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Model N (NYSE:MODN)
Q3 2019 Earnings Call
Aug 06, 2019, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Greetings. Welcome to Model N's third-quarter 2019 earnings call. [Operator instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Dave Barter, chief financial officer.

Thank you. You may begin.

Dave Barter -- Chief Financial Officer

Good afternoon, and welcome to the earnings call for Model N's third-quarter fiscal year 2019, which ended on June 30, 2019. This is David Barter. I'm Model N's chief financial officer. And with me on the call today is Jason Blessing, Model N's chief executive officer.

Our earnings press release was issued after close of market and is posted on our website, where this call is being simultaneously webcast. The primary purpose of today's call is to provide you information regarding our third quarter of fiscal year 2019 performance and our financial outlook for our fourth quarter and full-year fiscal 2019. Commentary made on this call may include forward-looking statements. These forward-looking statements are based on management's current views and expectations as of today and should not be relied upon as representing our views as of any subsequent date.

We disclaim any obligation to update any forward-looking statements or outlook. Actual results may differ materially. Please refer to the risk factors in our most recent Form 10-Q filed with the SEC. In addition, during today's call, we will discuss non-GAAP financial measures.

These non-GAAP financial measures should be considered in addition to not as a substitute for or in isolation from the GAAP results. Reconciliation of the non-GAAP metrics to the nearest GAAP metrics are included in the earnings release issued today, which is available on our website. I encourage you to visit our Investor Relations website at investor.modeln.com to access our third-quarter fiscal year 2019 press release, periodic SEC reports and the webcast replay of this call. Finally, unless otherwise stated, all financial comparisons in this call will be to our results for our third-quarter fiscal year 2018.

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

Jason Blessing -- Chief Executive Officer

Thank you, David. Good afternoon, and thank you, everyone, for joining us today. Q3 was another well-executed quarter, and we again delivered results that came in above our guidance. We are now four quarters into running a more focused go-to-market plan, and I'm encouraged by the progress we continue to make.

I would like to thank the entire Model N team for working hard to implement the adjustments we've made to the business. And I would also like to thank our customers and our investors for their continued support. Total revenue for the quarter was $34.7 million. The overperformance was primarily driven by our subscription revenue, which was $26.6 million.

The momentum is directly tied to strong bookings, which again grew in excess of 25% year over year. The top-line performance was complemented by improving levels of profitability and cash flow. Non-GAAP subscription gross margin climbed to a new record of 71%, adjusted EBITDA was over 9% and free cash flow improved to nearly $5 million for the year. When I joined the company last May, I said, I was committed to driving profitable growth and improving gross margins and cash flow.

Our team continues to deliver on this commitment. In the third quarter, we once again saw strong performance in our new logo business. Our success winning new accounts is tied to the additional focus we introduced to our go-to-market team in this area four quarters ago. I believe, we're still in the early stages of this strategy, driving bookings growth, and I expect this trend to improve as account executives have additional time to work their more focused territories.

We will continue to monitor the adjustments we've made in our go-to-market approach and thoughtfully invest to ensure that we capitalize on our market opportunity while balancing growth with profitability. A signature win for us in the third quarter was a new logo in high tech, with one of the leading component manufacturers in the world, with over $20 billion in revenue. This market leader is pursuing an M&A strategy to roll up their segment, and Model N will be the platform of the future to unify their end-to-end processes for quoting, contracts, pricing analytics and rebate calculations. This is a very exciting win for us, and we expect this customer to have a series of successful go lives over the next year.

We also saw new logo momentum in life sciences, as we signed new customers in both the medical device and pharmaceutical segments. Life sciences is a vital sector of the global economy and relies on sophisticated software to price and distribute its products. Our company was born in this complex market, and we started by serving the largest life sciences companies in the world. As a result, we know this market as well as anyone.

This domain expertise, combined with our cloud products and rapid implementation offerings, now allow us to serve virtually any company in this market. This represents a very compelling multiyear growth opportunity for us. I continue to spend a significant portion of my time in the field with our customers and our project teams. It's clear to me from these meetings that our more focused go-to-market approach is well received and it will pay dividends in the coming years as these tighter relationships yield additional sales opportunities for us.

