WKME - Earnings call transcript Q2 2022

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Operator

Good day, and welcome to the WalkMe Third [Second] (sic) Quarter Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. John Streppa. Please go ahead, sir.

John Streppa

for second you call. XXXX thank and joining quarter our earnings Hello, John Relations Investor Head WalkMe. I'm of at Streppa, And today, Chief Sweary, President Andrew I'm Co-Founder; our and and joined Casey, Co-Founder; by Dan Scott Financial Little, Chief Revenue and Adika, Officer; Officer. CEO Rafi make XXE we forward-looking constitute Exchange and of of meaning the may within Securities Act the statements of XXXX provisions U.S. Section Securities XXA today the information of safe of the statements Certain and of XXXX, the harbor Section Act Reform XXXX events. of to current Litigation relate Securities future Private of expectations Act our that and views uncertainties These our forward-looking statements and are assumptions, of subject beyond to are risks, which some control. outcomes result and to in titled Securities Risk Actual March in a of contained a report information Factors in number XX, on the XXXX, section our including filed the from or Form SEC. the differ documents forth with may annual XX-F of filed the set and as the furnished forward-looking on Commission with statements factors, other Exchange materially those See our August additional for XXXX, XX, information. press release dated

call, our indicators by key a information by its about respect for performance provide believe superior prepared and with certain financial accordance these In provide management of this a results, non-GAAP greater the GAAP. The a are and used and metrics. to will or that be financial financial by for allow today non-GAAP used information used in for We and in as discuss often number performance throughout decision-making. understanding means industry. of as in substitute Further, financial key or useful we operational measures period-to-period intended these competitors financial decision-making isolation is presentation our considered and past and not We metrics in to information and management presented this metrics operational the to use prospects we to comparisons. measures with operating enhance addition, overall financial future evaluate of transparency

XXXX. that, financial hand tables, off measures indicators like release with And non-GAAP including the on information XX, and to the performance reconciliation to press I'd our August see more For key Dan. it dated

Dan Adika

to team our Thank morning, Aviv management against excited you, John, here today. to I'm global office leading good our in quarter to Tel We're our all enterprises. with results. the We're global full share be everyone. Adoption our delivering second strategy, Digital executing Platform and proud

newly hub. X on made customers complex digital DAP growing for focusing year-over-year centralized by year-over-year deploying and from use over adding surpassed years driving within ARR last enterprise and Our across cases transition, now is with of move what our XX% is the expansion, selling all over faster customer XXX has This I'm the launched million. XX% from to to workflows. single in we progress accounting $XXX more now our our employee is far Overall product lines the application ARR use ELA, ARR. progress million thrilled us Workstation, applications $XXX driving with like having seen WalkMe larger growth cases

huge million complex this customers and to biggest happy demand seeing adoption digital experience. Our achieving growing is the our ARR million closed we've our with expand a company accounts X accounts on quarter, This environment we've realization employee testament business by $X value growth that or deal of share our on with focus the more. to focusing the history, in you success in and I'm $X and transformation in of large enterprise these seeing DAP expanding a enterprise this customers. seen digital value are by and digital of

focusing digital on forward of the customers, and that Our strategies driving innovators biggest work. customers are getting ways bigger, new these are

offering the right to expand prioritizing lead efficiency. our right As business product improve strategy our and we're accounts, and these we value on within to continue to focusing also the operational deliver segments

We from showing to $X our are cash model. We improve pushing margin our in leverage non-GAAP improve improved and efficiency the flow underlying operating free our nearly driving QX quarter-to-quarter. million, by business our our operating and to loss from

moved priorities, leading see expect in better strategic to forward. have margin to prioritizing in this fast our and We going our improvement leverage continued

growing and are the We Digital to category transition DAP of customers Platform. market our the complete Adoption our

action and large are of higher our levels aligning moving products are our within enterprise our also go-to-market customers. on conversation more engine organization, and consideration We experience more in essential near our with better business cycle. positive large macro sales offering the digital is as in and our Longer-term the customers, efforts. lengthening including we in leaders with strategic term, focus strategic increased enterprise business become discussion to and customer the a driving data, With our budget for discussions But transformation are we CIOs. our headwinds with CIOs

durable. partner more continue ecosystems will We growth, believe customers which show we and pipeline with are encouraged be enterprise to robust our to enterprise large see namely our our and expansions

On our growth the we side, such spend market strategic ecosystem driving our federal as in of of our focus growth our partner our investing intense advantage competitive operational and on business. prioritizing with areas category, investment an expanding are drivers in

Day position in XX a the the As laid and cash that saw pleased in of we we'll as in our spend to environment. Investor well Rule profitability and with towards technology focus leadership software that drive us improvements value-focused believe we We a our in free operating we the May. flow, the margins on were out that ROI team, we we continue deliver and

across workflow. can Adoption ability in Our deliver our by has completing be their the Platform, greater been aid driven which organization unique to employees value Digital to deployed entire an of flexibility

