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Smartsheet (SMAR 2.91%)
Q4 2023 Earnings Call
Mar 14, 2023, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Ladies and gentlemen, thank you for standing by. My name is Brant, and I will be your conference operator today. At this time, I would like to welcome everyone to the Smartsheet fourth-quarter fiscal 2023 earnings conference call. All lines have been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question-and-answer session. [Operator instructions] Thank you. It is now my pleasure to turn today's call over to Mr. Aaron Turner, head of investor relations.

Sir, please go ahead.

Aaron Turner -- Head of Investor Relations

Thank you, Brant. Good afternoon and welcome everyone to Smartsheet's. fourth quarter of fiscal year 2023 earnings call. We will be discussing the results announced in our press release issued after the market closed today.

With me today are Smartsheet CEO Mark Mader and our CFO, Pete Godbole. 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 Pete's prepared remarks, which can be viewed in the Event section of our Investor Relations website. During this call, we will make forward-looking statements within the meaning of the federal securities laws.

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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 the 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.

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 the U.S. GAAP financials, we will discuss certain non-GAAP financial measures. The reconciliation to the most directly comparable U.S.

GAAP measures 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.

Mark Mader -- Chief Executive Officer

Hello and welcome to our fourth-quarter earnings call for fiscal year '23. Our fourth-quarter results cap off a strong year for Smartsheet, a year in which we extended our leadership position in collaborative work management, delivered our best year ever for new customer bookings, acquired Outfit to strengthen our marketing and creative management solutions, added 2.2 million users to the Smartsheet platform, and generated positive free cash flow for the year for the first time. While Pete will provide additional details, I want to call out some of our highlights from the quarter. Revenue for the quarter was $212 million, up 35% year over year.

We added $62 million in annual recurring revenue in Q4, bringing our total ARR to more than $854 million. In Q4, we saw expansions at Volvo, USA Today, and Allscripts, among many others, and we had new customer wins at companies such as Dassault Aviation, cameras, and Xperia. Our expansion motion within our customer base continued with 311 customers expanding by $50,000 or more and 118 expanding by $100,000 or more. In Q4, we had two transactions of more than $1 million and now have a total of 45 customers with ARR over $1 million.

Despite these successes, we've seen the changing macroeconomic environment negatively impact expansion rates across customer segments. However, even with these less favorable macro backdrops, our enterprise customers continue to exhibit the fastest growth rates. Our product investment and go-to-market strategy is focused on winning the enterprise, and we have seen great success in this segment. We now have over 3,300 large enterprise customers defined as organizations with over 10,000 employees.

ARR from just this customer segment is now over $260 million and grew over 40% in FY '23. We believe this segment alone represents a multibillion-dollar revenue opportunity for Smartsheet. While we may have seen some companies be more thoughtful with spending in this environment, we believe that, in the long term, enterprises, especially large enterprises, remain the best opportunity to drive long-term, profitable growth. And no one in this category is winning the enterprise like we are.

In FY '23, in response to the changing macroeconomic environment, we took steps to improve our profitability. These actions resulted in Q4 profitability, non-GAAP operating income, and free cash flow exceeding our guidance. As we look ahead, we expect our scale, combined with our increasingly efficient operating model, to generate positive operating margins and over $110 million of free cash flow in FY '24. Our scale and profitable business model further secure Smartsheet as the leader in collaborative work management.

We are operating at an ARR scale, enterprise adoption rate, and profitability level that are unmatched in category. This leadership position is recognized by top peer review sites and publications. We recently earned a top five placement on G2's 2023 Best Software Products for Enterprise list, making us the only CWM platform to rank anywhere in the top 50. The list recognizes software companies that have best-in-class enterprise, customer service, products, and experiences.

And earlier this month, we were recognized for our industry-leading enterprise work management and digital asset management solutions on Fast Company's Most Innovative Companies list in the Enterprise category. At Smartsheet, adoption of our capabilities-based products play a key role in our enterprise success. These capabilities now make up 31% of our subscription revenue, up five points year over year. Capabilities drove many large customer expansions in Q4.

For example, a leading enterprise human capital management provider signed a three-year enterprise license agreement that will give all 8,000 Smartsheet users at the company access to a full suite of advanced capabilities. Through January, on a year-over-year basis, they created 67% more forms, provisioned 132% more control center projects, and created 210% more work apps. A key Smartsheet use case at this HCM provider is in its professional services org, where they use Smartsheet to manage customer deployments. Smartsheet has become their global standard for customer deployments, in part, because our enterprise-grade security gives them the ability to manage sensitive customer data on our platform while still allowing for efficient collaboration.

Our secure collaboration model has allowed this company to bring more than 42,000 external collaborators from different client organizations onto the Smartsheet platform. Q4 was a strong quarter for Smartsheet Advance. A Fortune 500 global manufacturer had a high six-figure annual expansion that included an upgrade to a higher Advance tier. This upgrade resulted from the viral adoption of Smartsheet across the organization.

This year alone, they created over 5,000 dashboards, increased their work apps used by 430%, and provisioned nearly 5,000 projects using Control Center. This company will now use Smartsheet to help achieve its billion-dollar, three-year operational cost-savings initiative. Advance usage through connected users also drove a seven-figure expansion at a Fortune 100 telecom company, which brought the customer's total ARR to over $3 million. Over 50,000 Smartsheet users across 11 departments in eight countries now use Smartsheet.

This deal was driven by increased demand and adoption as more teams look to centralize their work on Smartsheet. Our platform underpins over 1,000 work apps, 4,000 projects managed using Control Center, and over 28,000 dashboards. It is now the starting point for thousands of workflows that span integrated apps such as Salesforce, Jira, and Slack, and serves as a central hub for the company's collaboration with more than 500 external organizations. Wins such as these speak to the power of the Advance model, where the value of Smartsheet increases as the use of Smartsheet grows.

In January, we published our inaugural Future of Work Management Report, which showed that over 80% of workers at every level across the organization say project management is being done by people whose title or job description doesn't include project manager. The research also showed a significant perception gap between leaders and workers with respect to their current project management tools. Sixty percent of leaders say they've made the necessary investment in tools, but just 36% of workers who responded feel this way. This gap drives a robust, continuous flow of opportunity for Smartsheet.