As we have talked about in the past, we believe this expansion opportunity in our customer base represents over $400 million in incremental recurring revenue. Another point that resonates with me in these conversations is how dynamic our customers and markets are. life sciences is a highly regulated market with ever-changing rules, but it's also a highly competitive market. Stories about this are chronicled in the news headlines on a daily basis.

Our high tech customers also face increasing regulatory pressures in the form of tariffs that makes selling through complex channels even more difficult on top of an already demanding commercial environment. M&A is another factor that also continues to play a large role in shaping the high tech and life sciences markets. Our customers and prospects are increasingly turning to us for help, as we offer industry-specific cloud solutions for managing pricing, quoting, contracting and complex channel incentives. As I complete my fourth full quarter with the company and start looking to fiscal year 2020, I would like to share a few thoughts and observations with you on our strategy, people and company performance.

First, a more focused Model N is a much better Model N for customers and investors. Ultimately, focus is what will enable Model N to realize its full potential. With four quarters of more focused execution under our belt, we have proven that we're a company that can grow bookings in excess of 25% serving these vibrant global markets. We believe we are still in the early days of this journey.

As you can imagine, it takes more than four quarters to fine tune a company's strategic focus. But without a doubt, we're heading in the right direction as evidenced by our bookings momentum and improving margins and cash flow. Because of this, I am confident that the more we focus in our core markets, where we have great product and domain expertise, the better we will perform as a company. I also believe we are building a leadership team at Model N that has the experience to capitalize on this special market opportunity.

Over the past year, we have filled gaps in the leadership team and upgraded key positions with executives that have proven track records for success at well-known companies. I have committed to our customers, employees and shareholders that I will continue to put the very best team on the field to ensure that we take advantage of this unique market opportunity. Finally, we're favorably positioned in a dynamic market and we now have a team that is consistently executing. The market opportunity and team combined with the fact that our ASC 606 and business model transition are now behind us, position the company to drive meaningful improvements in our financial metrics in 2020 and beyond.

These improvements will include new subscription revenue growth of approximately 20%, combined with expanding levels of profitability and cash flow. David will offer additional perspective on 2020 in his prepared remarks. I am pleased with the progress we have made over the last four quarters. I'm looking forward to a strong Q4, and I'm incredibly excited to kick off fiscal year 2020.

Now, I would like to turn the call over to David to elaborate on our financial results and our guidance. David?

Dave Barter -- Chief Financial Officer

Thank you, Jason. Q3 was another quarter of consistent execution. We're having success winning new logos and scaling the business, which is leading to healthy growth, subscription gross margin, adjusted EBITDA and cash flow. Let's now turn to some third-quarter highlights.

As a reminder, the results for Q3 are based on the modified retrospective adoption of ASC 606. Total revenue was $34.7 million and ahead of our Q3 guidance range of $33.9 million to $34.3 million. The outperformance was primarily driven by our subscription revenue, which was $26.6 million. This exceeded our guidance of $26.0 million to $26.4 million and represented steady sequential growth.

It is important to note our subscription growth is being driven by the sale of subscriptions to both new and existing customers. This is partially offset by legacy maintenance revenue, which continues to trend slightly down each quarter, which is in line with the expectations we shared at the start of the year. Professional services revenue was $8.1 million for the quarter. As mentioned on our last call, professional services revenue will start to grow sequentially in Q4, which is reflective of the new subscription bookings growth, Jason highlighted.

Non-GAAP gross profit for the third quarter was $20.3 million or 58% of revenue. Gross margin for subscription revenue was 71%, a substantial improvement over the 65% in Q3 of fiscal 2018. Gross margin for professional services was 17%, which was in line with our expectations. Non-GAAP operating profit for the period was $3 million.