They've general of continue supporting of customers' the Fortune live resulting streamlining to liquor WalkMe took toward tight be to mission-critical processes suppliers supplier for it industries. product for change seamlessly to team. to start on internal initiative, We for their portal is to seen XXX company with leading migrated deployed members by network to the we'll workforce. the far Workstation central Metcash that less our over update of traditional changing beat our our and quickly. portal, availability they XX% workflow, a with can more specific value is the how approaches sales. excellence ushered presales add Workstation enable hardware independent in quarter. as food, of and its first X,XXX users. way enabled internal to on product across Australia's one the customer to Metcash largest to their demonstrate team goods developed a insurance enablement self-service Workstation, partner and migrate to hands. their who was in employees, each develop to with of see a employees design-efficient major our product the experiences in and designed HR has us a scale hardware Metcash's team businesses XX,XXX independent that to shelf get wholesaler business improve with guidance to also to our and and the additional work used over expansion for line, hub for strong of with suppliers to supplier-facing thrilled U.S.-based employees customers. our new them we grocers, network deploy example it WalkMe newest customers As completed we're their learn largest compared It's at establish and we can and application from smaller liquor than complements With of testing more provider, them time and entire in ecosystem, solution success using platform significant new some higher products adoption provides its team of XXX,XXX enterprise, an but and This to efforts stores ensuring information unit purchase value us drive partnered time our this the stream. distributor a property digital than across were huge and great program Proving internal This A systems. but management and new and and customers. requirements teams. for supplying revenue on across savings. and WalkMe the a and change customers, the management businesses offerings deploy had in XX WalkMe AB a center deploying regulatory its closely to a is user distribute self-service to management Metcash stores cost nothing system enterprise work, invested and They important our this retailers, system into casualty

portals and Metcash application enterprise-wide as AB this the introduced As real-world for well experiment, now of internal test a employee-facing their and is WalkMe users their customer supplier-facing to result as system. out WalkMe rolling Metcash their website. of

example enable & global just-in-time force uses user's to the company to global right its training great role, cohesive materials each a which With L. W. Another over providing Gore of is sales relevant WalkMe X,XXX people. information function and the time hours saving in sellers faster with feature proper sales an context led leaders of time resulting person's hundreds the adoption training has each a and with right XX% reduction to of year. in Associates,

enhancements with release, to functionalities introduced we invest our Notably, July and security to brings our data, changes through of and governance, how continue with that in hub Workstation Workstation enterprise employees newest employee and products. interaction customers. new related We the more. to integration, version software. and In search released interact simplify software employees desktop-based multi-language, our product a our automation we to workflow,

and short, how accurate to more they Not deliver gain [indiscernible]. used into Workstation, transformation full will and digital for customers. analytics. our able And business executives discovery processes DTI employees on their workflows their being measure to group and Intelligence, and Digital usage experience CIOs be combined use of observability stack and end-to-end and truly to DTI we business action is and to insight will experiences processes be for Transformation able to into our to are but that introduced be completed. DTI allowing with platform the is the efforts. our beta target efficient, In software product, focus to including software level allow digital CIOs the to being transformation, select just addition a

Now helps organizations' the WalkMe XX when lie leaders served findings the it where which from revealed second enterprise to business research digital nearly of senior across transitioning adoption. of of report and to challenges in pulse comes our X,XXX still the we gaps The categories. the Yesterday, take us digital transformation countries. state digital adoption annual

purpose. of technology, to approach XX% support of are fit change project include poor expected compelling average, have met of most findings only XX% the past This concerned of the say about are for programs XX% training a on on longer and of of enterprises no decision-makers inapplicable. employee one-size-fits-all their says XX% year, enterprises management adoption ROI. technology digital effect Some KPI. enterprise software is

employee So a operational clearly this can poor a X solve fail. to adoption realized the failed issues. failing and losing resources, adoptions industry digital these that. edge. these changes and inefficiencies increasingly improvements where we the strategy, gap business The to that organizations adapt security According to processes organizations retention, survey will of is survey, include waste effective digital shows and Without top help risk, competitive consequences increased

Another day, profiles to profession, of LinkedIn the of Professional facet WalkMe we WalkMe than of of opportunity we the last in for advancing application In XX both itself Equity also as taking was registered titled, or grow, of Thursday is employees by continues DEI DAP growing provider. our DAP professionals. Inclusion, DAP of International cited which grew within the to virtually July digital include celebrating of DAP organization. this is the technologies WalkMe DAP backgrounds, the honor Gartner mentioning is levels on for the expanded more WalkMe DAP community the event have more sample terms seen person. number how the XX% believe We a and growth from To to 'XX a individuals this the and Admin experiences. report that date technology. Elevate, playing from annual use all professional for announce recognition just In XX the DAP in DAP generations place case, different technology really report to took officially recent the 'XX say October nearly evidence And Day, we Innovation of as recently community Insight as the in X,XXX. as in field Diversity, and to Digitally-Enabled ex-equity category use of The

workforce the titled, WalkMe report Another Strategy example in included for WalkMe Future Adopt Labor Forrester category growth, to of example recent was technology of to Tech current overall in the productivity the Anywhere-Work as The can an the An increase the labor that report Market. complement Compete mentioned strategy.

the end and ecosystem relationship Our In partnership to to in recognized our have our continue our forward. executing expand, expand continued In scale to others. with combined working drive we HCL we quarter, professionals, been continues users this from against to partners Accenture, Deloitte, geographies to partner category and our increased plan. with DAP these we to and go-to-market our past, this

efforts partners. around the to being ecosystem more significant by our impacted we're our As seeing continue expand, partner deals

contribution customers. their one are their partner XXXX. deals employees all already X as make of delighting one ARR X-figure QX, ecosystem ecosystem investing is the new XXXX our and and to WalkMe with new saw well their our of talent net has to deals, eclipsed partner as in developing in Our customer contribution an in numerous half first net a own as customers including We a new meaningful Part partners to our expansion. internal ARR Global XXXX them of customers, deliver

