it's really one of the best ways to introduce individuals to the power of our platform because we allow free collaboration and sharing.

They can onboard and see the power of Smartsheet.

We think it's really our responsibility to make sure that, that collaboration experience is engaging, intuitive and that they -- those collaborators then see the power of Smartsheet.

And then importantly, we're running more plays to suggest to collaborators how they can do more by having a license.

And so there are a number of different plays that we run, both with the in-app experience and through the collaborator process, where we suggest to them that they can do more and get more power from Smartsheet by being a licensed user.

And we'll continue to refine that over time.

And I think one thing to add there, Gene, is as you were saying, as the offering gets bigger and our capabilities increase in number, the opportunity to also not have to give all capabilities to everybody exists, right?

So compare what we offer today versus what we had a year ago, 2 years ago, collaborators historically have had access to everything.

And in some cases, they're extraneous.

In other cases, there's a lot of value assigned to those.

So we get to exercise that choice, long term, on what we provide to that huge population.

I think there will be opportunities for us to be able to, as Gene said, get people to shift from one to the other based on what we introduce.

Absolutely.

Your next question comes from Terry Tillman with SunTrust.

I'll echo my congratulations.

First question, Jenny, for you, just relates to -- I don't know if you had said it earlier in the call and I missed it, but the actual quantification for the user conference expense in the third quarter.

I know that's one of the reasons for the seasonal increase.

And then secondly, for you, Jenny, is, is there some sort of potentials sales lift that we could see coming out of the conference?

In other words, it's an opportunity to sell, and so we could see some benefit to billing, either late in the third quarter or in the fourth quarter.

And then have a follow-up.

Okay.

First one on the user conference, I didn't give out the expense, but it's a couple million dollars.

You can put that into your model.

And in terms of sales lift, I mean, we factored that in -- a potential sales lift into our guidance for the year.

What's your third question?

Well, yes, just the other -- the other question just relates to the connectors.

Maybe an update on the -- and I'm not sure who this is for, but just I'll start out with the team.

But just quantification on what kind of revenue uplift you're getting from connectors.

And have you all been able to look at some sort of correlation on customers that use more connectors going bigger with the platform or being bigger ACV customers?

And again, nice job.

Hey, Terry, can you just repeat that question?

Terry?

Jenny, can you hear me?

Yes.

Can you repeat that real quick?

Yes, sorry about that.

Yes, just the question relates to the connectors, its revenue monetization opportunity.

So what kind of uplift are you getting from connectors?

And have you all been able to look at data that talks about the more connectors being leveraged in terms of like integrated workflows, those correlate with bigger customers on average?

Yes.

So the connectors are a small percentage of our total revenue right now.

It's about 2%.

But to your point, I think it adds a ton of value.

And we are seeing, in terms of bookings, a larger number than the 2%.

Yes.

I think the other thing I would add to that is in general, customers that use connectors are typically deploying higher-value solutions on Smartsheet and also typically tend to have more use cases across the organization.

And so I think that -- I personally don't think of connectors as much as a primary revenue driver as much as they are a way to be a more strategic app for our customers and create a faster spinning flywheel over time as we support broader use cases across an enterprise.

Your next question comes from Mark Murphy with JPMorgan.

This is Pinjalim sitting in for Mark.

It seems like most of the questions have been asked.

But on a high level, Mark, as you look forward to, say, the next 3 years, what are some of the areas that you'd say you are betting at this point in time and maybe, at this point in time, you'd characterize that real wild cards that could positively impact growth in the future?

I think one of the things that we highlighted during the roadshow was this very significant untapped population of business users who have not really been empowered fully to deploy tools to their advantage.

So when we think about what we build in terms of horizontals, what we build in solutions, it is really catering to enable that population.

So in terms of upside, it's pretty consistent with what we've said for the last year.

And how we position ourselves to enable those people in an IT-conforming manner, which is secure and scale like that combination, is the big thing.

Now as Gene spoke of, it's not just us building discrete features.

It's us building discrete capabilities combined with solutions, combined with enabling third parties to do that on our platform.

So when we think about our vision, it is not putting us in the way of sales velocity.

So how do you get other people who have IP, who have ideas productive on your platform?

So you asked the 3-year horizon.

It is absolutely part of the 3-year horizon.

The third-party enablement is not a big portion of our financial plan this year, but we do see that composite of Smartsheet-driven and third party-driven offerings to be very, very significant over time.

Interesting.

And if I can, quickly, Jenny, the dollar-based net retention, obviously, pretty solid.

I think I heard that gross retention improved.

Did I hear that correctly?

And what is driving that?

Yes.

I would say that the loss rate was 11% the last time we talked to you guys, and it's still around -- it's still 11%, but it's coming down.

It's closer to the 10.5% now.

So if you take that, then our gross retention has improved.

Your next question comes from Robert Simmons with RBC.

Could you give us a little color on what drove the acceleration in your billings growth this quarter?

In the what growth?

The billings.

There's a nice pickup in the year-over-year growth in your billings.

Oh, yes.

Yes, so we have some very strong, very large transactions that were above the 25k mark this quarter, and so that was very helpful.

Just generally from seasonality, Q2 tends to be a stronger quarter for enterprise upsales and renewals, and so that was what drove the improvement from Q1.

Okay, great.

And then beyond like the integrations that you were talking about, are there any other notable recent product updates that you can give us, things like in-app purchasing?

Well, I can tell you that we have a customer conference coming up in about 4 weeks, and you should stay tuned for that because we have a lot of new product capabilities that we'd be announcing at that time.

(Operator Instructions) There are no further questions at this time.

I will now turn the call back over to the presenters.

Great.

Well, thank you for joining us today for our second quarter conference call.

We look forward to speaking with you again next quarter.

This concludes today's conference call.

You may now disconnect.