Earnings call transcript Q4 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

John Streppa

Thank you for joining our Fourth Quarter and Full Year 2022 Earnings Call. I'm John Streppa, Head of Investor Relations at WalkMe and today I'm joined by Dan Adika, CEO and Co-Founder; Scott Little, our Chief Revenue Officer; and Hagit Ynon, our Chief Financial Officer.

Certain statements we make today may constitute forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 that relate to our current expectations and views of future events. These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control.

the materially a information of furnished on result those and forth filed differ forward-looking in factors, documents Form may Factors other on set as Risk the March the to statements of in Exchange XX-F outcomes filed from annual or Securities contained the SEC. the including in with Actual our titled and report Commission section with a XXXX, number XX, additional release information. press February dated XXXX for our See XX,

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

call, by provide Further, our throughout by this key in used of industry. our we management a used performance indicators number competitors and often

the see on measures indicators, XX, and financial information non-GAAP release our press tables, more dated the For key reconciliation XXXX. performance including February

it to with And that, like off to hand Dan. I'd

Dan Adika

our you today fourth I'm plans to on our with and good quarter XXXX everyone. morning Thank thoughts XXXX. results ahead for and pleased you, John and share

company, we large tune be to on our fine within flow and to positive cash align targeting we enterprise a strategy focus sustainable customers. enterprise growth As XXXX,

footprint count on departmental-wide customers year customers. a applications ARR, and four and I which to customers we enterprise ELA year-over-year over $X DAP grew or in call deployments XX% with the with share that XX XXX showing million paying our now am growth our happy we finished more

seeing We the importantly, are focused of we're growth, expansion for value and ARR our most the platform. room account most from utilization realized on our DAP customers and

ARR year-over-year the a DAP three and seen growth XX% XX% showing new above we've last now XX deals from for ARR. for row, total steady quarters is DAP in XX% of accounting customer up QX in our

While focusing free our highest positive DAP prioritized growth we've spend investment while our on key our rationalizing segment and flow. in the also drive area to offering, towards cash

within Through and continued with the our operating this made growth QX I'm sequential margin. we management I'm XX% quarter. from we've in reduced non-GAAP With XX% reducing highest cash our improving we by partner will flow XXXX. ecosystem We've our hit pleased driving prudent positive that the throughout seen positive tremendous XXXX run to milestone in from year, progress that, OpEx our XXXX. progress loss expense rate QX WalkMe the our operating

in tools, We management and as now in people are continue the partners to to count largest our scale training challenges and These with enable have and largest in world. contribution partners. businesses invest the greater tackling organizations Deloitte, and relationship Accenture, deep HCL, partners drive others change the We'll XXXX. even our their to SAP,

This existing U.S. demand signed federal Government. opportunity quarter, the work ready This deals In partnership fourth we in our as in Federal testament is towards the amazing space U.S. the pent-up a two federal federal the the through to is about the secure prior excited also to market. we in approval. progress We're large tariffs. federal

through We contribution to expect more meaningful second of XXXX. half the come

for point Wave XXXX year also and Gartner, glad guide leader reports of Forrester market Adoption category was was market. to DAP analyst as tipping We where named Forrester, share the WalkMe are IDC and market Group the major Everest first category from in New mentions, Digital the number a ever the with I'm pioneers of accredited the Platform, for that unprecedented DAP and

the of and investments our our Adriel Pyrzenski, best XXXX additions was for Revenue our strengthen forward Officer; group to Chief Chief made our way the in People defined customers. together clear Scott so One Chelsea leadership and of to Sanchez, a CMO. we of Little our deliver this I'm team has with come path the executive the experience Officer; proud

It months. Officer. was announced having Hagit valuable an of finance team process. six the Hagit Interim the in CFO the integral has served I in and been leader the a of for Ynon great EVP promotion and Financial building a role our of part Operations been pride member our past in Hagit our three is as Finance that real and to with has past organization years, IPO Chief

profitability. and on joining WalkMe variety close at CPA. decades to financial has to WalkMe, expertise where Prior held a of her honing present Hagit well has roles she experience past have step and the the two been company Finance positioned NICE been a to and she's certified have purpose skills Operations going and Her a commitment leadership her the with by and ability we and utmost impressed WalkMe's leading path the her forward. to incredibly in clear leadership Myself role and into confidence

prioritized proud and macro investment team of challenging XXXX and corporations made the through in you future to immune we've shape slower thank Hagit, our economic as while and we company our progress forward the growth company XXXX. congratulate category. our very year and been want am to as a with of the strategic facing I all We're a to side-by-side I not the working headwinds you in It's a anticipating productive of for looking achievements. backdrop. you globe busy I'm to continue we've and and your across

properly our difficult made X% we of reduction the global January, a In of led to workforce. which to focus, ensure resources our were people decision strategic our aligned with around

markets our I economic With downturns forward XXXX motion. throughout XXXX. We will that aligned linger in upmarket growth to may working support the our that, continue look with initiatives to hire enterprise the navigate to our with and to selling of customers

initial globe Enterprise need Adoption to businesses to with margins, their drive clarity Platform are wrestling revenue from into WalkMe's provide emphasizes their underlying the risk, ROI Preparation transformation largest Digital to the greater promise which allow increase workflows succeed. investment second of and reduce the digital across the and software.