Our partners certified have in continue grow. trend the of to their and employees hundreds to that or WalkMe expect we with already the process,

in As partner Investor digital outlined us transformation. expand to some organizations we of our our to largest the platform Day, the undergoing ecosystem of reach enables our

focus to continue we as in XXXX, meaningfully scale XXXX and We expect out laid contribute in further previously. this to

We've Lastly, sector to Last in addition a infrastructure upcoming Georgia's voter capabilities to out part to team, to the Page work including ensure Voter technological plan support election. WalkMe FedRAMP access on the of public November Georgia's enhancement progress. our of certification the continues of business. in State invested comprehensive building and significant announced as My Secretary the week,

In so addition, pursuing we are status pleased made of with the StateRAMP the and in process and we're progress FedRAMP far.

While new of certification, customers. continue the to public including Chandler, and city large undergoing we the gain sector transportation customers Arizona in

infrastructure Our of has to practice technical drive investment, goal go-to-market but will entire helped our solution. This investment greater driven entire across large efficiencies our just us being in our our overhaul federal our strategy, noted business more going segment, serve isn't and the by structure in who our joined and federal able Chief we Officer, of product we Little, signed and forward. nimble pleased to few had that today to weeks started I'm approach be our by the a Scott quarter, ago. new a deployment our Revenue Last of

Additionally, week, increased greater Scott strategic focus them focus earlier execution. this a as help thrilled few and alignment Adriel that Chief and Adriel have to reunite and we to us had Marketing Sanchez on I'd join Scott? announced our hired priorities we driving to strong drive invite Officer. We're say by on like Scott to words.

Scott Little

am WalkMe thrilled optimization and as Thank be Global invested here the being I the money of to I well saw as you, in today. the largest transformations. in digital transformations Dan. I to because support joined some XXXX discovery process those firsthand

a partner and partners cost-effective An is partner as processes. multiple role material in outcomes. a that of is large GSI transformation drive their play to and as kinds SAP their live multiple ingredient that in-house systems that are software Software these clients. the completely fit-for-purpose solutions that management most or new process Partners good of of lightweight customers by across new the success well aspect a like adoption adoption applications processes key Deloitte. of in or whether WalkMe business in to want way flexible or outcomes are the Celonis investments. change or implemented a and digital applications. an Accenture brings of end, both is overhaul the projects, drive deliver transformations optimization never And these understand huge new and the often These changes platform can valuable deployments existing applications. our process whether These of like to existing related to organizations projects element a from success, a nimble, digital underappreciated

return largest platform clients on complex their portfolio most environments software deploy with the investment the X workflow greatest WalkMe when Our the they their Tier across realize applications.

to outcomes ability in to and repeat deliver Successful business. Since in And best I'm come clients July, companies smart, in taken to into of some from partners a Our recently excited with the software critical turn our very time the world. good large clients. joined have part with world. I these meet work happy the that are joining from projects driven have The talented the these and employees have people people. across of

at can Dan. I'll As continue organization hand grown help the today, in and Thanks And problems my we're grow again. rapid fast, plan it we've now and growth. I effective organization scale immune to and way. look the But to that come I back with processes provide to structure repeatable and not a this that to

Dan Adika

this really I'm customers. our our all and pleased Scott. employees progress you, Thank investors, to with quarter. partners, Thank you

We X $XXX Since, years our journey continuing ARR. we the offering ago. vision DAP has to DAP that in over are fulfill kicked million to grown off

professionals. ecosystem hand expanding over customers category, signing by expanding to firms us. the an dollar it true tier With over are have are X,XXX We contracts and that, analyst Top with DAP realizing with with Andrew. recognizing will multimillion value I and us our

Andrew Casey

Thank you, Dan.

by was their XXXX invest customers, quarter and us. relationships with driven who our with to second continue Our Global expand strong expansions

As of the largest by some agreements. but the Dan the highlighted, in year-over-year. months, which the grew DAP increase nearly as strategic customers, XX% history, we nature quarter expansions was duration for saw saw from also in our company broad average XX evidenced our of these And of ARR our highlighting we customers, deal biggest contract

need in costs, processes with operating focused the us aligning operations. coming scale efficiencies operational efficiency by our vision that's and strategic is customer and our savings saw Scott in from quarters. many we execution we Chief second first greater both the Officer. efficiencies and operating to The welcome the excited our a WalkMe we're to our direct Revenue with business Adriel in laid drive next and that benefits people the Investor as on Improvements also to out Officer team our in initiatives alignment achieve in the our our the greater take focus it's outlined in drive our initiatives our one will we improvements executive compared of enable Chief our And our of as first, level. these Marketing driving greater organization our we initiatives. why Day. to and focused sales will improving pleased I'm long-term core Adding software and reflection them of our to We of to these to utilizing improving the internally, on our margin quarter in

new Our biggest WalkMe we across that and in $X Nearly of X/X quarter, $X from the in Impressively, us expanded deploy customers were customers customers and than $XXX,XXX continue organizations. to our expansions invest $XXX,XXX in quarter, greater our we X net than paid had of ARR. who already within the had million million ARR. more over XX expansions

shift enterprise All both respectively. in validation paying and XX%, cases, on over of who this $XXX,XXX million the ARR. in XX increased customers. customer and go-to-market enterprise over XXX are customers ARR us and is We in us of XX% In paying focus customers large $X have our to the ARR now per year-over-year average

the million. million. expected in subscription Long-term be after large grew business, revenue months, to quarter. XX% quarter be current being quarter XX% customers fourth Our XX% revenue XX And year-over-year $XXX year-over-year, subscription with recognized ARR than more months, for the which The momentum revenue enterprise our $XX.X the continues with XX Remaining grew to $XXX expected was customer growth employees at quarter up RPO, year-over-year grew for in in over continues. $XXX XX% contracted driver to up the XX% the up to year-over-year, the recognized the next XX% Total obligations, from growth undergone XX% $XXX.X accounting largest of next million, contracted to is the of which to XXX a ended the growing million, RPO, $XX.X rest was representing ARR while of million, RPO, performance million, year-over-year. the year-over-year revenue after or outpace expansions maintenance subscription year-over-year. is XXXX.