Here's a great example of how the best tools can empower people and business transformation. In Q4, we had an RFP win against three CWM competitors, which expanded our footprint at a Fortune 500 global biopharma company. The seeds of this win were planted when one team member in the purchasing organization took the initiative to design a Smartsheet-based system to automate the company's complex and time-consuming paper and email-based purchase order management process. Smartsheet didn't just modernize management; our platform also reached the company's transformation office, where Smartsheet is now supporting the company's critical initiatives.

As the company's business transformation platform, Smartsheet Control Center and work apps are now helping them manage five strategic portfolios of work, each containing dozens of workstreams that will guide the company toward its goal of positively impacting the health of 2.5 billion people in the next 10 years. On the product front, we closed out another year of customer-focused innovation, having delivered over 400 product enhancements. In Q4, we launched the Smartsheet desktop application, content automation with integration of Outfit, capacity view, and numerous automation enhancements. We also further increased platform scalability to power sophisticated workflows and drive thousands of business-critical workstreams for customers of all sizes.

In FY '24, our investment efforts will be focused on helping our biggest customers grow faster with us, as well as driving efficiency in how we sell to and serve our emerging customers. To enhance customer experience and value, we continue to evaluate and integrate artificial intelligence into the Smartsheet platform. Our AI innovation began in 2018 following our acquisition of Converse.AI. More recently, we have enabled petabyte-scale intelligent content management through our proprietary-powered AI engine, Brand Intelligence.

Using recognition models, content is analyzed and tagged, making it easier for people to find creative assets with natural language search. And for over a year, predictive models have powered navigation recommendations in Smartsheet. Now, our sights are set on the next wave of innovation of generative AI. The progress we've made in our early development is very promising, and the impact to accelerating customer onboarding, solving for advanced business designs, and unlocking self-directed discovery can serve as a catalyst for growth in FY '25 and beyond.

In closing, I'm proud of how our team executed in FY '23, expanding our enterprise leadership position while navigating macro headwinds and driving significant efficiencies in the business. We continue to keep our customer's needs top of mind as we prioritize investments that enable them to drive meaningful change for their organizations. Q4 was another showcase of our CWM leadership, our winning enterprise strategy, the power of our platform, and the scalability of our business model. We are excited to continue this momentum in FY '24 and beyond.

Before I turn the call over to Pete, I want to acknowledge the transition of Smartsheet's board chair role. We recently appointed Mike Gregoire as the new chair of our board of directors. He succeeds Geoff Barker, who has been on our board since 2012 and has served as chair since 2017 and will remain on the board following this transition. We appreciate and thank Geoff for his leadership.

His commitment to governance and execution during the company's transition from private to public and in the years that followed strengthened our ability to deliver value to customers and shareholders. Mike has been a valuable member of the Smartsheet board since late 2019. His expertise in operating technology companies of scale aligns very well for our next phase of growth. We are pleased to welcome Mike to the chair position and look forward to working with him more closely.

Now, let me turn the call over to Pete. Pete.

Pete Godbole -- Chief Financial Officer

Thank you, Mark, and good afternoon, everyone. As Mark mentioned, Q4 was another strong quarter. We exceeded our guidance across the top and bottom line and posted quarterly operating income for the first time. We saw particular strength in our largest customers who continue to exhibit expansion rates above our overall net dollar retention rate, and Advance, which contributed a record level of billings and revenue in the quarter.

Despite strength in these areas, we saw the impacts of a worsening macro environment. Similar to past quarters, we see these pressures manifest as smaller deal sizes and longer sales cycles, which ultimately led to lower expansion rates among our customers. In FY '23, we placed an intense focus on driving operational efficiencies, which has resulted in a faster path to profitability than previously contemplated. We focused on driving operational efficiencies by eliminating lower-value activities while maintaining sales capacity.

These operating efficiencies have contributed to our outperformance in our operating income and free cash flow in Q4 and our guidance for FY '24. We expect the macro to worsen in FY '24, but the plan we have created positions the company to capitalize an improving economy when that eventually occurs. We are continuing to pursue sustained growth and profitability in a disciplined and thoughtful manner while focusing on allocating capital to growth initiatives. Our strategy of focusing on large accounts for the last several years has been a part of that thinking.

And this year, we plan to invest in four areas: first, widen our competitive lead on the dimension of enterprise scale; second, unlock product-led discovery and adoption; third, enhance IT governance, control, and security; and fourth, elevate our user experience. I will now go to our financial results for the full year and fourth quarter. 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 and presentation that was posted before the call. For the full fiscal year '23, we ended with total revenue of $766.9 million, up 39% year over year; billings of $892 million, up 35% year over year; operating loss of $36 million; and free cash flow of $9.8 million.

We ended the year with annual recurring revenue of over $854 million, a year-over-year increase of $215 million. Next, I will provide more color on our fourth-quarter financial results. Fourth-quarter revenue came in at $212.3 million, up 35% year over year. Subscription revenue was $198.9 million, representing year-over-year growth of 37%.

Services revenue was $13.5 million, representing year-over-year growth of 15%. Capabilities made up 31% of subscription revenue, up from 26% of revenue in Q4 of last year. Turning to billings. Fourth quarter billings came in at $286.7 million, representing year-over-year growth of 28%.

Approximately 94% of our subscription billings were annual with 3% monthly. Quarterly and semiannual represented approximately 3% of the total. Multiyear billings represented less than half a percent of total billings. Moving on to our reported metrics.

The number of customers with ARR over $50,000 grew 36% year over year to 3,206, and the number of customers with ARR over $100,000 to 45% year over year to 1,484. These customer segments now represent 62% and 48%, respectively, of total ARR. The percentage of our ARR coming from customers with ARR over $5,000 is now 89%. Next, our domain average ACV grew 20% year over year to $8,377.

We ended the quarter with a dollar-based net retention rate of 125%. The full churn rate remains below 4%. Consistent with our assumption of the macro environment in FY '24, we expect our net dollar retention rate to trend lower into the high teens by the end of the year. Now, turning back to the financials.

Our total gross margin was 82%. Our Q4 subscription gross margin was 86%. We expect our gross margin for FY '24 to remain above 80%. Overall operating income in the quarter was $7.5 million, or 4% of revenue, which represents a 6-percentage-point sequential margin improvement.