The and accelerated to disjointed experience has led departments, the the decision technology path applications. to XXXX creating from average for and [indiscernible] by visibility the has over a XXX user decentralized employee. makers with diffusing the running employees of been company Hiring owned

is paradox resulting digital in simply the average and workflows. ever, is over world, on XXXX company transformation using still experience. digital failing. more all-time XX% technology today's Organizations in Today's found and average frictionless employees more an ever efforts put, low In applications a of week themselves a system than a running adoption with than expect XX have worker powerful

efficiency innovation value. This organizations decreasing leads for our and on with results time closely a time workflows. of achieve spent to process ultimate economy, Bottom application duplication driving to working business has global cost, automation streamline understand employee to these key to wasted on of and today's line, outcome. been are the experience by the leaders WalkMe time, employee context and switching the in on and focused digital focusing

department outcome able utilization a share launched Being that, to to is I'd on critical. the software to impact offering. understand we've and Enterprise tool achieve few mission recent our our DAP company carries the like it To developments Digital of across discovery DTI business key Q. model and about users. the as the tool, and org and utilization part cost unlock and enterprises software data currently optimization by GA Intelligence, the Using end beta discovery by Transformation in can consumption of

are tracking license any will user proprietary the learning all usage. user we'll module how journey and optimization. new DTI applications, At and used this many able leveraging be understand any that type of across end a for enterprise dashboard QX technology uses and of view machine new a to With clear the AI get interface enterprises be of introducing our to licenses

example, data organizations licenses that can be user to use For pinpoint due can drive this to to Alternatively, use which to licenses converted where be to read-only or of can adoption. lack usage. WalkMe eliminated

the allow use to understand to how to provide insights generate us actionable ability quality application clear our customers. sets data Our exactly that users

QX various DTI over immediate at spend software discovery XX% our in of applications. resulted WalkMe SaaS spanning in of underutilized Using saving

product the end available customer of generally and WalkMe our to at adopted be the heavily customer expect by QX to base. We

best In which system accumulated for in task, applications. practices the and enterprise enterprise past drives generation kits, four task a years, every we to of all of have been the to that I'm knowledge our organization all developing leveraging packs workflow major announce second pre-built solution the years workflow excited accelerators enterprise launching them. blueprint content almost SaaS from DAP we're that and

sales much cycle improve will With be new margin. able be will and faster teams the customer live able professional our our to DAP go shorten kits, to and services

solution pick almost processes on deploy for and Our problems their their data user able be real-life customers the their will and and to and workflow. improve instantly get choose business it

Since areas its a WalkMe has and with software. in empower committed founding, their being that technological leader to to customers been interact employees

content eight has both user focused elements end and understands unique interface automatically journey. automation that all us patterns building user technology journey, best [ph] user for DPYI the and to on experience end allowing Our end its and deliver

This and innovations work. that future and the the are technology ensures has DAP of the on our category forefront of foundation always of been the we

and on human centers deep element interactions developing by single interactions leading of WalkMe with accumulated day it's user we For with we of software. our vast moment. interface every organizations billions being every have unique modules understanding that the technology. Using and been past UI employees intelligence has single XX intelligence years data understand in enterprise and how have a used every technologies,

developments value share of unlock I'm is in foundation for IS will that the the this data that currently excited works to enterprises. huge new

datasets modules technology, open connected available new our through leveraging language with completely to are know-how natural a power bring digital We employee experience. of AI and the

through work to generative Jasper offering, content WalkMe product employees. have the native work I'm when AI in the from to it. to our flow Aside need capabilities announce desktop. to thrilled integrated Employees where web in Jasper AI enhance will of aim AI functionalities content of bring global it, they of to on workstation mobile, omnichannel they and contextually also Together, flow and AI need our the we employee millions that experience access

of for DAP XXXX. future WalkMe, great looking work is creation integrating will and stay We take to input the workflow. work. area personal and partner a achievements customers, unique rapidly for to in streamline all importantly truly investment the and XXXX for all unfolding. of I'm future excited as employees in content I we'll into our technological of the advancement fields and to the and thank forward help ahead This role want for of road will together I'm our most organizations a user make this about ahead AI of are

pass our that, Little, over to our go-to-market more share With it to Scott? Revenue I'll about Scott plans. Officer, Chief

Scott Little

Thank you, Dan.

engine the Our upsell go-to-market the largest quarter to cases the most executed of use impactful our company of deals segment, optimizing market the biggest out deliver well signing across value to customers fourth some focusing the selling in globe, on gate. and history newly motion, Enterprise. our some best landed important driving right and most go-to-market to in of the our customers, focusing We're on our to

We're and also to to a path pricing clear our our and our platform. give on grow packaging customers structured improving

as Our in improvements data employing processes to critical software fast. product their organizations play XXXX their workflows mission in a role inefficient, redundancies identify identify meaningful look will are to that stack, offerings strong

with with on experience key our drive can organizations engagement workflows digital say benefit to play text omnichannel [ph]. web, XXXX our unwieldy mobile, will in We an to employees I they to Digital results. paralysis deliver Workstation as need desktop organizations enterprise WalkMe. believe product order every face their growing in strongly also software and Adoption a that from line Platform from high in extract as to and their like role ability will Our

organization XXXX internally our best-in-class clear to WalkMe and forward transformational to transformation to a the shape a partnered platform Adriel Sanchez with our drive base Customer was workflow first McCulloch, value-oriented I'm Officer purpose Chief that place help our and year management and with deliver at growing customer customer I've is and to CMO hyper-focused this on customers. thrilled our Wayne value. in plans closely

accelerate strong I'm While advanced still executed DAP customer we XX% ecosystem, strategic continued at regions, all across to our strong our with and short maintaining relationship further while in the ended expectations, priorities, of We pleased. over year-over-year. ARR growth the very our year

many deployments, saw longtime expand and we including WalkMe to invest networks. In of QX customers their one largest the continue railway in

as field and shifted XX,XXX plus of their with employees purpose-built selected Digital from choice. modern As mainframe systems they tablets, to they based legacy Adoption new, WalkMe mobile and equipped their applications Platform