the net the XXX% XXX quarter in dollar-based retention last employees for for trailing year. customers to X over compared was quarters Our XXX% second

XXXX, steps While the the I'm our loss both in our pleased margin the we've our operational ecosystem to the loss. which continue improvement with taken us efficiencies, high investments basis public making improve for first sector, and of our on dollar will progress enable quarter to watermark sequentially also partner and throughout

improved As a cash of expect we positive XXXX. achieve to operating the non-GAAP result margins, free now flow during

and was that to expenses the margin XX%, margins, like going profitability, gross XXXX, in up be results quarter. quarter towards as due strategy. forward. will improvements the profit multi-cloud to first from margin I XX% to to shift non-GAAP year-over-year. In gross of hosting seen million, X.X% turning discussing second Gross gross revenue would mix was a I our Before and up note capabilities $XX improved a we We've subscription move

improve an the We mix positive where model, expect and our services leveraging margin to to overall of our revenue gross feasible. hosting will operations due continue subscription optimization improved and services versus of partners engagement

expenses. operating now to Turning

the $XX.X increasingly the last $XX in growth to XX% the the versus XX% Sales are This prioritizing quarter expenses in in the ecosystem on million second year. quarter million second growth expense total was partner go-to-market to second quarter XX% million XXXX the enterprise XX% expansion, our total second of compared We in year. strategy compared R&D $XX.X category in quarter year. XX% $XX.X enterprise drivers of quarter in million in quarter second of last last compared year. and to our of to XXXX same across last quarter the of in last revenue globe. was large represents and period of focused This of marketing second and and strategic our represents revenue

to to flexibility platform our and our in for drive investments We increase innovation continue make deployment.

quarter year. G&A the versus in XX% compared extend million XXXX. was of product to revenue in of to in XX% We our quarter in expense as ecosystem the $X.X last and second will million in in was second $XX.X we invest R&D our year. the last invest of the quarter XXXX second quarter G&A for continue second

in We are our investing infrastructure business. drive in our scale long-term continue of business the and to

and primary model, products. the be us in We've operating made second opportunity market sales drove our our forward, lower the look capture the to will in our greater marketing which the we R&D initial operating progress and as plan Going areas for in to our quarter. of continue loss efficiencies quarter, for than driving investment growing for

million quarter We the driving are year. last Operating margin cash model. Net share and and $XX.X breakeven and in quarter from of showing last negative in of Free cash using $XX.X efficiencies. to last million the in operating the weighted which the quarter compared was last our and of year our for second $X.X to loss XXXX the very negative in increasing quarter cash flow XXXX of operational negative compared XXXX is Operating of on the quarter reflection quarter XX%, negative negative second flow average outstanding. and down negative quarter negative last loss focused a period loss XX.X the million towards quarter year. second in in $X.XX, business shares XX% million profitability million flow last XXXX second leverage a year, Free XX% last in margin quarter was of same $XX.X was million last compared of $XX.X per XX% XX%. quarter improved $XX.X of second to million of XX% second of was negative

We in short-term sheet. million $XXX.X equivalents the cash, ended with deposits. cash quarter and balance to Turning

throughout balance to and cash to well support improving margins expectation the continue sizable operating goals. XXXX XXXX, of we capitalized growth our and our Given are

Turning now to guidance.

in While the of we the the to we approach taking second quarter, our pleased year. remainder were a with performance more are conservative

of XXXX. SMB a half are we and revenue mind, customers which expect second our around in uncertain customers, into million $X the our small XXX focus expect In we currently be the our this from churn employee total ARR Combined, than ARR. doubling addition revenue million XX% and that With guidance. environment, increasing from more for to impacts our are macroeconomic down factored greater of $X the to our to headwind of total and macroeconomic represent the

with while aligning priorities. efficiencies more strategic driving are model We operating our our

sequentially non-GAAP non-GAAP previously. and that revenue a improved headwinds a said, basis. to And for the the see the are year-over-year; we range million As With the result, XXXX, million operating loss in we $XX.X $XX.X loss quarter of the to third of quarter representing expect to guidance of operating range to growth XX% third of expect $XX.X improving we million, in in operating on million. mentioned revenue our margin despite $XX.X fourth XX%

the are For we XXXX, operating revenue our and line guidance year full loss lowering our top expected range. lowering

will We continue operating million, our $XXX XX% a of XX% million, gradual we returns second and in see the improvement revenue that, non-GAAP your million to questions. as half of leverage representing I XXXX range to of take in $XXX from investments. With Dan, the Scott in million Rafi, to of to expect loss $XX growth $XX year-over-year, range the operating in reflecting

Operator

our KeyBanc. Michael Instructions] from take [Operator question from We will Turits first