Free cash flow in the quarter was +$16.4 million. Now, let me move on to guidance. Our guidance reflects the expectations of a worsening macroeconomic environment. Therefore, we have incorporated more conservatism into our guidance philosophy.

If the macro environment does not decline, this would be a source of upside to our current full-year expectations. In FY '23, we placed a heavy internal focus in operational rigor and moderating our hiring plan to adapt to the changing macro economy. In FY '24, these initiatives, combined with the natural economies of scale in our business, will result in significant improvements in our margin profile and free cash flow performance. In FY '24, we are investing in enterprise growth with a ramped sales team and continue to invest in widening the technology advantage of our platform.

As a business approaching $1 billion of ARR, we are set up to leverage this natural scale, the operational initiatives that we started in FY '23. For the first quarter of FY '24, we expect revenue to be in the range of $213 million to $215 million, and non-GAAP operating income to be in the range of $8 million to $10 million. We expect non-GAAP EPS to be $0.08 to $0.09 based on diluted weighted average shares outstanding of 136 million. For the full fiscal year '24, we expect our revenue guidance to be $943 million to $948 million, representing growth of 23% to 24%.

We expect services to be 6% of total revenue. We expect our non-GAAP operating income to be in the range of $35 million to $45 million, representing an operating margin of 4% to 5%; and a non-GAAP net income per share to be $0.31 to $0.38 for the year based on approximately 137.5 million diluted weighted average shares outstanding. We expect FY '24 billings growth to be 20%, and we expect our free cash flow for FY '24 to be $110 million. To conclude, Q4 was another strong quarter highlighted by our continued outperformance, our strength in the enterprise, and emerging profitability.

We see FY '24 as a year where our enterprise investments set us up for durable, long-term growth. Now, let me turn the call over to the operator. Operator.

Questions & Answers:


Operator

[Operator instructions] Your first question is from the line of John DiFucci with Guggenheim Securities. Your line is open.

John DiFucci -- Guggenheim Partners -- Analyst

Thank you. Well, first of all, congrats on elevating Mike Gregoire to the chairman position. I think he fits really well with our view, at least, of how you guys approach the business. He's pretty straightforward.

It's also nice to see you demonstrate the profit power of the software model with both the results this quarter but also in your guidance for next year. So, it's great to see that, too, guys. But my question, Pete, you know, you said guidance reflects a worsening macro. So, it sounds, you know, it's a little more conservative than usual, which I think is the right thing to do here.

But last quarter, you gave some specifics around go-to-market metrics, and you talked about positive comments on pipeline, close rates, sales productivity, quote attainment. You also said you'd be close to a fully ramped sales force. And I think you sort of mentioned that, too, here. Can you sort of hit some of those you think that are most important and what your -- what is implied in guidance in this year? Are they all -- are you assuming all of those things sort of moderate throughout the year, or there's some of them that actually hold steady, and some sort of moderate?

Pete Godbole -- Chief Financial Officer

So, John, I'll parse that question down to what you asked. So, let's start with Q4. We exceeded our guidance relative to the expectations we had set based on advanced booking in larger transactions that we did. But as we built through the quarter, we saw a nominal worsening relative to past trends.

And what that meant was a slight degradation in the close rate and then elongation in the sales cycles. We're seeing a strong pipeline. It's the close rate that we're seeing the slight degradation on. So, given that phenomena, what we've opted to do is be conservative in building a nominally worsening guide for those in FY '24 as it relates to our top-line view.

John DiFucci -- Guggenheim Partners -- Analyst

OK, that makes sense. And if I could, just a quick follow-up to that, Pete. It sounds like the NRR is going to, you said, decline to the high teens by the end of the year. So, it sounds like progressively.

And I realize that's a trailing 12-month metric. But does that imply that the year -- should I be thinking about that as, like, the year-over-year subscription growth or perhaps the ACV growth would also decelerate throughout the year too or is it not quite that?

Pete Godbole -- Chief Financial Officer

So, the net dollar retention rate, John, aligns with our billings guide. If you think of the top line, those are intertwined. And the same factors that affect the billings guide we just walked through are at play for the net dollar retention rate. So, you're seeing, you know, a basic macroeconomic impact.

We have a pretty healthy growth rate, but there's a macroeconomic impact that puts a slight pullback from those rates, if you will.

John DiFucci -- Guggenheim Partners -- Analyst

OK, that all makes sense. And this is good to see. Thanks a lot, guys.

Mark Mader -- Chief Executive Officer

Thanks, John.

Operator

Your next question is from the line of Brent Thill with Jefferies. Your line is open.

Brent Thill -- Jefferies -- Analyst

Mark, on the enterprise, it seemed like that held up better. Can you just give us a little more color and what you're seeing, and kind of back to Pete's comments, in the monitoring of demand? Or where do you -- factoring in for the enterprise close in the back half? And for Pete, just when you think about the economic headwinds worsening, did you see that across multiple countries? Was it more pronounced in Europe versus U.S.? Any color you can give from a geographic perspective would be great. Thanks.

Mark Mader -- Chief Executive Officer

Hi, Brent. I think one of the things that I was looking for in the quarter was how the conversion of pipeline that extended in the previous quarter played out. So, one of the things that was really encouraging to see was in business that did extend last quarter, a lot of that business converted this quarter. And when I look at our net sequential adds on over 50K, 100K, we saw really healthy numbers.

You know, we added, I think 138 over 100K customers. We added over 240 over 50K. So, I was really pleased to see that. So, we continue to see strength there.

I think the expectation from customers is clarity on what one's presenting to them and how it connects to value. You know, are you helping me identify new sources of revenue, or are you helping me retain my existing ones, or are you helping me drive savings? So, some of the things I spoke to in my remarks spoke to that ability to help customers expand or drive savings, and that remains very much alive and well. I think the -- going into the year, I feel like we have a sales team, which is probably the most ramped team we have -- have had heading into a year. So, I think that will continue to yield nicely on that part of our business.

Now, as we make investments in our product, I'm also as motivated to continue to drive that product-led growth piece, which builds the -- you know, all the future growers. So, we do talk about enterprise a lot, but I think there's also some really favorable things coming out this year, which helped lay that foundation for future growth. Pete.

Pete Godbole -- Chief Financial Officer

Sure. And then, you know, the second part of your question, we did see more macroeconomic sort of, what I call, pressure in Europe. That's one part of it. But between the customer base over here, we saw really good success with our larger enterprise customers, and we probably saw a little more pressure with our SMB and smaller ARR customers.