This exceeded our guidance of non-GAAP operating profit of $1.4 million to $1.8 million, and reflects our focus on scaling the business. Non-GAAP net income in the third quarter was $2.1 million. We produced a non-GAAP net income per share of $0.06, which was well ahead of our guidance of $0.00 to $0.02. Adjusted EBITDA for the third quarter was $3.3 million, which was well ahead of our guidance of $1.8 million to $2.2 million.

It was driven by the improved mix of subscription revenue and the strength in our gross margins. It also reflects our strategy to invest in long-term growth while driving enhanced levels of profitability. Turning to the balance sheet. We ended the third quarter with $58.5 million of cash and cash equivalents compared with $54.1 million at the end of the second quarter.

Free cash flow generated was $4.6 million through the end of the third quarter. We remain confident in our ability to generate $8 million to $10 million of free cash flow this fiscal year. I would also like to note that on July 1, just after quarter end, we repaid another $5 million of our term loan. Over the last 12 months, we have paid down 25% of our debt.

We continue to strengthen the overall financial profile of the company. As our free cash flow continues to improve, we expect to further reduce our outstanding debt and increase our net cash position. Looking ahead to the fourth quarter, we expect total revenue to be in the range of $35.5 million to $35.9 million. And within this, we expect total subscription revenue to range from $26.8 million to $27.2 million.

This reflects healthy new subscription growth, and we expect legacy maintenance to continue to trend down slightly. Non-GAAP income from operations is expected to be in the range of $3.2 million to $4.2 million. This would lead to a non-GAAP net income per share of $0.06 to $0.10, based on a fully diluted share count of approximately 33.5 million shares. Adjusted EBITDA is expected to be in the range of $3.5 million to $4.5 million.

As you consider the Q4 guidance, please note the sequential improvement in the business, which highlights the headwinds from ASC 606 and the business model transition have begun to moderate. For full-year fiscal 2019, we are raising the midpoint of our revenue and profitability guidance. We expect total revenue to range from $140.1 million to $140.5 million. We now expect total subscription revenue to range from $104.6 million to $105 million.

We expect non-GAAP income from operations in the range of $10.2 million to $11.2 million, and non-GAAP income per share in the range of $0.16 to $0.20, based on a fully diluted share count of approximately 33 million shares. Adjusted EBITDA is expected to be in the range of $11.5 million to $12.5 million. We continue to expect free cash flow to be in the range of $8 million to $10 million, a meaningful 4x increase on our fiscal year 2018 free cash flow of approximately $2 million. Looking out to fiscal year 2020, I would like to share some very preliminary perspective.

Please keep in mind, we still need to wrap up Q4 and then I will provide guidance in November, when we release our fiscal year 2019 financial results. We expect total revenue and total recurring revenue growth in the very high single digits. This will be fueled by our new subscription revenue, which represents more than half of our recurring revenue, and we expect it will grow approximately 20%. We expect legacy maintenance revenue to decline in the single digits, as we have not sold perpetual licenses for several years.

And finally, we expect professional services revenue will grow in the very high single digits as we continue to leverage partners. In fiscal year 2020, we will provide an additional level of detail on our revenue mix, so that it is easy to track our progress and the growth driven by the sale of new subscriptions, as we believe this growth rate is the key indicator of the company's long-term growth. We're incredibly excited to wrap up Q4 and to begin fiscal year 2020, which we believe will mark the beginning of a long period of top-line growth and expanding levels of profitability. As always, thank you for joining today's call, and I will now turn the call over to the operator for questions.

Operator?

Questions & Answers:


Operator

[Operator instructions] Our first question is from Koji Ikeda with Oppenheimer. Please proceed.

Koji Ikeda -- Oppenheimer and Company -- Analyst

Hey, great quarter, guys. And thank you for taking my question. Just had a question here on the new customers that were added in the quarter. I read in the press release the revenue ranges were anywhere from a $1 billion to $20 billion, which is actually quite a range there.

I was wondering if you could talk a bit about what are the core drivers that is driving that new customer acquisition? And are the drivers the same for that $1 billion revenue customer versus the $20 billion revenue customer or are they a bit different? Thank you.