Michael Turits

move you sustainable cash How numbers free I flow is next Can then a also, And more on to getting free to the And basis? close expansion that large how bit that? a year. you that's the there? assume opportunity flow talk enterprise to year think to talk about X-quarter breakeven customers. Congrats actually Good the that bit fed on just and good a get full cash and focus. basis. you're we're those see when breakeven for -- on do little going those rate a about

Andrew Casey

we'll the back up expectations on progress are fed, that you But on Dan be on with Andrew. greater certification. the teams making very it's and questions. you, the add if The expect more specific the focused, tell front X, detail coming I'd with can first I I'll take progress Michael, our we're and showcasing weeks. me that our in in line

in tell pleased would there's we're free you So drive the contribute there's us proud our cash We're internally is On showing we how improvements, there. operational efficiencies I whenever product WalkMe for progress big our fact Most -- program. expenses. couple that's a we're we're improvements WalkMe using importantly very factors many our flow driving you in real way a basis, operating the own improving. in with in which for a to and up of very operate process

there of So the progress operational team very we unit. major the areas and made which the is has proud really focus, every

you about towards a -- the optimizing we're when that from that together response goal that executing that The they And singular teams thing focused the when towards talked other our work Day, on get will we work areas, spent. singular tremendous. sure is, every on I'd in inefficiencies I goal and everybody was giving highlights we all you employees not tell And we and you that a tell efficiencies drive all major other making dollar that's all these at Analyst us major, really new where things which our could our -- come improvements it's when have ways little all to it's efficiencies, in you that palatable. we drive the work together our sales cohesive that model. areas as although some improvements, big in marketing was unit, makes And about

of and our that And talking that positive flow that to on and you're a our strength think position do I unit we'll that continue model framework so the XXXX. our about basis. sustainable in right hitting cash free we're of terms economics, And in given do

Michael Turits

the other And we're was to going discuss I the right, fed, think one?

Andrew Casey

great certification on in on Well, progress pace I say that be expect Fed been for we'll well progress showcasing objectives. And coming the going the so meeting the weeks. our I'd We're has our us. for

Operator

Berg our Needham. from will Scott next from We take question

Scott Berg

here. I the guess on a couple in things quarter. got I've the sales Congrats of

I commentary the to to I efficiencies changes don't all, new expect of can the know, to or to sales process what understand with new Officer, that's welcome the wanted First over in. maybe we next, try wanted months. in call, some I organization Revenue Chief start to and XX get maybe the XX

Scott Little

Thank you, expect board. glad organizational and be I'm on to per I changes se. don't significant

way manage I we think some pretty aging efficiencies, perspective. they're But discipline drive can which from manage we we and which I maturity. in shape there in pipeline that way think, the the and at in are good

organization. company would mature Just itself things would in the you for expect that that the sales as see to you

approach. good here, So there's just and no discipline magic sales,

Scott Berg

on quarter Andrew, assumes for from back we Wanted growth little the QX. guidance here in And guidance. a in cycles QX then, from acceleration deals And to half, that to sales second guidance into be Helpful. don't there try to rate great. helping your that any the But color can something it. obviously revenue your QX fourth into understand I the is comes that's from moved and confidence guidance that. know, in, or where QX just would Got

Andrew Casey

into major QX. Scott, a did I'd our about talk tell that remember one job from we we certainly, had in talked opportunities areas. closing earnings, you certainly slipped great we and that slipped in when then about of did a the that had And So all we quarter of the that moved few QX you those almost

with pleased with selling we process we're the especially So go our our you on actually strongest revenues profile, respect period through reflection a quarter that is how on our PS throughout those our QX quarterly the up to at and the well. look a line frankly, deals to and, basis year, -- that as it's always how pretty the fact our revenue as the linearity saw When in we history well. on of

they're a that up our So to are align that all macroeconomic it's really GXKs with really But the and lining to else. right the it's large as can our problems solve. towards It's the Analyst have talking that right that I'm put talked with reacted more about about, -- the customers. in a on thing -- I in how the and pipeline material Day, we customers which that that with we're us focus shifting will linearity tell I you the enterprise, and expand can we really our and the our despite anything made and headwinds well about enterprise. teams well focus, than documented, pleased pipelines really -- way is And

you I and pipelines cycles new tell other client new with more would don't go and DPA to the we're a that expansion the and up of a the The efforts exhibiting and you And motions it more is are security contract driving. reflection sign sales sales easier. opportunities, the reviews. thing through a the is makes It have go sales and the all

in to weighs optimism And operate in so little our with we how QX. a would that bit respect

show are the company guidance respect us, prudent how we actually want for just But very levers about well like I material broader we're for to in with pulled up macro we're the to the environment. starting and highlighted and So setting to a be we've it growth. the way, positioning feels ones long-term

Operator

We will from our next question take Kevin Goldman Kumar from Sachs.