They've over on roadmap intuitive rolling applications Excellence yard. or WalkMe WalkMe handful on and of seeing results, simple XX and conductor while After new to deploying now enabled of a DAP a they're over use, out WalkMe XXX. a to all ensure applications in and applications of the of for developing whether workers successful Center are rail established they're the are

Most notably, and launch to to the complete they're will to gateway their Workstation automatically mobile as from the deliver to that and and see on their based ROI of that employees role Workstation workflow touch specific of their utilizing Employees apps these need all will apps. Railway simply going their use the drive areas tablet their work. role customers seeing like us that organization. can It's business we improvements all are impact

that financial of customers are interact technology with highly from industry have to institutions create transportation employees to their the across We retail and value. all transforming every way customers regulated

In we CNH Electric We American and relationships with Chartered OnProcess the started Insurance Standard with Power our Income among new relationships Technology. others. quarter, Rand, Ingersoll Bank and Industrial, fourth expanded Limited

I I want the some on XXXX. had look Before in of we in XXXX, what's back to successes focus store in at

quarter partnerships seeing of Accenture, XXXX area XXX% signed others, partner our made WalkMe. Deloitte, third tangible XXXX we Celonis fastest in business. the and was growing into of is within One are HCL, ecosystem. out and in great What now over XXXX investments the Concur, with grown that partnerships started in XXXX SAP in We've among turn those and has big the

of over influenced in XXXX. XXXX XX four, channels by million. ARR organizations we're ARR and asking our in additional sourced sourced ARR the most established partners, and our doubled in and ARR sourced XX% geo it In The over XX new double alliances and year-over-year. million grew Americas team We helped XXXX for deliver in to overall new XXXX. us largest the Partners in partners an XXX% our again

our area partners We are to accelerate easier. our ecosystem us with continuing important partnership this to in to invest work enable and

Our partners great access space. otherwise. U.S. we markets able that the example also in in to helped us is demand generate be wouldn't of this federal A

the Army, we in with secured Dan U.S. relationships. strong could million federal partner generated from market new As Veterans X the not U.S. QX we and without over in ARR which have Administration mentioned, the

our one EMEA largest All SAP partner a governments. seven for also excelled for used We three applications market. from partners is vehicles by of within the transactions with the of and sector an ability closed drive public state workflows their support for figure have as their example, employees. use across to those public citizen the and clients. would region these international as deal solution and In ready into ease large The contract both our we happened sector Concur sales facing and enterprise entry market not to government right without strong well

and will able major been market status, transformation budgets the through to ourselves agencies we only we advantage digital that adoption In primed new have for as for allocated the is when important government. be to share and federal Defense. FedRAMP-ready the capture partnerships provider federal category secure generate the take existing the been technology contracts space digital the establish of U.S. civilian already our a we've U.S. market of Department to needed and both demand This in in brand of to

Xx nearly already what building XXXX. we Our and is pipeline in is saw

for accelerate looking this and our opportunity We the half ourselves as to the Federal the are Government. adoption established of position U.S. for to provider us second digital XXXX help

on go-to-market adoption motion for is digital market ripe is the our that platform. exclusively XXXX, segment In a focused

our upmarket. we shifted some on Over of headcount, customers have resources focused smaller last months, those and the reduced six

aligned longer levels process adapt enterprise are activities our the to normal market sales the buyer we're lengths more marketing shifting and to Our new approval. to of deal and

limited with for expectation. continued organization. fourth these anticipate within results impacted by that for including and our counts, elongation deal We quarter were have Our seat We've cycles desire some with that will been headwinds headwinds renewals. which by the business plan headwinds built XXXX for opportunities and both of even new to continue also expansion several impacted

our continue expect net fell headwinds, these and into XXXX. fourth based Given in quarter we to this the dollar retention

with strategy years making positioned our to last headwinds, public during pleased these to shift we benefits upmarket investment reap Despite in the our the are two I'm and our of that well we're the believe partner and ecosystem progress sector.

a partners, I thank for Before and it great to XXXX, ecosystem and value our review employees I off Hagit pass numbers, in our our amazing importantly the customers, to to XXXX. to of building I'm with entire all looking forward want most

Now review numbers. to Hagit to our

Hagit Ynon

good morning Scott, everyone. and Thank you,

Adika, macro to we portal, are and organizations headwinds. There of to ahead costs into really WalkMe it the accelerate want the Directors for extract execute as digital we the matters. to and into jump opportunities the positioned WalkMe. Before Dan as navigate is of value Board and DAP continue I trusting as challenges CEO well our CFO helping me thank to their our of where many leader to strategies dig deep the market

continue opportunity. committed will of a free the while highly to strategy base driving alignment that on flow growth path investment balances to venture our of of positive growth sustainable this building with to opportunities, with the the WalkMe cash profitability in principle value executing to to rule our We QX on our success be long-term focus business I'm and XX. focusing

in year. of and Our ecosystem, grow highlighted grow base, fourth the declined against pleased operating I'm loss our to operating last the DAP results partner see to our XX% margin cash non-GAAP fourth to flow. loss by customer were continuing compared progress continued strategic objective quarter our our our to quarter improve XX%