Jason Blessing -- Chief Executive Officer

Hey, good afternoon, Koji. Thanks for the question. So Yes, I would say, every single one of our customers that comes to us, whether it's in high tech or life sciences has one of three issues. One, they've got revenue leakage around existing contracts they have in place, so essentially pricing compliance.

They have an issue potentially with managing their prices globally and driving the best price and best economics on a global basis, or they have simply just compliance issues with government tariffs, government pricing and so forth. So those are really the three business problems that companies have that really transcend size and vertical for us. So there's very much commonality. In terms of the revenue mix or excuse me, the customer mix, I'd say we tend to see more large customers on the high tech side of things, just because that's the second vertical we got into after life sciences.

And so just by definition, there's a little less penetration at the top of the market for us there. And then on the life sciences side, given that the heritage of the company was in life sciences and really focused on the top 50 or the top 100 life sciences companies in our early years, we tend to have a little higher penetration there. But as you get into the mid-market, they still have the same complexities and issues that the largest companies have, and that's what's driving them to us. And now, we'd say, also with our ability to deploy in the cloud and some of our templatized implementations, we're able to reach the mid-market and provide a favorable price point.

Koji Ikeda -- Oppenheimer and Company -- Analyst

Jason, thanks for that. And just another question here, if I may. It looks like the fiscal third quarter was another good execution quarter, and the business is generating cash. It sounds like the go-to-market strategy is really beginning to click.

And David, if -- I think I heard that right for the early, early fiscal 2020 guide, you're talking about subscription revenue growth of around 20% is the right way to think about it. I mean, it sounds like everything is going in the right direction. Why not invest more for growth today?

Dave Barter -- Chief Financial Officer

Well, I think right now, when you think about it, Koji, and if you were to going to go back and you think about what we shared in our remarks around four quarters and what we've done so far, a lot of it was focusing in on life sciences, a lot of it focusing on high tech and really kind of go into that area where we have deep domain expertise and our products are really sticky. And so when you thought about the way we approach our resources this year, and I think what you heard in Jason's remarks, we had some open roles to fill and we've been filling some open roles. I think there's been some elements around putting almost a more talented team on the field. And so I think, for us, I think, we're getting the leadership team in place.

I think we're moving the pieces in areas where they're most productive and they produce the best unit economics. And so as we think about this, we may continue to build, I think, every quarter as you know. And I think we conclude in our remarks, we're always -- we go to this process of where do we invest. We assess our investment landscape, and we will do some true-ups and we're continuing to push on that opportunity.

So I would want you to think of us as not in investment mode, but think of us as in thoughtful investment mode to make sure that we do kind of continue to have this good balance between growth and profitability.

Jason Blessing -- Chief Executive Officer

Yes. Koji, I would just amplify what David said. I mean, there was a lot of opportunity for us, kind of, operating within our existing investment envelope to redirect product services, sales and marketing resources as we started to deemphasize some markets and reemphasize life sciences and high tech. So we certainly felt, for this year, as we head into next year, the investment levels were appropriate.

We're really gaining a lot through redeployment of resources and better productivity. But I think the indications of those changes are very positive for us. We're showing that there is a very vibrant new logo market, we have a significant opportunity in our customer base and we'll continue to invest to make sure that we fully capitalize on that.

Koji Ikeda -- Oppenheimer and Company -- Analyst

Great. Thanks for taking my question. And congrats on a great quarter. Thank you.

Dave Barter -- Chief Financial Officer

Thanks, Koji.

Jason Blessing -- Chief Executive Officer

Thank you, Koji.

Operator

Our next question is from Ryan MacDonald with Needham and Company. Please proceed.

Ryan MacDonald -- Needham and Company -- Analyst

Good afternoon Jason and congrats on the great quarter. I guess, starting off, obviously, really impressed by that great win in high tech. It seems like, obviously, outside of the main life sciences area where you have that main domain expertise that that high tech area tends to be a little bit more competitive, can you talk about sort of what some of the differentiators were for Model N to get such an impressive win?