Kevin Kumar

changes given year? of in there back sales One is the that maybe on half just capacity terms of investments increased of to rep sales much in are And productivity? the expectation, any guide, updated how improvements the profitability the

Andrew Casey

if to year. So beginning wants capacity maybe the capacity. may at let would I'll that and he comment I'll you one, I take you our that we the sales of on sales hire of tell most recall that Scott

are teams amazing you activities. efforts effort much other the we investments with where productivity the focus It's year. get not our And the as then in we're spending we markets, can expectation certainly types us segments, at Analyst And give expected. you and start seeing that's that would I also you of the we go specific that certain of so deemphasizing, on, sales they areas efficiency. those continue lot that's And we overall. efficiencies in told and right throughout more the greater more as made us productive how a drive customers profit, that and segments investments opportunities. we on time the made, market much in when certain allowing that the that specific as and we're to on we given doing can you we're And focusing that Day confidence greatest focused investment the focusing drive on to And certainly,

up, Kevin, the so built I to do investments in greater greater we've to hires to growth reach materially What the think in order efficiencies don't we place. drive our grow kind all our need it business that in is sales think made. And can ones and I with execute really we we it's goals. that's that continue to and have of have of we have teams

Scott Little

this And also it's right a see marketing greater it's greater with I that, I So don't of and add and right? house, communication is need. of better of and in an of to efficiency not we're that going would efficiency those Scott. the sales sales -- side think to resources, get rep out just growth the deployment the expectation a we going guess the organization marketing that that both in I the a I of with increase expenditure significant forward and lift to achieve combination

Kevin Kumar

the Super Celonis partnership. on then helpful. And one

that value of combination gaps curious you're been WalkMe accelerating and and the it's And say customers? that of to time for since was customers a starting to announced. see is think the couple I if Celonis months of leverage and technology identification

Dan Adika

is Dan. This

we especially are is and interest a the growing, enterprise. larger there the So of with pipeline seeing lot

We our of with have joining a about CIOs obviously, first, them. asking of We're integration lot That it. a lot calls. was

we have big it quarter So looking least customers are in X next or to out. the X to try at

So we're the growing. to But interest X on Phase technology and that. obviously, partnership. growing them pleased with we're the with just working keeps And deepen

Operator

from from our Vinod take Barclays. question Srinivas will next We

Vinod Srinivas

years. growth goal little do you've formula still the moved about given versus now? X, a flow to kind Rule just you And there about about Just talk that talk get of free cash bit XXXX? by to of wanted reaching by the for flow the your you up free X Can philosophy cash expect profitability revenue XX

Andrew Casey

a drive we growth fancy that year-over-year revenue the that ourselves we company still us. front percent think market So I see short answer the XX-plus of in opportunity yes, given we there do. as can And still is

the that, term into that increasingly second giving revenue believe way -- drive the we're this of over we do investments thinking we I really what and said of we're and lot half and headwinds need having we what that a we're see. the it's front experiencing. the us more some about more year and, growth lot of there's to not is guidance, a see in short in -- macroeconomic Now based XXXX, to make guidance upon of But all incremental not certainly, there's order is the the

some major the we've really taken, and of a date drive the got in our to of formula. line that's operating or see model. actions every basic those starting little to on actions go leverage. in a lot benefits back different we're We've from So X, operating them our year now the initiatives And improvements

when at on customers. really the that aligned free doubled And beginning feedback get So targeting down hard on not and our whole position. flow market of magic, rolled the it's of our right focus from on cash And helps driving outcome the the towards it's investments we we operational heard out company positive just and efficiencies the the the work. initial year, we and

Vinod Srinivas

No, And that later about through the helpful. in on of cadence little the into little that's through bit it. a early demand do I follow-up given kind trends Got just July of kind you quick talk And on-cycle some then report can August. the later you guess from of then that. other bit continued companies than a quarter and a June

about performed the of XX about there about how those talk of specifically versus GXK -- talked You are you make up customers I overall DAP think how base? some about them maybe Can customers that customers. are

Andrew Casey

first. second So I'll the part take

added why in we were customers the things things we're that customers a the were one DAP in GXK the that we're that doing even I during of is cases, ones some that the of think the customers that right very of cases. us. quarter reasons expanding the those optimistic that DAP are already couple GXK were -- were And with the

optimism, that's showcasing been the they business able their largest the they're improve to in our are focusing with benefits do, a our right really we've that we're the they is associated world, way. seeing when our -- broad companies So done processes technology adoption to things meaningful and the organization. And in and

change in that focus. major no So

think not I benefits we're just the of seeing it.

them is GXK customers. that and DAP. see had a I technology making basis. capability I over progression. We're had those in that and remember, But point XX time, on everybody about GXK we our the it customer in customers, to that's I may those were progression And that told of taking think, there. the you customers -- go-forward we DAP at showcasing reminded And our see and only number, real I XXX GXKs to continue DAP. GXK going opportunity, You'll talked

I'd can making the existing the shared before, do you focusing a our And we our million-plus And be the better DAP drive, opportunity it's that really at us on customers so a customer. driving by them off more customers math we'll DAP for $XXX growth. into basic if just

Dan Adika

a Regarding DAP-specific average economy XXX to of from the unit it deal, XXX. grew

So themselves average growing, the size... also deals are the deal

Vinod Srinivas

the of just question? the And demand on part

Andrew Casey

Yes.

say demand that wouldn't us. I has So for substantially profile the changed

has clear may was company software with as about sales metrics. what cycles short-term I core happens what right think our every that headwinds want talk reflect you to sales we there But absolutely certainly, position seeing Longer that, on in do enterprise the right process longer-than-prior And right focus, lengthening really and our other it's caused perspective. we term, sure is when it us we're approach on company impacts. major is to other back-end to as talking shift guidance. a it's we and every for that from clients, like that our we're thought about and And us a the quarter and demand some upmarket larger investors absolutely and loaded teams the strategy, linearity is be with invariably, be cycles. we're being our into we how get prudent make and larger

Rafael Sweary

their that's And is metrics deals more an demand our by significant the larger driven partners, in from coming partner see another that we are in are partners, thing demand great and the ASP. increase Another thing.