So, that's a little bit of texture where we saw it.

Brent Thill -- Jefferies -- Analyst

Thank you.

Operator

Your next question is from the line of Josh Baer with Morgan Stanley. Your line is open.

Sophie Lee -- Morgan Stanley -- Analyst

Hi, this is Sophie Lee on for Josh Baer. I'm wondering if you saw any benefits of vendor consolidation and if you saw any customers consolidating to the Smartsheet platform. If you can also highlight any customer conversations that changed meaningfully in the past quarter and some of the outcome of that discussion.

Mark Mader -- Chief Executive Officer

I think on the consolidation front, Sophie, we're seeing it's quite common, when we have a multi -- you know, $100,000, multimillion-dollar opportunity, that there is presence of others in the environment. I think where we benefit is we have, very commonly, presence within multiple nodes of the business. We remain, I think, really grateful for those high conversion rates in those situations. I spoke to one of those in the biopharma space this year, which was a bake-off where we were able to demonstrate the value, and they move quite quickly.

That is going to be a very large account for us over the next 10 years. So, I would say the number of times there is that formal RFP, really high diligence bake-off, those are still pretty few and far between, but they typically happen on the accounts that really matter. So, we definitely put energy into those when they do come about.

Sophie Lee -- Morgan Stanley -- Analyst

OK, great. Thank you so much.

Mark Mader -- Chief Executive Officer

Thanks, Sophie.

Operator

Your next question is from the line of Alex Zukin with Wolfe Research. Your line is open.

Alex Zukin -- Wells Fargo Securities -- Analyst

Hey, guys. Thanks for taking the question. Good to see a solid quarter and congrats on kind of the margin guide. Just two quick ones for me.

First, if we dig in a little bit to the macro factors that you saw in the quarter versus what you guided to getting worse, I guess, clearly, your churn was strong at some 4%. But maybe if you split up what you're seeing around expansions with existing customers versus net new, where are you seeing that bigger impact from the macro? Any downward pressure on renewals? And then, I have a quick follow-up.

Pete Godbole -- Chief Financial Officer

So, Alex, I'll take your question in pieces. So, first of all, the net dollar retention rates are fairly healthy. And the pullback that we've seen is on the expansion side of it, you know, tied to sort of what's happening in the macro. And what we've seen is it's been relatively strong with our larger customers and our enterprise customers.

And there's a little more pressure with the SMB and smaller ARR customers. So, that's how we've seen it play out. We haven't seen, as I said, the churn number materially get impacted. So, we've seen fairly strong, you know, commitment to the Smartsheet platform.

Alex Zukin -- Wells Fargo Securities -- Analyst

Perfect. And then, I guess with respect to the margin guidance, maybe talk about the linearity through the year, the exit rate that we should be looking at for fiscal '24. And specifically, as you contemplate, you know, kind of this net new growth algorithm growth, profitability algorithm, where your billings growth is at that kind of 20% level, what is the aspiration around sales efficiency in terms of, you know, that magic number or the ability to kind of generate a balance of both?

Pete Godbole -- Chief Financial Officer

So, I'll start by saying that, you know, this is a big market, and we think there's plenty of room in the growth in this market long term. We're bullish in this market, and we are the leaders in the enterprise segment and across the whole category. So, when we think of this business in terms of the longer-term growth, we see this as a solid grower. Now, there's going to be macroeconomic adjustments as we go through different cycles of macroeconomic change, so that's one part of it.

But the second part of your question is on the profitability and how we think of that moving forward. We're going to continue to be optimizing, essentially, the scale we've attained. So, if you think of the scale we've achieved, we don't need to add a lot of resources, just given the scale, in terms of where we're at. And we're being more and more efficient because the -- every dollar we've already gained costs us a lot less to serve compared to a dollar we need to invest to gain.

So, that's playing into the economics you're seeing in sales and marketing, and it's going to continue through. So, you're going to see that play itself in the future as well.

Alex Zukin -- Wells Fargo Securities -- Analyst

Perfect. Thank you, guys.

Pete Godbole -- Chief Financial Officer

No problem.

Operator

Your next question is from the line of Terry Tillman with Truist Securities. Your line is open.

Terry Tillman -- Truist Securities -- Analyst

Yeah. Thank you. Good afternoon. Hi, Mark, Pete, and Aaron.

I had to look at the press release like three times because I kept looking at that $110 million of free cash flow. And, surely, it was, so great to see that. I have two questions. The first one is a multiparter, and then, the second question I'll follow up with.

But on the first question around product and packaging, I think, Mark, you said you have 3,300 customers that are considered enterprise. What I'm curious about is the penetration of Advance now in that segment. And then, if we take a step back, if we're looking at 23% to 24% growth in the total revenue, how should we be thinking about the enterprise segment? And then, I have a follow-up around product discovery.

Mark Mader -- Chief Executive Officer

Hey, Terry. You know, the 3,300 again, that ties out to the large enterprise. That's over 10,000 employees. We obviously have many more companies north of 2,000 employees as well.

So, in that very large segment, it is still really early innings for Advance. We have -- while the bookings do tie out to a lot of the larger transactions we have, it's a minority of that base. So, we think it's still -- we're trying to figure out ways, in addition to our people-based processes, to get these capabilities presented to people. As I said on past calls on some of our roadshows, we are working on both getting our professional sales team able to solution advise and do outcome mapping with people while getting our Advance product line into a self-discovered state.

So, what that means is people at those 3,300 customers using our product in the context of what they're trying to solve, whether it's integration, whether it's providing advanced access to data, having those things presented to them in the flow of work, having them experience those things, and then do really have inbound demand to us saying, "Hey, we use this thing. We'd like to talk to you about this capability," which ultimately leads to a discussion of Advance. So, we are still, call it, second inning on the Advance penetration as it relates to these super-large customers. What's neat, though, is that we have enough data points now that really helps us understand how people are adopting those, what it means for connected users, and how that flows through on the economics.

Pete Godbole -- Chief Financial Officer

And, Terry, the second part of your question is the -- was on the 23% to 24% revenue growth and how that parses out across segment. So, our revenue growth is a function of our billings and our net dollar retention rates. You think of the largest customers, they grow with us the fastest. As we -- as Mark shared, on our biggest large enterprise customers, you can see the growth rate is really quick.