$XX the to million fourth fourth cash our year. to negative million We quarter continued quarter $XX in have flow in free last the also to only decrease compared

to a growth committed departmental the of our to are now really investment deployment cash our four customers which ELA flow have within or reach positive total DAP of XX% to grew XXX. quarter. represent in We customers from customers, a balancing DAP path ARR applications fourth ARR. with defines more

our segment non-GXK growth than I throughout we GXK GXK year average nearly Furthermore, customer ended GXK The focus customers. DAP with opportunities also to progress customers gross this ARR potential in market $X strategy customer to million ARR great that This of count as that GXK want against XX fourth market the highlight of over account fit XXXX. double quarter. is an We our the average shows the XXX the customers segment. best the on is product customer. with with

we to have continue the on declines of quarter. in expectation our While great headwinds. our retention progress made are to pressure be we of the initiatives, have based macro strategic not This resulted extended and we below some our dollar falling net some cycles faced customers. Sales for from immune our

reflect fourth that the anticipated. headwinds flow Our will in our guidance built model and that expectations. quarter even on we free positive the depress have can expectation in our to near-term to have conservative this lower cash been believe we to is our continue these and we also that mind, than revenue growth get previously With built still with growth assumption with growth the we in revenue the

ARR We at million ended the year in with XX% $XXX year-over-year.

our going we strategy. that disclosure on metrics those we think best to align focus with forward, Going our are

DAP that adoption. basis. contract million We a driving in enterprise With and K on to related platform will quarterly on disclose customers, we focused to size increasing adoption, driving $X XXX our metrics customers are continue mind, and

timing volatile as they model our basis the and be deal in in drive dependent RPO be highly underlying as penetration of changes signing on greater could we Enterprise total segment. an can We with and will on annual update ARR our

end million, XX% revenue for $XX.X was Our guidance. high the the up year-over-year total of at the quarter

RPO to $XXX the or Long-term XX% year-over-year recognized grew revenue million. is be next XX% subscription XX to grew XX% growth $XX.X million Remaining Obligation million. grew which at revenue representing subscription ended million. the over of Current $XXX to RPO months, expected $XXX Our XX% RPO, Performance year-over-year to year-over-year contracted quarter year-over-year.

of of employees our our We with XXX, now customer ARR. our greater continue to which larger strengthen cohort than represent total position XX%

margin will that I results Before and profitability, turning expenses like note non-GAAP to to gross would be discussing going I forward.

expense fourth on non-GAAP drove As we Dan very and an the loss efficiencies for proud which consecutive quarter. are our of improvement operating focus management, in our highlighted,

last XX% In margin X% the growth was XX%, million, of XXXX Gross up quarter. fourth was profit quarter from $XX.X year-over-year. up points

professional in time. our seen gross optimization services gross continue cloud believe to We our over hosting to will margin improve continued have utilization We better improvement of due and our our operations margin our we organization. with

the at Turning that operating to workforce difficult our SMB are to growth align the strategic strategy. as fit We with reduce resources we our directions a area go-to-market better of our versus such no behind area to highest made are customers. internally prioritizing expenses, longer resources a our by now beginning to our XXXX X% decision

with priorities. We will as line strategic to continue hire appropriate our in

better are XXXX our margin drive XXXX. aligning be yield We in we will sales organization improvement expect and efficiencies to and marketing that into

quarter $XX.X million Sales expenses total fourth compared quarter $XX.X our This was total fourth represents the revenue XX% fourth million last and compared improvement million QX an were in year. of last in fourth quarter last fourth of the This in XX% quarter R&D year. year. expense last quarter the in XX% year. in the of versus XX% from to of to the fourth marketing and represents in in $XX.X the last quarter, million revenue quarter XX% $XX.X

last our for deployment our you've year. We to drive make was from platform last the G&A for in $X.X fourth increase fourth year. similar Dan. compared flexibility to to million continue million quarter quarter heard to $XX.X in G&A of expense the fourth XX% and innovation revenue the was quarter as investments

the in operating during model, efficiencies than loss operating our progress quarters which for the past lower four our made plan year. drove improving have We initial

cash driving focused very business model. increasing on showing in leverage our are towards free flow, positive We

million $X.XX fourth XX% quarter XX% last last year, margin of the quarter quarter compared Operating loss in to operating Net last QX quarter $XX.X of $XX.X XX% share last loss was year. QX $X.XX in and $X.XX and of million and in the million, year. $XX.X QX loss using to shares a was average fourth outstanding compelled loss $XX.X quarter last weighted to of last XXXX the compared million in in per in

flow the XX%, compared XX% to of in last improved $XX.X quarter million to cash negative last last XXXX, of to QX negative fourth of $XX.X We $XX.X margin compared a quarter in our quarter Free flow year. negative free the million cash in million and full year. was

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

our cash growth Given [ph] we improvement cash to and capitalized visible support balance to well flow, our are in free continue goals. our

we guidance, created guidance be to our to now economic expect with Turning wins the head which in while results, XXXX. to throughout with linger were line have pleased we financial we our

have the revenue fourth built and in for flow will continue to improvement the XXXX expect growth positive account cash lower income be margin plan for and a throughout to show quarter we We the XXXX. to operating year full our in operating With we year. of improvement

of the loss of XX% year-over-year, an for $XX loss million first expect a revenue to to growth million, $XX.X XX% $XX.X $XX million operating XX%. non-GAAP to XXXX, to XX% operating With a range of we said, and that represent in of margin range and quarter million of a in

X%. range million XX% to a full of $XX year-over-year of XX% operating non-GAAP margin million $XX range For revenue million, we in million of growth to year to and of to in operating expect the XX% $XXX loss the $XXX and loss an representing of XXXX a