Operator

We will take from our next question Wells from Turrin Securities. Michael Fargo

Michael Turrin

the a maybe some around on current if in you I step what just would DAP spend back, just the into time environment. it space helpful think be you're selling taking learning could

half during deal framing targets the the more measured stance the of there's a sounds ever it back in clear landing for Also, largest mentioned year. quarter. You the

customer there ROI in larger shift of in some yourself you're more customers to gains we're software? the across environment then of smaller are that just hearing finding much efficiency how expecting just to there? lean deemphasis help offset outlook or current you're the broadly on able or comes impacts into the side, constrained that of environment the from continued elongation So and And

Dan Adika

Mike, I will start.

quarter and call, So in in now on mentioned history, the just an the ever as deal expansion. we was that I largest our signed our

they us our ROI larger their deploying them that So what enterprise-wide the to spend on to seeing more to continue more start increase clear And a that go Digital Adoption gains more and with need Platform. it's deploying and because from the or and customers applications. WalkMe they're we're seeing to is

the So XXX. average customers. is we're seeing went why it across DAP up This to customer all per our

As saving they're and money in just from them general will deploying it, their DAP we productivity gain one, current investment. help absolutely in a ROI think software that lot, economics, today's WalkMe on and increased

to this help So be utilize solution we suited are software. to organizations on their spend

happy ARR we're more and seeing more ARR. our I as than and us $X with to more million we're see increased more expanding it, are customers $X and So over mentioned that by customers our the us. paying of X And on million call, of

we're doing sign a that that So us right for thing. the was big

Michael Turrin

terms a targets Are year? you visibility given and much That's Maybe you're of the rest all in throughout the big quick just the framing seeing how bit additional impacts those is rest for of do now of currently the do the assumed what's uncertainty have to follow-on, end between here allowing surface? approach more how picture year, what you Or for holds for outlook the of in targets helpful. it Andrew, just year? as and a just you into

Andrew Casey

and visibility those in on we and I So frame drive we our pipeline. how how discipline think more good pipelines And Scott doing to we've more mature said, them. as he's got

factored from bit accelerate. revenue going may our we part accounts. that respect less we've to guidance you away our little you shifted focus away when that expect where will definitely our It's with headwinds of your is shift really employee that XXX of there I guidance. with do ARR, some the X% softening very away intentional That's were that our that nuanced. to tell roughly than be positive. there's And So focus. a into And I

business the medium-sized the medium-sized COVID we segment when our less was from than entered XXXX, back Now into we're away doing XXX, and from there's some had with had clients. impact we customer -- impact macroeconomic the business but on the small larger small, associated biggest slowdowns in shifts also we clients. on When

by and So will that for there's hit look expect going the as out slowdown. naturally we a some see and that us be market headwinds, segment that's be to

and little is going on be. split a versus process less it our nuanced intentional XXX. on heavily it's weigh trying away bit from to hairs But macroeconomic between more to half thought to is does guidance part shift what what the second So our on than

Operator

Tyler from We from Citi. next question will take Radke our

Tyler Radke

$X I or in million haven't like added to $X just customers, million the ask looks customer it new QX. wanted a QX you you about

X about last in first added of You the half year.

some about expansions are You within talking customers. $X million good those pretty

million last could over deals us part makes that churn in dollar of help just there. the couple you from just you kind Or QX? that of those So referenced there new Were any that existing quarters? closed look slip your customers was understand some that outlook of cohort of metric flat the

Dan Adika

Yes, start so the with end. I'll

$X just X they're organization, a I absolutely in say, we're have expanding, prove We an would as our we're new churn and value. that cohort. Actually, entering to million need we category,

first goal customer to that's a that's and get the the to harder. million, So

seeing On customers when are those getting are increasing. we flip to million, the $X side, we

in adding million existing ARR just biggest the our we account. history, customers with customers, one million in over $X deal So add we added new more $X didn't those and million but than $X signed company another in

are trend. that we So seeing

more deployment, said, good The the goal to and ARR will million continue to mentioned, customers time is to as customers our more more So and sign, are customers. I will is obviously continuing time, adopt $X as it see with and get to -- adopt I more existing expand.

Andrew Casey

is each add greater that, $XXX,XXX. that were a up expansions, virtually customers $X grew are did we those And time. in see customers the of all thing that Dan, I'd million than other increases period over So good of the number they to

average expanding, ARR adding XX%. year-over-year overall and grew for and in average customers XX% sorry, too. the great even The grew in in more more that we're as -- So $XXX,XXX, the grew -- they're ARR value cohort quarter-over-quarter

graduate million-dollar see into customers where is we've go to we'll a opportunities lot the go and focus back drive the in we to of future, And expansions you continue got our more those clients, bet to they'll expand, more to graduate. customers. as can is, that So

Tyler Radke

terms year. for are the That's down. QX guys thinking ARR some maybe for do softer slip outlook of forecast? mind have And benefit summer seasonality? follow-up you the a keep I just seasonality, in And anything know full did helpful. revisions about deals. the ARR maybe of we in took seem you you know typically maybe to because of a should and revenue bit your on is QX your kind year, How it this of just typical like you I but

we just seasonality QX. how about be maybe QX frame for So us for thinking should ARR and