Jason Blessing -- Chief Executive Officer

Yes. Whether it's in high tech or life sciences, I mean, we really position and differentiate on a unified suite all the way from contracting and analytics, all the way through to compliance and the full suite on unified platform. So for us, we do see competition, but they tend to be point suppliers that can't meet the full requirements of a business. And so that continues, the suite continues to be the key differentiator for us.

Ryan MacDonald -- Needham and Company -- Analyst

Got it. Great. And then just as a follow-up. As we look at sort of the existing customer base and sort of the migrations and SaaS transition projects.

One, can you sort of update us on sort of where that stands? I believe last quarter, you said it was about half a dozen. And are you seeing any sort of increased velocity in the conversations now post-Gilead go live?

Dave Barter -- Chief Financial Officer

Yeah. Great question, Ryan. So yes, as we reported last quarter, Gilead went live. And then I think the other notable piece and news related to Gilead was in Q3, they came off the enhanced type of care that we provide to any large customer after go live and had a very uneventful conversion.

So the fact that that project happened on time, on budget and basically the schedule after go live has given us a tremendous amount of confidence as we look forward. I would say this year, SaaS transition bookings have been a bit of a supporting cast member. We've done deals every quarter. As you pointed out, we've got probably a dozen or so projects that are in flight in varying degrees of progress.

But it's been a supporting cast member to just great organic growth this year, but it has also been very much a topic of discussion with customers. And I think, certainly, as we have proven with Gilead, as we've proved with some of these other large projects that are in flight that we're able to handle largest customers in the world. I think this trend is going to continue to materialize in our business as we discussed over the next couple of years.

Ryan MacDonald -- Needham and Company -- Analyst

Thanks. Congrats again.

Dave Barter -- Chief Financial Officer

Thank you, Ryan.

Jason Blessing -- Chief Executive Officer

Thank you, Ryan.

Operator

Our next question is from Ilya Grozovsky with National Securities. Please proceed with your question.

Ilya Grozovsky -- National Securities -- Analyst

Great. Thanks. Just wanted to get a little bit of a better understanding about your longer-term outlook. I get that this year with the 606 transition, top line from a year-over-year perspective looks a little bit different than it did last year.

When you talk about single digits next year, that would be an apples-to-apples to this year and 606. So do you sort of is that where you're comfortable kind of looking out as -- in terms of Model N's top-line growth, high single digits or? Because in the past, you guys have obviously grown faster. Thanks.

Dave Barter -- Chief Financial Officer

Thanks, Ilya, for the question. I appreciate it. And it's a great point to press on. I think our long-term model and the framework that we've shared is a model that we still feel very comfortable with.

I think a good way to think about the single digits, when you think about companies, obviously 606 probably made it more complicated, but even when you complete that business model transition and you start to enter the expansionary phase, it's not uncommon actually to be in the single digits before you get back into that double-digit mode that you expect to be. And so for us, I think, we're incredibly excited that the new subscription, this element around hunting and expanding relationships is feeding a growth rate at about 20% as we shared in our remarks. And we think that actually set the tone for how we will grow long term and actually be in the double digits. And so think of this as we go into fiscal '20, that transitionary year that Adobe went through and others went through, and then you expand and then you grow from there quite profitably.

Ilya Grozovsky -- National Securities -- Analyst

Got it. OK. Thank you.

Dave Barter -- Chief Financial Officer

Absolutely. Thanks for the question.

Operator

Our next question is from Chad Bennett with Craig-Hallum. Please proceed with your question.

Chad Bennett -- Craig-Hallum Capital Group LLC -- Analyst

Great. Thanks for taking my questions guys. So I've been hopping between a few calls, so I apologize if I'm redundant in here. But in the preliminary fiscal '20 outlook that you gave, David, I think I heard on the last question there, subscription growth is implied at roughly 20%?

Dave Barter -- Chief Financial Officer

Correct. I think what we shared is that -- what we've been excited about is that we have very quality growth in terms of that sales to new logos and expanding relationships, and then what you'll find is that maintenance will continue kind of coming down in the single digits. And ultimately, that kind of gives you that blended average between the two.