And the best part about that is they grow -- they will grow faster than our median growth rate. But what's interesting is that our biggest customers that are the most profitable for us is, well, that's the scale that leads to the 110 million you see, which you referenced to the start. So, we're pretty excited by those economics.

Terry Tillman -- Truist Securities -- Analyst

Yep, got it. And I guess just following up on the first part of the question, I mean, Mark, you were kind of going down the path of product discovery. And I know we've talked about that a bunch in the past. You go on the website and if you just look at the sheer number of capabilities, a lot of these folks probably don't even know all of what is under the hood.

But is there a point in time this year where there's a major kind of milestone where, whether it's the technologies or AI or people, that could really unleash this, where potentially this could become an upside driver around some of the product discovery initiatives on whether it's billings or revenue? Thank you.

Mark Mader -- Chief Executive Officer

Yeah, Terry, we expect to benefit from this beginning in the second half. So, engineering is underway right now. Some of that self-discovery will be available heading into the second half. And, you know, consistent with how Pete and I have, you know, forecasted the business, until a new idea, a new concept, a new innovation yields, we don't bake it into our guide.

So, I would see that, Terry, if it performs to be implemented.

Terry Tillman -- Truist Securities -- Analyst

That's great. Thank you.

Operator

Your next question comes from the line of Michael Turrin with Wells Fargo Securities. Your line is open.

Michael Turrin -- Wells Fargo Securities -- Analyst

Hey, great. Thanks. I appreciate you taking the question. And nice job with the close of the year.

I think, given the prepared remarks, the focus on enterprise is clear. Could you just speak to how margin complements that? Would think that could prove more people-heavy, but clearly, not the case given you're giving 10 percentage points of implied free cash flow margin expansion into next year. So, can you just add more on what enables that from the Smartsheet side and how you're able to balance both an enterprise focus and the margin expansion in the current environment?

Pete Godbole -- Chief Financial Officer

Sure. So, Michael, two parts of it. The first one is, when you think of the enterprise customers and you think of their -- the growth rate they have, that's a really high number. It sort of is better than our average by a fair bit.

And what that does for us is it creates a space where, if you're looking at our growth and you're looking at how much we invest in retaining the dollars we've already got, that's a fairly low number. So, that provides the basis for the margin accretion. We are investing in getting the new dollar, but the base is growing by such a large number that it provides natural scale impact benefit to sales and marketing. So, that's one part of the equation.

And the second part of the equation is just the simple part of, you know, we hired a lot of people last year. Given the size at which we are that we don't need to hire the same number of people, and that lower hiring that we're going to go to this year is margin accretive. Those are -- think of them as two simple facts that really drive the margin story.

Michael Turrin -- Wells Fargo Securities -- Analyst

That's helpful. And then, I guess just the other point that you mentioned in the prepared remarks, Pete, was just also making sure you're able to capture the improvement whenever that word surface in the world. So, it sounds like you have some natural capacity to grow into, but just how you continue to thoughtfully add capacity to make sure you're striking the right balance.

Pete Godbole -- Chief Financial Officer

Yes, it's, for us -- you know, we are sales-assisted motion, and now we've paired it with obviously the self-discovery that makes that motion go faster. But if you think of our -- the way we've modeled it, we've modeled our sales productivity in line with the way we think the macro is going to play. If the macro changes and it turns on us, you will see a ramp in sales productivity because we've already got a ramped sales force we brought in this year that's now enabled with the best techniques. So, we're ready to get there.

So, that's the upside we see as the environment changes. Or, as Mark mentioned, as we see the benefit of some of these things which we can measure, we can put more energy behind those initiatives and drive upside to the current plan we have.

Michael Turrin -- Wells Fargo Securities -- Analyst

Thank you.

Operator

Your next question is from the line of Pinjalim Bora with J.P. Morgan. Your line is open.

Pinjalim Bora -- JPMorgan Chase and Company -- Analyst

Great. Hey, guys. Thank you for taking the question. And congrats on the quarter.

Mark, good to hear that you're kind of leaning in on generative AI. Maybe help us understand some of the use cases. But more fundamentally, how do you differentiate with generative AI when everyone is kind of rushing to implement those large language models? Do you think it becomes kind of table stakes at some point versus kind of increasing competitive advantage?

Mark Mader -- Chief Executive Officer

Yeah, I love the question. I think those who sprint toward embedding a standard capability that is not differentiating can say that they're participating, but I actually don't think it really separates you from the competition. I think the marriage between what is distinct and unique to your offering paired with generative AI, that's the magic. So, when we think about our assets and digital asset management, whether it's the generation or images -- manipulation of images, that is paired with the Brandfolder and Outfit offerings.

When I think about where we see major value unlocks in our world in terms of Smartsheet proper, I think of the thousands of cases we get every single quarter from people saying -- trying to figure out how to design the most advanced formula and logic-based workflows in our app. We've already done research. We've already generated formulas and logic with the help of generative AI, which we think will be a major design win for customers. So, when you think about -- it's not just driving down the cost, it is unlocking a whole new set of population that, in the current form, may be dissuaded from taking the next step.

So, I think it's in the context of the work people are tracking and designing in Smartsheet, the digital asset. And then, the third vector is really all of that inflow we get from our customers into our help center. People trying to -- when you look at the percentage of cases that come in, it's not break/fix. It's typically grounded in how do I and how do I unlock, which generative AI is significant.

So, the very promising remark that I made in my remarks ties that to those three vectors that we're pursuing. And you'll see us continue to engage our community and our customers through early adopter program in the coming quarters. And I would say I'm quite bullish for the out years in terms of what that means for our customers.

Pinjalim Bora -- JPMorgan Chase and Company -- Analyst

Got it. Understood. Thank you. And, Pete, one question for you on the FCF guide.

Obviously, it's extremely strong, but help me understand kind of the context with respect to stock-based compensation on that. It seems like SBC is growing about 23%. Understanding is that hiring is probably going to moderate, help us understand the FCF guide versus the SBC number. Is there a change in kind of the structure going into this fiscal year?

Pete Godbole -- Chief Financial Officer

So, the guide we provided obviously shows an improvement in the GAAP margins as well. So, you can see a proportionate improvement in the GAAP margins consistent with a non-GAAP margin improvement. And it embeds a stock-based compensation element that basically shows it's being -- we're managing it to be flat year on year. And we've taken that sort of special emphasis and initiatives that we can use to reduce the stock-based compensation.