Scott With I will your and that take questions. Dan,

Operator

you. Thank you. our Scott Thank first Needham. at Berg take question [Operator We'll from now Instructions]

go Your ahead. line is please open,

Michael Rackers

my Hi Michael everyone. for Scott. today. for This is on Rackers questions taking Thanks

quarters, churn companies versus if with has maybe just this XXXX change all any then off, into headwind? or initial first guidance of baked overall And Thank you've an XXX wondering you FY kind it uptick Just additional in under seen that employees? you. the as know, something your past over few or seen you've been

Scott Little

Hey Scott. I'll that take Michael, this question. is

have but in of guidance saw before Yes, our for answer we We absolutely I'll half the the seats. baked on second XXXX, into sell number uptick seen down So an we've it first. pressure churn. and

you that think on clients reducing manages provider our puts as that with employee their counts, I software in as pressure general see user a accounts. overall us

So seen do and believe we will pressure pressure that into XXXX. continue have we

Michael Rackers

then ERP, platform. digital And upgrade by a we've these kind adoption changing selected how like CRM when the are are or Is you. macro an purchase large customer software that of implement found purchase seeing of HCM to customers when technologies thank a behavior? often Great, customers you WalkMe an or also and consistent like or they WalkMe kind like

Dan Adika

We out drop often are sales digital out see new demand, dates off point large related pushing as in systems. since, any you but to record. overall We to platforms haven't seen of clients also adoption large do their deployment some connected go system the cycles of a live elongation for of these

macro guidance. for a we our we see what is planned that headwind in XXXX and that that, overall have function the see do we of So in

Michael Rackers

you. thank Awesome,

Operator

next you. from Thank our at Tyler now take question Radke We'll Citi.

Your please ahead. go line open, is

Tyler Radke

Thanks Yes, taking question. good morning. for the

year the of you're the doing if Thank And just question, kind with SIs? with you the kind what maybe differently the expecting back again, what with partners momentum could or the So, is sign expand earlier approach and some if side? of new you with them? of partnership that bit. that some the little ERPs expectations going you again. just you for expand a could to you of of Are implementation you. of to double had just the about talked on partners wondering in on this, I'm kind on your involvement to Is

Scott Little

Yes, the and of our momentum focus. important that general, announce have is But additional great take most question. member is that going be Scott. this players quarter. continue as GX we we in Again, question the place. almost every I'll and for partners current We've existing to you. to firms in The plan that's got larger

considers with up to the pick and But GX, player, IBMs, client additional we frankly work? large going adoption most the they're on with organizational be deployment because digital ones, help Will to around regional some management projects conjunction cases, delivery digital Concurs us advisory that transformation. in or SAP change their influence have deployment sure. and the is new focus or players a the whether that For the on new our in

course. it's for well what well the stay did us, doing we We in So performed XXXX. we're going in a XXXX, to and keep

Tyler Radke

But you and [Indiscernible] expense curious, overall thinking to how the just on given quarter. Great. of done past opportunities headcount the year? And the macro kind about level the Thank some or question needs you about the headcount today, the the be need talked think that for do you the is what promotion. over you you environment -- the as you're base I'm for feel this and you next restructuring right you. for of just restructuring is efficiencies? seeing are like that have about future of congrats in

Hagit Ynon

good a good we've a that I have what we was not can demonstrated and now, expense very done That's management up you until tell question. actually restructuring. it

growth our We that are I actually from totally like like areas have What have DAP never our we resources you, that -- is we ecosystem. different can done restructuring, low tell customer, partner a focus, area believe we like we within a more partner do to didn't restructuring shifting is story. FedRAMP,

matter So of focusing. it's a

enough from have that people we ground. And yes, we the believe a do perspective, on headcount

We the organization. sales right capacity are within sales the building

future any slight seamless, up a now. mainly done people see comfortable to expecting January, changes XX headcount felt. we a out not feel In are position we we redundancy we near with layer the very until a what have very of that major done we So have X% additional in and

not expecting take So at major this are measures. to point, any we

Tyler Radke

Thank you.

Operator

Stanley. next you. question now Josh at Baer take Thank We'll from Morgan our

is open. ahead. line Your Please go

Josh Baer

focused is ask wanted I question, seats I sells answer just the on reduction. guess, in related any I down the to wanted Congrats, quarter I change in logo dig contraction guess on headcount churn. customers' In the to and churn. more Hagit. prior about to around

Dan Adika

Hey, Dan. this is

really actually, So not the same, seeing The stays the getting logo is change we're churn. lower churn the better. seeing actually on on even sell and down we're big

projects using They're the companies headcount see order are value the them. So just to keep and in focusing new or to on WalkMe that more important WalkMe. adjusting

on mainly good churn, lower what negative we actually call so results, we're it's actually, seeing expansions. And the and on

Josh Baer

in the Okay. look like from And if then so moved quarter-over-quarter. X% I up with customers $XXX,XXX that at logo a ARR over perspective,

the was So it the is that impacting getting elongating better sales adds in cycles the than churn were of gross more quarter?