Chad Bennett -- Craig-Hallum Capital Group LLC -- Analyst

OK. And is there any -- I know, it's still early, but in terms of looking out into that 20% maybe. But what are the kind of drivers within that 20%, if we were to break it down between conversions? And then 606 is now behind you, so that has to help a bit. And then maybe looking at, you guys have done some dual ramps and pods and whatnot that hopefully analyze and give you a lift there versus just flat out net new.

Is -- again, I don't want to press you because you just gave preliminary guidance. But just kind of magnitude wise, Jason or David, could you comment on that?

Jason Blessing -- Chief Executive Officer

Yeah. Thanks for the question, Chad. As we get ready to wrap up this year and look into next year, we're expecting more of the same in terms of a very nice mix of bookings between life sciences and high tech. I think we're going to get to the finish line here for this year and have both of those teams be at or above their internal plans.

So we feel good about the momentum both of those teams are showing and then when you double-click into both of those teams, there is a nice mix of new logos as well as sales into the installed base. And we just -- we expect that to continue next year. The reason why we expect it to continue next year is if you just look at some of the high-level metrics that frame up this market that we talked about in the past, I mean, multibillion dollar TAM, $400 million cross-sell, upsell opportunity in our customer base. And then in that $4 billion TAM, roughly a 10% penetration from a logo perspective.

So we really feel like there's some good room to run in these two markets, and we think that the strategic adjustments and the focus that we've put in the business this year allow us to roll that forward into next year.

Chad Bennett -- Craig-Hallum Capital Group LLC -- Analyst

OK. Thanks, Jason. And then maybe a last one for me. Just seasonally, obviously, fourth quarter of the year, you'd expect some uptick on a -- and a pretty strong -- what appears to be a pretty strong billings quarter in June.

I guess, is the expectation that this is going to be a normal year-end kind of bookings billings quarter, Jason, and kind of -- is it heavily skewed either way in terms of conversion activity or net new or any type of color you can give there at least qualitatively?

Jason Blessing -- Chief Executive Officer

Yeah. Certainly, from a qualitative perspective, we're expecting Q4 to look similar to the first three quarters of the year, and we're expecting nice contribution from both of the sales teams that we've got hunting and farming in both high tech and life sciences. I think the -- I also kind of like the dynamic of how our fiscal calendar is set up in that we're in our fourth quarter, so we're motivated to finish the year strong. And then that paves the way into the calendar Q4, which is a key buying season for most of our customers.

So I'm expecting we're going to very busy and have a lot of activity over the next three to six months.

Chad Bennett -- Craig-Hallum Capital Group LLC -- Analyst

Awesome. Nice job on the quarter again guys.

Jason Blessing -- Chief Executive Officer

Thanks, Chad.

Dave Barter -- Chief Financial Officer

Thanks, Chad.

Operator

Our next question is from Patrick Walravens with JMP Securities. Please proceed with your question.

Patrick Walravens -- JMP Securities -- Analyst

Hello. Great. Thank you. And let me add my congratulations.

So I have kind of a big picture question, which I think you both probably have a good perspective on, which is -- I mean, Jason, you're at Taleo and PeopleSoft, which are kind of horizontal. And then you are Plex and now Model N, which are vertical. How do you think the critical success factors differ for running a vertical SaaS business versus a horizontal one?

Jason Blessing -- Chief Executive Officer

Well, I think the -- the thing I've really noticed, Pat, in my first year here really, developed a pretty intimate appreciation for is the domain expertise that's required to run vertical software companies. I saw it in my last company, the importance of manufacturing and the vertical expertise. But I will tell you the level of complexity in life sciences, particularly where we sit at that nexus of lifesaving therapies and government regulation, the complexity is, honestly, at a different level. And that I would even say that's true as well in high tech, given some of the trade issues they're dealing with in that industry, national security issues around export that they're dealing with in that industry.