Obviously, there's a stacking effect that happens in stock compensation of previous historical grants. So, we're very mindful of what we're adding into the pile. And for example, this quarter, we made the change to convert the bonuses we paid to senior employees, which used to be in stock, to convert them to cash. That's an example, among many others, of how we're managing stock-based compensation.

Pinjalim Bora -- JPMorgan Chase and Company -- Analyst

Got it. Thank you very much.

Pete Godbole -- Chief Financial Officer

Sure, Pinjalim.

Operator

Your next question is from the line of Rishi Jaluria with RBC Capital Markets. Your line is open.

Rishi Jaluria -- RBC Capital Markets -- Analyst

Wonderful. Thanks so much for taking my questions. First, I wanted to maybe hit a little bit on the macro side. And what sort of impact have you seen from your existing customer base? Ad what are you kind of contemplating from the seed count reductions -- or, I guess, the layoffs we've been seeing across the board, and what that means on the seed count side? I know you're very well diversified, but, you know, we've seen a lot of layoffs in tech.

So, maybe you could talk through what you've seen so far, what you're modeling, and anything, any tools that you've kind of had in your arsenal to be able to counteract that or maybe slightly offset that. And then, I've got a quick follow-up.

Pete Godbole -- Chief Financial Officer

Yeah. So, the first major element of what we're seeing is, when you think of, you know, the expansions, it's really on the growth expansion side of it. We're not seeing, you know, anything more than the normal historical movement on what we would consider reductions. And to parse that even further, we are seeing sort of, what I call, some sea churn.

But that's not unusually different from the capabilities churn we see. So, it's sort of aligned and moving in lockstep together. Some part of that obviously comes down to what we're doing. So, what we are doing is we don't have an ELA-type model.

What we have is the earned enterprise, which means we don't sell seats ahead of their usage. People are using them, they leverage them. It's the same concept we use for connected users. You're not paying for users you don't need.

That really helps keep people on the side of the ledger where they're staying with what they have. And then, the question really becomes one of what are you adding to the list, or how much are you going to add, and when are you going to add those.

Rishi Jaluria -- RBC Capital Markets -- Analyst

Got it. That's helpful. And then, the other kind of macro-related question, I wanted to better understand, Pete, when you were talking about the impacts that you're modeling, you know, if you've seen lower close rates, you're assuming that degrades further, which makes a lot of sense. Have you also seen deal compression as well, you know, in terms of you've thought a deal would be, call it, a million in ARR and it ends up coming at, you know, less than 800 or whatever be the case? And what are you modeling in terms of deal compression going forward? Is that embedded in guidance? Thanks.

Pete Godbole -- Chief Financial Officer

Yeah. So, Rishi, you know, we've modeled the trends we've seen. And so, what we have modeled is, you know, some degradation to close rate. We've modeled some elongation in the sales cycles.

And the deal compression that happens, typically, is people deciding not to buy is not the issue. They're buying either things a la carte or in smaller pieces. So, it's still a healthy expansion rate, which is what I was looking at -- I'm looking at. You know, our expansion rate is healthy.

And even the one we've guided to is a healthy expansion rate. It's just a matter of moderation in the macroeconomic phase that exists.

Mark Mader -- Chief Executive Officer

I think, Rishi, one thing also that has been helpful is there are some of the transactions this last quarter I would class as compliance-based licensing. So, we have an agreement with you, you use the product extensively, you have all these connected users. And that discussion happens around, OK, here's the new level at which you're engaging with the platform. It's not you making a choice over, oh, I think this would be interesting; I can get value.

It's a decision you made quarters ago that you're now clicking into. And those discussions are usually much more high velocity because it's really maintaining compliance than it is making a new business decision.

Rishi Jaluria -- RBC Capital Markets -- Analyst

Got it. Perfect. Thank you so much, guys.

Pete Godbole -- Chief Financial Officer

Thanks, Rishi.

Operator

Your next question is from the line of Jackson Ader with MoffettNathanson. Your line is open.

Jackson Ader -- MoffettNathanson -- Analyst

Oh, great. Thanks for taking our questions, guys. The first one, just given that these things are happening concurrently, like, how confident are you? There's been a lot of discussion on the back row, but how confident are you that none of the, you know, deal compression or close rates are impacted by some of the, you know, expense cuts that you've made over the last kind of six to 12 months?

Pete Godbole -- Chief Financial Officer

Jackson, the short answer to your question is, you know, if we've made expense reductions, we've made them in areas which are ancillary to the core selling or product area. So, we've made changes, for example, in support resources. We've made changes in expenses that we spend on. We've just reduced the dollar value of those normal procurement type of things.

So, we haven't -- we've actually maintained our sales capacity, and that's one thing we're pretty excited about going into the year. So, when you talk about deal compression or you talk about elongated sales cycles, that's really about what customers are feeling and experiencing as they're making plans of their own on how to plan their business.

Jackson Ader -- MoffettNathanson -- Analyst

OK. Yep, that makes sense. So, they're outside of the scope that you would expect to see in effect. OK.

And then, Mark --

Pete Godbole -- Chief Financial Officer

That's right.

Jackson Ader -- MoffettNathanson -- Analyst

Got it. And then, Mark, when we're talking about, you know, those rare instances where it might be a bigger RFP and Smartsheet is already installed in a couple of business units, are there any business units that you feel like have an outside influence on the ultimate companywide decision, you know, whether it's finance, or IT, or, you know, sales, marketing, whatever.

Mark Mader -- Chief Executive Officer

I would say it both spans user population, as well as those responsible for ensuring a safe and scaled environment. And I would say there are certain things that are non-negotiables where you have to conform, whether that's in how it's administered, how you are licensed, how you allow non-licensed people to interact with the information that is being stored. Those are all things that are, I think, pretty tried and true -- tested in that enterprise environment. I would say that the organization, from a functional standpoint, which I think are getting outsized sort of weight on the scale right now, are those who are tying out to revenue and both growth and retention.

So, I think the presence of field ops, any organization, is directly tied to customer experience. And financials, I would say, plays a larger role today.

Jackson Ader -- MoffettNathanson -- Analyst

Got it. All right. Thank you.