Dan Adika

Yes.

expansions million the logos with as seeing you're we had what million addition we're a and that long $XXX,XXX $X those those is of with with new logos, we $X cycles. seeing logos over new $XXX,XXX sale So the less have and actually logo

Josh Baer

Could on expand some prepared Okay, think on around focus was got around there? And then large packaging it. customers. I believe, some those pricing, it changes and of you. I remarks, changes on Thank with you the the mentioned

Dan Adika

Sure.

a doing we So obviously, work our better lot of we're customers. to how can understand serve

get for logos, So to we're packaging try what people one so be easy. And until call starter going we included. new did what We you want what model, everything to try is, WalkMe that and buy to now, want new WalkMe introduce we go you and package. a fast to able could and

a have they that want people for get and package starter to up use a fast. offer case to running very precise going and we're Now

The customers, structure. run. better our second so platform crawl, to Again, the we we suit packaging our as module to plus we're piece, walk, call can moving a it

As license. with starting are you us, remember expanding what and previous three call, actually go most apps our customers then we into call with of in two, one, the DAP

it easier us. with So we be grow for our them aligned better will just to packaging so

Josh Baer

you. Thank

Operator

take question We'll you. from Thank next Michael Turits KeyBanc. now of our

Please Your open. line is ahead. go

Michael Turits

as I questions. just What perspective. targeting was think on while, been going sales partnerships? some about in do market? itself, inning where Hey, Fed. guys. what adding around for and to being FedRAMP FedRAMP. And we've as something I'd to obviously, Thanks bit is especially capabilities are of federal say ask really the well a involved This from costs Good you for that ready a we're you're terms profitability the both are wanting work, attack in taking on that, that in, of a little

Dan Adika

Yes.

Just to question. the clarify

The first with it? question was about the associated costs

Michael Turits

needed I Hagit to afterwards. other just in maybe Fed expertise towards towards of -- push But we words, in progress think around the dedicated needed Well, can partnerships towards where that itself, FedRAMP so we sales? and the terms are

Dan Adika

Yes.

So the in we technicality momentum see take I did on the a start Scott sales would QX. it great will and because with

and GovCloud. running ready ready and WalkMe have approval then to for we're FedRAMP Everything is moderate. be already waiting we So on final Federal

all So we XXXX. did in the heavy actually lifting

and sell. what then starting have that. Scott actually to and already expand So go in coming we time on call We XXXX deals QX is in, basically will

Scott Little

Yes.

expectation, a So just make heavy done. is the it to the is, all fine the point on lifting, all work

we of for documentation to to provide As process, the part the have confirm. FedRAMP government

answering in them we're through pleased, a We're needed it. their finalizing been now we pleased we're able the close in with certifications we typically but is But very of interested who as little to in obviously, that rounds of to documentation well our pipeline bring surprised, but were and support in order we what circling a could have to very that the going provide our that questions. and we believe clients finalizing bit with couple some that. us bring, we're to had So

good because get we from DAP great worked Army, a for happy today had started we it IBM. support, addition that their -- those along that needs in to so process to that could the service to FedRAMP in in our certifications the and clients certification, had to, use support of normal U.S. FedRAMP right ahead Veterans order us able Administration, security partner being certification And them. and they that particular, business make now out ours really of right we client a had with with IBM they in the is were needed

of that a we quarter was delivered business and So expect very that were that. pleased we only about, that very the in we more smooth,

a us. not nice So was, upside surprise, if a for it

Michael Turits

got terms sounds think some then in Scott, are. good. of from spending It of Okay, I sense the where And like ramp up. we you

have maybe long SMB on say, just the a question regarding Enterprise wanted you last What cost kind the prioritization been optimizations? cuts. Obviously, changed? I So time. you done, in that's of the What little going quarter for has to bit versus a re-ask done of cost on have

those gotten you've in macro, and else that you go optimizations more things in worse saw this tell that order anything year been maybe can for recently targets you have about to us So through profitability? hit as to beside the X% cost headcount cut,

Dan Adika

will Yes, start continue. and I Hagit can

main mobilizing to team our we basically did the is yes, thing go up So market.

a we're need focusing we just saw services, we customer accounts. resources handling not in on it's it's with large volume in upmarket, across, when you So And of sales it. less support SMB success, than name it's and marketing,

the those XXXX, So able we're things, if federal XXXX large said, in in focusing entire if we'll it's enterprise Hagit it's we good the right and really continuing because see to were through operating savings leverage it and on partners, enterprises. show

was focus. So the that main

In more savings. addition, we had

to more. If always more working you saw Hagit, and our better. be gross margins if you to add we becoming We're improve want are efficient.

Hagit Ynon

margin to I of we and demonstrated saving the balance will gross some multi-cloud part balance organization. have over growth the around we hosting, PS that margin and Yes, been also out the add our the with our to rate have gross able

We have hiring on and strategic been more backfilling.

very is are shifting a have a I point we needs think another And be growth infrastructure. it's important to account we strong really to that area. into taken resources

SMB. to actually organization. there outcome to we is out the see with in of well. of are to are customers starting efficiency SMB more of another are we are able we SMB Maybe up so respect moving expensive service, the fact as point the that the The So the scaling the also

Michael Turits

you Thanks, very Dan. Scott, Hagit and much. Thank

Dan Adika

You bet.

Operator

Turrin Securities. We'll Fargo you. our Thank at Wells next take now question from Michael

ahead. open. Please is line go Your

Michael Berg

quarterly I and in metrics to mix dropped Berg expect customers headwinds significantly year-over-year and you. get those smaller than on headwinds when customers. for thank XXX maybe on the as negative just can less customers, Michael between your That to pretty want Michael us through large grew walk for abate focus the some clarity in right, particular, $XXX,XXX can we two expected the small XXXX XXX. enterprise diving from All X% retention out? This just net and Turrin to expect dollar-based is here. plays Maybe from we what on across those into