And so I think the thing that really sticks out to me as a differentiator at this company is much, if not more so, than any other vertical company, is just that domain expertise in that level of credibility that we have with our customers. Yes, I think over time, that level of expertise and specific focus on an industry also acts as a flywheel and really helps drive new logo acquisition and add-on sales. And I think, as we've seen in many vertical plays, renewals are also stickier, because it's such an industry-focused solution.

Patrick Walravens -- JMP Securities -- Analyst

All right. Great. You just actually anticipated my follow-up, which was we look at things like Diva, right? As they play out over time, what's different? I think one of their renewals are stickier, is there anything else?

Jason Blessing -- Chief Executive Officer

Yes. I mean, I think renewables and name brand recognition and ultimately being the standard for that that business process and that industry, I think are differentiators. And I think we are well on our way on that path.

Patrick Walravens -- JMP Securities -- Analyst

All right. That's awesome. Thank you.

Jason Blessing -- Chief Executive Officer

Thanks, Pat.

Operator

[Operator instructions] Our next question is from Gene Mannheimer with Dougherty & Company. Please proceed.

Gene Mannheimer -- Dougherty and Company -- Analyst

Thank you. My congratulations also on the good quarter and outlook. I wanted to know if you're able to break out for us the bookings growth across new versus existing customers? Is that something you can provide?

Dave Barter -- Chief Financial Officer

It's been -- yes, Gene, it's been actually pretty balance. I don't actually have the numbers right at my fingertips. But I think we've had pretty good balance. And I think, if you -- when you think about the business over the last five years, I think we've trended pretty evenly across those areas, and I think that's largely playing out this year as well.

Gene Mannheimer -- Dougherty and Company -- Analyst

OK. So it seems like this year with your new sales hires and upgraded leadership there, that I would think that'd be more of a trend toward new business bookings versus couple of years ago. Am I thinking about that wrong?

Jason Blessing -- Chief Executive Officer

Yeah. I would say that's right, Gene. I mean, I would say there's a -- David's right. If you just kind of look at absolute dollars, I think there's a nice mix.

But this year, there has been a tilt toward new logos in terms of absolute new logos acquired. And that's pretty important to me because, one, as I talked about, this is an underpenetrated market where we have a very favorable competitive position. And so claiming more of the market right now in its early years, I think, is smart for us given those assets. But also, I think it drives great customer sales in the out years given that now we have cloud-deployed products where we can land and expand.

And I think that drives growth in the out years. So yes, it's been tilted a bit toward new logo this year.

Gene Mannheimer -- Dougherty and Company -- Analyst

OK. It makes sense. And I know, Jason, there's been a lot of talk this year about Gilead and how they -- a great example of a large pharma going full bore cloud. Are there other large go lives that maybe you're expecting this year that you're able to talk to at this point?

Jason Blessing -- Chief Executive Officer

Yeah. The two that we've mentioned in the past at some of our company events are Novo Nordisk. So a company that, I think, is at least if not bigger -- is big or bigger than Gilead and then Biogen is another sizable company. Both of those companies are fairly far down the road in their conversions, and we're expecting go lives in those accounts, one is end of year and then the second one is in the beginning of next year.

And then we have a variety of other companies that are in various stages of prototyping and planning for projects next year.

Gene Mannheimer -- Dougherty and Company -- Analyst

Very good. Thank you.

Jason Blessing -- Chief Executive Officer

Thanks, Gene.

Operator

That concludes our question-and-answer session. I would like to turn the conference back over to management for closing remarks.

Dave Barter -- Chief Financial Officer

No further remarks. Thanks all for joining. We really appreciate it.

Operator

[Operator signoff]

Duration: 45 minutes

Call participants:

Dave Barter -- Chief Financial Officer

Jason Blessing -- Chief Executive Officer

Koji Ikeda -- Oppenheimer and Company -- Analyst

Ryan MacDonald -- Needham and Company -- Analyst

Ilya Grozovsky -- National Securities -- Analyst

Chad Bennett -- Craig-Hallum Capital Group LLC -- Analyst

Patrick Walravens -- JMP Securities -- Analyst

Gene Mannheimer -- Dougherty and Company -- Analyst

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