Mark Mader -- Chief Executive Officer

Thanks.

Operator

Your next question is from the line of DJ Hynes with Canaccord. Your line is open.

DJ Hynes -- Canaccord Genuity -- Analyst

Hey, guys. Thanks for taking the questions. Mark, can you talk about what you've seen with some of your more marketing-oriented use cases, Brandfolder or Outfit? It just feels like that's a category of spend that's seeing more scrutiny, so it would be great to get any observations there.

Mark Mader -- Chief Executive Officer

Yeah, I think conversations in the marketing and creative management arena that tie out to sort of concrete financial benefit, like that presentation of value, is landing very well. I think things that are more qualitative in nature in terms of being more confident about the work you're managing, being a little bit more clear on the status of something, still important but probably not enough to tip the scales. So, on most of our large marketing-based solution discussions now, we are grounding it in accelerating the completion of work, the elimination of third-party resource to get that work done, and then the quantification of what that campaign or that asset is actually yielding for your company. Like, people are very interested to learn about how to quantify that.

And the more we can arm marketers in going to their CFOs, Pete, no offense, right, in presenting the value, I think that really gives the marketing teams much more confidence. So, it's a newer arena for many marketing organizations, but I think it's -- it actually is quite promising for the year ahead.

DJ Hynes -- Canaccord Genuity -- Analyst

Yeah. OK. That's helpful. Thanks.

And then, Pete, just a follow-up for you. So, in the context of the big margin upside next year -- and I know this is a question you won't want to answer -- but can you help frame what kind of sales capacity you're thinking of adding in fiscal '24, you know, maybe relative to what you did in fiscal '23? And the reason I asked, like, I think investors are going to want some assurances that we're continuing to invest and position for growth in fiscal '25 and beyond. So, any color there would be helpful for folks.

Pete Godbole -- Chief Financial Officer

So, DJ, I think -- you know, we're committed to growth. So, think of that growth coming from a more efficient model. So, quite simply, if you think of the size of our base that we bring in for renewals, the cost in terms of what it takes to service that base is much lower than what the cost is for bringing in a new dollar of business. That economic -- or that effect is going to stack into how many resources we need.

And now, we will continue to hire. We're going to hire this year as well. We'll hire next year, but the classes and size will be smaller than what we've historically done. So, you'll see an accretion to margin as a part of our longer-term, you know, plan to grow margins.

DJ Hynes -- Canaccord Genuity -- Analyst

Yeah. OK. Thank you, guys. Appreciate the color.

Pete Godbole -- Chief Financial Officer

No problem, DJ.

Operator

Your next question is from the line of Scott Berg with Needham. Your line is open.

Scott Berg -- Needham and Company -- Analyst

Hi, everyone. Congrats on the nice results this quarter. Thanks for taking my questions. I guess, Mark, I want to start with a question on a totally different kind of, I guess, agenda.

Is -- the company is pretty close to $1 billion revenue run rate. How does Smartsheet look differently at a $2 billion run rate, do you think?

Mark Mader -- Chief Executive Officer

I think the enrollment, Scott, of many more customers having a diversified experience in Smartsheet, that will be the -- that will be very much present at 2 billion. So, today, we talk about thousands of companies benefiting from Advance. I think a couple of years from now, we're going to see tens of thousands of organizations having a much more complete Smartsheet experience. So, a couple of years ago, on Analyst Day, someone said, "What's the thing you would most like to have in your product?" Said, "You know what? Don't give me another thing.

I want our customers to have perfect information on what's possible." Now, fortunately, I have gotten a whole bunch of other things in those two years, but I want those assets, those capabilities to land with our median customer. So, we are working very hard not just to cater to the largest of the large but how do you get that midsized customer and that upper-mid customer, and even an emerging customer, to understand the power of the platform. So, I believe you're going to have a much more cross-connected product experience across the various disciplines within Smartsheet. Whether it is on strategic transformation, it's marketing, creative management, it's PM, it's core work management, you're going to have much more complete usage.

And today, you would see -- you'll have evidence of hundreds of customers using us at scale, doing very sophisticated things, that will be driving toward the middle of the band. And I would say what that will result in is not only more customers, but also a significantly higher average contribution per customer. So, our ASP will climb meaningfully over the next few years as a result of that.

Scott Berg -- Needham and Company -- Analyst

Got it. That's very helpful. And then from a brief follow-up perspective, a lot of discussion on the macro. Obviously, not a surprise given what's going on, but how do you all view your opportunity or recent working with partners? Partners continue to becoming increasingly more important components of, I think, some of your sales processes, not that they necessarily sell directly, but they seem to influence it.

Are you seeing anything different out of partners recently than maybe what you have in the past?

Mark Mader -- Chief Executive Officer

I'll start, Scott, by talking to a message I sent to -- a video message I did for the kickoff of one of our global SIs, who has one of their global practices building a set of workflows and solutions on the Smartsheet platform. In this -- for this large global SI, every single M&A transaction and divestiture within this industry practice is backboned by Smartsheet. Every single project they do is navigated with Smartsheet. Every time they leave the customer site post that transaction being completed, Smartsheet is left behind with the customer for it to continue in those operations.

So, that is -- a few years ago, those types of discussions, those types of experiences never existed. It was much more the midsize SI. We still have hundreds and hundreds of SIs in the middle range who are contributing, influencing. We do as much co-selling with them as we do them closing deals independent of us.

But I would say the really notable ones, the ones that sort of give me the most confidence in terms of high impact, are those larger players who are developing practices around us. And that is not just one global SI. We have three of those in play right now.

Scott Berg -- Needham and Company -- Analyst

Very good. Congrats on your nice result this quarter.

Mark Mader -- Chief Executive Officer

Thanks, Scott.

Operator

Your next question is from the line of Robert Simmons with D.A. Davidson. Your line is open.

Robert Simmons -- D.A. Davidson -- Analyst

Hey. Thanks for taking my questions. I was wondering, given the way valuations have generally come down and maybe stabilize a little bit privately, what are your -- what's your current thought on doing further M&A, and kind of how much cash do you need to keep on your balance sheet? So, kind of what's your kind of capacity or bandwidth?