Dan Adika

Yes, I would it. take

So seeing mentioned, in which seeing majority a things logo one, we're expansion, part two and Scott not of our necessarily negative overall we're as churn. churn yes, is

on SMBs, On smaller and is $XX,XXX pressure and a we but so those customer budgetary not only on, small pressure companies. the SMBs, which customers, are seeing more below

we're seeing higher So obviously, there. churn

call the On deals, and seeing DAP the enterprise quarter-over-quarter. the or over actually side, flip a steady on XX% accounts growth the what big accounts we we're

but seeing only. to obviously not where macro we're is matters, like seeing platform headwinds, going, healthy where and actually the where due So a our increase it is seats, we vision going, the unfortunately, are pressure on

more when but account everything XXXX. lower feeling we're it provided we into the So guidance took for on side, we

XXXX, see But an assuming see So it obviously, Hagit headwinds. as rebound the continue used will said, coming method conservative and that hope into to macro as we a continue. we'll we will the we market upside

Michael Berg

you. cash to Makes seasonality of the sense, operating generation cash Thank it throughout back positive to flow profile flow of free in the to margin the thank front, general just lead changing the rest a And improvement is going free or that anything you. of margin the year? the year fourth particular quarter would versus

Hagit Ynon

Yes.

is with and in gross flow that past of cash our we the improvement line that the in actually answer yes, for margin, quarters margin. including So the gross in in are demonstrating show our in continuing to and couple operating

and QX positive, margin the and cash is going we're expectation it's XXXX, the issue seasonality. to that will of an So furthermore be operating leverage not

Michael Berg

Thank you.

Operator

take now from Bachman We'll Keith our you. next BMO. Thank question at

Your line is Please open. go ahead.

Keith Bachman

opportunity think construct the towards years few metrics. the little how as XXXX what's conservatism different given versus be better. since more number CY I public been Hi, in And just just guidance about quarters? demand-related try little want approached been you kind guidance WalkMe with sort really for tilt versus thank wondering to approached a how the has hear conservative of the a the more other over quarters, But you of about in to the line number or you've past in bit last In line past construct having approached guidance to typically have on of economy on words, you. I of I'm you've If gone of to of XXXX. you've the

Dan Adika

Yes, great question.

it bake So and I XXXX you... a our we wanted IPO. much the into plan. is previous than so more don't yes, know conservative to the be conservative obviously, obviously, lot is if unknown, of year, There Hagit, following

Hagit Ynon

Yes.

what I are account we approach a in future. also change experienced not we think, more tough will in environment, a taking QX, that we cost planning near in what overall, will with that see, environment be, we actually the conservative into have as we fact are the are very the with this, along

are ecosystem. So investment and into strategy our we are and FedRAMP DAP in -- to in also with cycles the partner the see we expecting in and sales see will also that, the to the do we that with the also account, the continued that we guidance of into line our account take in lengthening also taking drive changes

The drivers will not will there be -- immediately. those result result

see them we to long-term area. yield expect the in So

all we right that, account taking So and the guidance revenue we our the on of right into -- from taking setting are the doing our perspective growth. right are approach

operating we to management to do an to other coming strong see and also efficiency, into anticipate our hand, margin XXXX. the also a cost expect On demonstrate so in continue improvement we

Keith Bachman

broader WalkMe a a been back, you for on if of basis, take period Okay. has And step then again, time. a short public

young of Do feel the now XXXX? place I for amount to would company. like you there's in is a challenging turnover a submit a team such investors been navigate that relatively think reasonable most

Dan Adika

our priorities as Yes, said, out a changes is absolutely. our and and we that, focusing about excitement. that's young Orlando, lots sales did team and we team. company And Everybody setting we just came a as are from that go-to-market did Obviously, back We a feel We executive our in going we you strongly hired focus. ready. of in lot upmarket. new strategy kickoff upmarket, of

go it As time. I calling we're said,

So yes, in. we strategy, and right feel all innovations go to the with everything baked the ready that we products, we have

XXXX and a worked for the infrastructure XXXX. set great XXXX lot to a we So in

Keith Bachman

on sorry. implementations, were you the Discovery, how in charge focused particular, I'm and about, more that In on just offering I that? and Okay. one software didn't of users talked name, a and sneak more, additive the remarks, prepared that model more. do going was in AI the Is advantage giving to how catch to for taking data you new

Dan Adika

in current for is game Thank is because you a asking especially this huge, changer environment. actually this this Yes. and

importantly, applications being So other and digital heavy the any completely new what without listing, offering assets they're basically allowing understand companies which how are used used. being discover one, to more we

within understand we you completing how we So you full and so processes actually it's environment, applications, save so licenses, but those we on can money how operating improve logins, can how can can hey and can you're the budget that understand not obviously, actually on. in the give your usage visibility the just, on, adoption, adoption, you this improve you

with talking need lot save just money can't a cost, So costs. guess, they if it's it's software IT to and I'm to eliminate And today, being we the of if CIOs, are do to and tasked it, you guesswork.

we with we module, call our very listening what we're our savings very, to on to gain added the ROI. can model. So show those Digital seeing customers, we're And Intelligence, new and those something as fast demand. actually allow that license Transformation this obviously, companies and in optimization discovery is us We

users, the is we to charge yes every expanding it customer believe very every are but as if customers Obviously, you're selling only and to addition. that, that architect. allow we way And we including per system how employees, Now pricing, with us, DAP and you're employees to we we're buy mainly offering or many one, CIO module that be monitoring. package, regarding an in are to the compelling would a going it's the

can we earnings, improving working. software we to on our said just we without what's be in our because were as on and we license hurting operations laser-focused And XX% used our save operations QX, in it able our to ourselves actually

Keith Bachman

you. Thank great. Okay,

Operator

Thank question Barclays. next our from now at We'll [indiscernible] take you.