Andrew Casey

that. appreciate for the thanks question. So I

those from something the see lot a also this try QX. point going it's we're to there's we what so ARR you saw in we're with in churn at right. you more softness of same so new absolutely well, and in you're largest in really up you but QX. will we But when -- time -- seeing on Obviously, typically when with expect year little play client, be But think huge that, is second made in last growth seasonality. half, your line wouldn't say, QX to we did linearity as around And the that to see types come in same last ARR we I of the look where that we of SMB year in in softness I some see to to where year contribution, things of typically, time. And this how up respect QX. initial did than type our thought And QX with a to year-round I'd I'd look, the going processes some ARR. have the is on for the saw

Operator

take question our Baer Josh from next from Stanley. will Morgan We

Josh Baer

commentary some pipelines. the Clearly, guess, strong seeing some same trends expansion backdrop I macro and we that deals. and slip time, have we're on about this great At talked

and a customer customers large are of existing your for get with to sales also from macro how this wanted customers. of customers potential better in then both the going maybe just -- perspective conversations new existing for cycles So and sense light

Andrew Casey

Yes.

not extend mean shift time So a moving I focus the that new start going our say more pipeline just whenever the focus your on that focus you'd expansion, -- trying more clients. -- so you're good overall with we've to you're large the is on, to thing upmarket, we more naturally, bit. will as is average cycle lot in customers, it's of towards I'd capture on see of extension. a see the got and weighted deal The

However, over-rotate pipeline, focusing still want as I'll are those also There's lot much to -- have GXKs, objectives after we're in new going tell too. you, to just on I clients go don't of a too focusing expansions, capture on and new well. our we

Dan Adika

started One, the I And know, Yes. on XX case ago, as very would much focused things. X WalkMe when base. use you years we're add we

we WalkMe for Workday. Salesforce, So sold WalkMe WalkMe product, for

Digital conversations are we're seeing for wider. Adoption Platform, the demand we Now more obviously, much massive expanding as those category and are DAP

we're when companies, a much bigger talking within So with on talking deployment. or CIOs COOs we're

on deployment on an said greater desktop, employee employee which every is just than WalkMe sits just I as this Salesforce that about overlaying value or your HCM. different app much Just CRM or Workstation, is with much

but more it a is value way deeper, the the much value because obviously, of bit deployment little So the time higher. is is bigger, contract much, the takes

That's we And our promise. this a this technology, focus. not process. want And business employee, deployment, deployment every seeing that I that's the a transformation obviously, and help touch question. and can every companies that's our answered it to per their what with We just is So mission goals enterprise app every is we're that's hope the working. digital full KPIs.

Operator

JMP from our will next Pat take Securities. from Walravens question We

Pat Walravens

on congrats the all And Great. progress.

where maybe, strategically players is with I fits I'd what adoption love big digital but WalkMe this and picture. perspective Dan love are guess not other I'd and perspective a -- So very I'm your in your Andrew, sure, doing. on

themselves now a So management they're Celonis. you started process positioning Celonis execution mining, as with partnership as have software.

You which that worked is they and and where Andrew the includes code integrated their with low have workflows, before. RPA. And ServiceNow, creative

really together? fit for pieces do where confusing you it's do these How all in? think investors. fit And I

Dan Adika

Sure.

Celonis and would I ServiceNow. examples mentioned, that go those just start to -- So I specific would you

So the they don't transactions the the business back-end taking Celonis mining, anything from log, interacting users all the have from with right. business users are database, process -- is end, They're how doing but like software. mining, actually what your on front

one. that's So

like to they be reality companies inspiration But yes, obviously the are great that. [works] of ServiceNow, that have the deploying lot is or On software. something a

and in Just they're to using sales, different mentioning X payroll benefits, not XX on. so HR, applications,

you Microsoft, the and X of CRMs different the this just Celonis, be features. And we of from at we lot At where it. different employee the to needs that They we're doing the we're or on in employees validation, the acquisitions. vendors. what But or are employee exactly It So more mile -- or process. much, not name on the processes have They business have application reality making are our can onboarding desktop, sitting the getting execute WalkMe being a application. making organizations using do. of end X about the of the using be We're productive. much that multiple, fit. day, their can front XX or cases, job efficient, not Oracle, search, using correctly, They're talking last out we every Integrations that to ensuring them is and from they're to some about the vendor. helping data They're employees. on ServiceNow that customer most organizations, Salesforce, end day, one XX, and, big more. Think is to one need complete

this what on screen. the and activate our we the an and allowing WalkMe have Celonis right? integration Celonis, WalkMe automation the on make their So they How pops we're but example, for So API, via can then action desktop now? action? to user user data, amazing So trigger actually data, on with based Celonis take

is you on have think how and all not different to processes If of them ServiceNow. ServiceNow, do, many about need you

go to go Sometimes to go your to you details, need another then application. go then update HCM, to Salesforce, then to ServiceNow,

of it want is orchestrating to the piece because don't or to WalkMe employee or solution break confused don't software. to you And be one want -- just go obviously all You need it. other of they be other to one

to I So have. hope follow-up it answers do the I would happy you a question, be if

Operator

are Streppa, the questions conference time. remarks. there like this further at Mr. you for appears John no It to closing I'd to turn back or any additional

John Streppa

today. our I you and want analysts, everyone, to Yes, with for thank being our the everyone customers us our Thank call. team, on investors,

Operator

That concludes today's call. for your Thank participation. you

You may now disconnect.

WalkMe (WKME) 11 Aug 222022 Q2 Earnings call transcript