Pete Godbole -- Chief Financial Officer

So, you know, we have a healthy cash balance. And our approach to M&A has been that we want to look for adjacencies when they come up, but they have to be accretive relative to our margin models. So, we're not looking for, you know, visionary M&A that doesn't have a clear payback or a clear ROI. So, that's been our strategy, and we continue to pursue that aggressively.

Robert Simmons -- D.A. Davidson -- Analyst

Got it. And then, talking about an existing one, can you tell us about how Outfit has been performing a little bit more quantitatively perhaps than you did before in terms of the approach but also, like, the actual performance?

Pete Godbole -- Chief Financial Officer

So, Outfit has performed, you know, to our expectations. It's done a really, you know, kind of an effective job. The way we went about Outfit was it really tags along with Brandfolder as a part of templating that you need when you're doing Brandfolder deals. And we're seeing a good sort of, you know, what I call, synergistic effect.

And the product integration we're thinking about between Brandfolder and Outfit makes this even more compelling when that comes through.

Robert Simmons -- D.A. Davidson -- Analyst

Great. Thank you very much.

Pete Godbole -- Chief Financial Officer

You're welcome.

Operator

Your next question is from the line of Jake Roberge with William Blair. Your line is open.

Jake Roberge -- William Blair and Company -- Analyst

Hey, congrats on the great results, especially on that profitability guidance. That was awesome to see. Understand there was a slight degradation in close rates and sales cycles, but you're still seeing some pretty strong new customer activity with new bookings and the user growth number. I know those customers start small, but were there any particular segments or industry verticals that stood out on that front?

Pete Godbole -- Chief Financial Officer

I think when you look at the segments that come out for us, which are very strong in that new user etc., we've launched essentially, you know, a lot of new activities with customers. And what we're seeing is our largest customers that come in from the largest companies, new nodes within companies coming forward, they seem to be really resonating with our product. And what they're hearing is capabilities can be launched early. We still do deals with Advance, which surprises sometimes us internally that says it's a new customer and they start with Advance.

That's somebody deciding that they don't want the primitives as they get started. They just want to start with what gets them the lift in productivity that they need.

Jake Roberge -- William Blair and Company -- Analyst

OK, great. And then, we'd love to just touch on what you're seeing in the market from a competitive perspective. Seems like some of your competitors are calling out some headwinds and undergoing some fairly large RIFs while you obviously continue to execute pretty well. Have you started seeing any competitive benefits in the pipeline as a result of those changes?

Pete Godbole -- Chief Financial Officer

So, what we are seeing is, you know, two things happening. First is the market for hiring talent has obviously gotten better, which is, you know, a macro statement about everything we've done. And then, the one thing we are finding is, on the marketing side, the competition for a lead or ad word, etc., is proving to be easier. The cost is dropping over there.

So, we're benefiting on those two fronts.

Mark Mader -- Chief Executive Officer

I think in terms of the teams in our pursuit, those -- the large opportunities that we pursue where we have established footprints, those are very rarely highly contested. It's really us demonstrating value and seeking greater investment from our client. It's pretty rare that one of our large existing customers that's growing quickly that they're in the process of reconsidering -- or considering a platform change. So, it's -- we really haven't seen that manifest or, you know, the median sales cycle for us.

Jake Roberge -- William Blair and Company -- Analyst

Great. Thanks for taking my questions and congrats again on the great results.

Pete Godbole -- Chief Financial Officer

Thank you.

Operator

Your final question comes from the line of Steve Enders with Citi. Your line is open.

Unknown speaker

Hi, this is George on for Steve. Thanks for taking the question, squeezing me in. I guess on the macro, if you could discuss the degree of linearity you saw through the quarter. It sounds like things may be progressively got worse on the conversion rates and sales cycles.

So, just any comments there, and then, what you've seen in February and March so far. Thank you.

Pete Godbole -- Chief Financial Officer

So, you know, as we looked at the quarter and how it played out, the bills through the quarter had, you know, some element of what I call degradation that took place between November moving into December and January that you could describe as the elements I described before. That macro degradation was a function of, like, elongated sales cycles and what I call some degradation to close rate that we saw. We saw that play out as we progress through the quarter. So, that's the first part of it.

What we have observed so far in February, I think, you know, we've got off to a February start which is consistent with the first month of the quarter. But essentially, the trend we expect it to have continued, which is a part of our guide, is built out. We have seen the close rates and, what I call, sales cycles not sort of improved. They stayed sort of marginally a tad bit sort of worse than they have.

So, that's how they played out.

Unknown speaker

Got it. That's helpful. And then one quick follow-up on the margin guidance and your sales and marketing spend. I just wanted to kind of understand if there are any kind of KPIs that you would see that might lead you to sort of turn on that investment flow, or is this kind of all sort of according to plan, and regardless of what you see in the macro side, you're kind of going forward with this ramped sales force that you have today.

Thank you.

Pete Godbole -- Chief Financial Officer

I think, George, our model is based on sort of reading the signals and seeing what comes out. So, I would describe it to you as if we see a macro opportunity, as long as the ROI and the payback is there, we will continue to invest, which sort of provides the stability in op margins but allows us to accelerate revenue on one side of it. We'll do the same thing with, for example, things we generate internally. We see something that has legs and it's driving to good ROI, we'll continue to invest behind it.

That's the approach we're taking.

Operator

At this time, I will now turn the call back over to Mr. Aaron Turner.

Aaron Turner -- Head of Investor Relations

Great. Thanks, everyone, for joining us this quarter, and we'll talk to you again next quarter.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Aaron Turner -- Head of Investor Relations

Mark Mader -- Chief Executive Officer

Pete Godbole -- Chief Financial Officer

John DiFucci -- Guggenheim Partners -- Analyst

Brent Thill -- Jefferies -- Analyst

Sophie Lee -- Morgan Stanley -- Analyst

Alex Zukin -- Wells Fargo Securities -- Analyst

Terry Tillman -- Truist Securities -- Analyst

Michael Turrin -- Wells Fargo Securities -- Analyst

Pinjalim Bora -- JPMorgan Chase and Company -- Analyst

Rishi Jaluria -- RBC Capital Markets -- Analyst

Jackson Ader -- MoffettNathanson -- Analyst

DJ Hynes -- Canaccord Genuity -- Analyst

Scott Berg -- Needham and Company -- Analyst

Robert Simmons -- D.A. Davidson -- Analyst

Jake Roberge -- William Blair and Company -- Analyst

Unknown speaker

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