open. Your line Please go ahead. is

Unidentified Analyst

taking question. for thanks Hi, my

down pressure mentioned and cycles. selling You've longer sales

or sources So this assume should upside that do to XXX% much to NRR the -- in look, XXX% I contribution these partners slightly kind get think guidance your does or of guidance? sense contribution does you a your range quarterly of that view Thanks. we that wanted similar stays from to for and greater as federal just vertical in embed greater

Scott Little

we from assume are partners the the Fed. one. I'll in our absolutely in coming that greater Scott. QX we is that of in that this range, and take Yes, do stays our contribution range out baking Yes, NRR guidance

back Now of in models of remember, the in Fed of year, do calendar XXXX, the our second is now. bump skewed performance but that's end most so Fed our year we'll we to half the right the overall to that what got see assume

We're pipeline, us, building when a FedRAMP and that get for prepared then for it's status we're moderate hard. being and run we

excited model. until QX. of we in partner's we about came half in we're didn't with it. And some our QX us the mean what of to that year. And So deals see came this baked for they in that's really first exactly I expect contribution into these our in

scary and good in So it's a a way. little exciting

Unidentified Analyst

it. Thanks, great. I That’s appreciate

Operator

you. Thank

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

go ahead. Please line Your open. is

Kevin Kumar

of customers? for Dan, overall proposition hearing of software taking cases you think, companies do question. to spend you're reducing kind how to control guess, expenses. my Thanks to this the we're I and impacts value their WalkMe trying showcase prospective

Dan Adika

Yes.

is a they WalkMe those that this in hearing us. more for from So actually and actually on see we're you We're value have doing. when actually is pressure you to increasing what this ROI more customers opportunity we're from pressured And great what pressure happens the exactly more because more to have current things, investment. more is value are your investments provide from current and save your when they

we and able save we better digital for CIOs and eliminate that of to releasing for addition, license a company. basically bottom-line are there on money, them lot optimization focus, the to because to guess transformation in saw their be the is In intelligence order show work pressure the

in it seeing being sales pressure adoption And are one are seeing seeing that. of cycles the it not that much testament logo a just massive is actually budget, as happy we're short-term. the we're seats. actually more we're a makes pressure is Yes, on So on the churn digital and we for obviously but There that relevant, opportunity, longer. and

offerings ready challenging actually and help On the it this to are new hand, navigate macro for we those other products with new companies environment.

Kevin Kumar

was seeing in DAP a then that customers, certain or the in that And downsell question concentrated quarter, on commentary cohort Thanks. customers including enterprise across customers? of seat are another you just the

Dan Adika

and customers So say, and WalkMe less laying the cost in employees basically, reduction off seats. [indiscernible] basically I'd every needs

we're seeing basically see So companies it it. across increasing hire more, their that won't we hiring and

it the certain and pinpoint segment, a lower end. can we So obviously end is not but usually the upper pressure the in to

Kevin Kumar

my Great, questions. thanks for taking

Operator

now Pat Walravens We'll take you. Securities. from Thank at last our JMP question

open. Your Please go ahead. line is

Joey Marincek

Celonis Hey, thoughts opportunity team. WalkMe on for most to so you It's much. Joey Marincek for get trending in here. mention Dan, on investing partner Thank Pat. highest then see How And where just Thank expectations? the growth give that did in the partnership? your on you so you relative on areas, second, you questions update can to love the near-term? us I'd the the you the an is ecosystem, for

Dan Adika

you the Can repeat first question, please?

Joey Marincek

investing the mentioned in highest growth you area. Yes,

most see your just wanted where So near-term for the opportunity I thoughts get to you WalkMe? on

Dan Adika

and lot a the federal. in invested Oh seeing is DAP seeing mind partners massive call so just and opportunity what our federal have contribution WalkMe growth XX% that DAP We're is and Obviously, obviously, we're over customers the we we one blowing. year-over-year. where the in platform partners, and

we're to customers, with obviously our and when penetrate massive our it in at as mentioned actually ROI markets and new well. about platform our we developments, putting looking seeing working to can So talk large our we're recent enterprise, obviously I most coming well. from those as of we're on But and resources enterprise, partners AI,

Scott Little

an the right? you think on had partnership, our second was update question is I around that Celonis

Joey Marincek

much. you correct. so Thank that’s Yes,

Scott Little

and relationship, take off with at we a it's $X as to partnership, because of were than relationship. clients Celonis that. in our million kicked happy know, I'm There client perspective, of added QX because purchased number greater of we you from us that ARR well. year new least The Celonis and last one going that really that

with way deliver of Celonis weeks the So fantastic with the that and ago, in a fact, participated support job. Celonis sales did technology to built we've we stuff that folks kickoff at ready it's go. in Celonis, our The a is which couple GA, the

just based half what And wins excited what first progressing into the as in to first the upside we're looking bring can pipeline on bear we've would half we're positive these them. joint second at and being the be us. So with for had initial really a about we

Joey Marincek

helpful. Thank you, That’s very guys.

Operator

I Dan now you. today's back Adika, to you. you to Thank Thank conclude conference. will hand

Dan Adika

Thank you, everybody.

our The our growth we're to XXXX our great new want our and want confident a And I growth, we're so in and category, role. XXXX really in sincerely and So our obviously partners, thank looking for against employees, plan. in the to XXXX. to forward base coming our [ph] investors Hagit congratulate for in super execute customer

Hagit Ynon

Thank you.

Dan Adika

thank all, And you you listening. thank and for

Operator

and this joining. call. Thank gentlemen, for today's Ladies Thank you. concludes you

You disconnect. may now

WalkMe (WKME) 15 Feb 232022 Q4 Earnings call transcript