AVID - Earnings call transcript Q1 2022

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Whit Rappole

Good afternoon, ladies and gentlemen and welcome to Avid Technology's First Quarter 2022 Earnings Conference Call for the period ended March 31, 2022. My name is Whit Rappole, Avid's Vice President for Corporate Development and Investor Relations. Please note that this call is being recorded today May 4, 2022 at 5:30 P.M. Eastern Time. With me this afternoon are Jeff Rosica, our Chief Executive Officer and President; and Ken Gayron, our Chief Financial Officer and EVP. followed Jeff Ken an review will financial operating remarks, business of of prepared questions. and then for and provide results their will overview provide our our In time by a detailed We issued afternoon have call. refer a prepared will earlier presentation we on and that we slide to earnings our release this this this website limited the call, website the page of Presentations press and release and following be will presentation The replay for shortly Investor a are at Relations available Events conclusion IR and currently of time. available on our ir.avid.com our on a

are During these a noted to today's Regulation this on otherwise and and Growth, information reference of for definitions measures management associated which also closely by metrics during reconciliation our earnings non-GAAP except with operational appendix noted the non-GAAP financial and the presentation. to our used the operational most call call, is metrics management always financial will in non-GAAP both Unless figures, release for GAAP GAAP. accordance contain the metrics. website In revenue, call today certain and investor the

of the today's Securities addition, meaning statements the forward-looking Litigation of In statements certain Reform within contain presentation during made Act XXXX. Private

or occurrences and on current future Actual may These comments statements our slide results forward-looking as well deck pertain forward-looking or Our that that on this may statements available from based beliefs are your answers outcomes. differ statements. and these as of to future results questions to include as are call the accompanying information forward-looking materially today. and

filed these release remarks. recent XX-K for and the turn Report today President, SEC. over his that, risks see the me the press and our and Rosica call XX-Q Reports discussion Form With our with a including forward-looking For issued more information Jeff to of some on Quarterly Form our CEO key uncertainties please with let on statements, and most Annual associated of

Jeff Rosica

us joined first today who everyone results. to thanks my quarter Avid's to and Whit Thanks, review

subscription have with business growing strength subscriptions continue adopt in our coupled licensing good customers individuals. enterprise We continued subscription creative to success as more for

continue for the we our and components integrated at that end While seen portfolio, supply our solutions several see first to customer to activity of in a business impacted audio revenue across tightening the for lower quarter first meet at we demand demand ability guidance. of end of our that the quarter resulting have strong

the currently full in challenges temporary cause We to have been these proactive these believe global to we and mitigate we due continues could aggressively such constraints. to maintaining as our although effects. And the these chain near-term which to are that year proactively efforts performance our quarterly uneven present situation Avid addressing be And guidance. supply some for

especially, healthy business, with over We coming subscription in new encouraged our additions our and planned months. growing confident remain and maintenance exciting also several be to the released offering innovations subscription and to

growth. new we In more enhancements and strategy execute for Demand, continue addition, MediaCentral several Composer, have Pro to on Media profitable Tools, recently we and introduced we on plans for exciting Edit our as product

of some QX the into details get our me Let of results.

Avid's key Let's with performance takeaways the three quarter. for main the start during

solid largest deliver First, sustained X,XXX And tools our we added in and creative MediaCentral we quarter Flex subscriptions. including another subscription for to-date. for enterprise That's adoption QX. continued to subscription great we performance delivered strong quarter growth our subscriptions we where growth quarter another increased

mentioned, strong products continue and conditions Next, to for solutions. as overall healthy we just market demand customer I and our experience

of limited our end the the to solutions at some orders constraints quarter chain our supply customer deliver integrated ability of for certain global However, parts portfolio.

Overall, even our several total with more above us the growth shipped would midpoint we have we And have revenue the in as gives and headwinds easily chain improvement a during margin well total backlog supply the margin, of and continued QX, in With Integrated XXXX significantly orders, we elevated drove delivered continued brought demand finally, confidence well X% EBITDA gross Solutions quarter, together full late year-over-year year-over-year which expanded adjusted quarter would these situation, of us in ended which our the as market which million our dollars seeing revenue for still intensifying targets. profitability. guidance. solutions, strong year

adds and subscription dig sustained specifics some me these business strong and saw With XX% Now in adoption net the subscriptions We in subscription in provide we overall both let year-over-year expectations for more of our realized areas. subscriptions by number offerings, creative both solid subscriptions. of subscriptions each this software in our in and continue quarter, growth first our in new exceed delivering the of confidence to overall our the business. of of a existing XX,XXX trajectory on increasing cloud-enabled customers subscriptions enterprise of quarter. our growth bit Enterprise growth

to XXX% were continues the uplift we of of business. and As enterprise calls, portion QX. high to see conversion larger improve typically subscription our we've previous pricing to discussed again at the seat as on on XXX% per we earnings to end that around range subscription a during expect the And becomes

business year-over-year factors across remain the creative next-generation And creative tool as current while quarter, all subscription also lines, in we three innovate and good successfully we essential attracting subscription of to had tools resulted the this these XX.X% net grow Our customers, growth. more an growth. within piece product of further creatives. revenue Together during our first continue adds the of

strong quarter, customer first within as activity existing customers During the in new demand healthy business as and markets continued and our segments. well

XX% in subscription to expected But the ACV. customers We as enterprise closed revenue films. discussed. maintenance as previously healthy brands the NFL in contributed enterprise such quarter, to including year-over-year have with strong. our with subscription notable as growth new a Fox in maintenance which the customers total remains reduction subscription grew XX enterprise Business at year-over-year agreements, plus converting and activity a in is we and in revenue resulting success Our

solid in good total well we support carry of content supply limited across creation their was had performance ecosystem. I for we revenue with in of year-over-year backlog the Global the the live sound driving a Integrated Even operations constraints NEXIS in by orders strategic about ended one to across quarter We X.X% we from saw mentioned growth towards solution that also chain with helped solution next. potential with Solutions industry our and common a of We mutual continued announced recovery than the the vision cloud reshaping audio agreement typically as earlier, solutions. but our our million content strength as $XX Paramount integrated storage more the portfolio, to and cloud-based production quarter

to to we global the based situation begin we chain to our I up XXXX. that continue and demand we expect working chain into managing to be proactively present able mitigate we diligent the meet and customer see are supply ongoing today, as will on And on environment. efforts of want effects half catching macro what to can currently from risks We second reiterate those on in supply head of be And business. the the

quarter, of year-over-year. year-over-year. margin of a year-over-year non-GAAP growth improved EPS Non-GAAP $XXX first we we million. subscription with improved over XX.X% hardware due up of of revenue basis the The of revenue margin was margin gross total XX.X% continued combined and to of points delivered to result the During shift and gross gross us maintenance the for profitability more and growth XXX XX.X%, towards as enabled EBITDA deliver revenue improved quarter, margin adjusted saw

growth near-term several focus with fuel on to for in capital as software reverse cash flow new the continued our in well later plan we this and expect product will increased also initiative. that technology our to our lower our year. introductions while digital transformation We due than to to costs, digital last strategic the second managing Free innovations primarily of other use revenue growth in to contribute our the as that CapEx was transformation investing innovation planned cash support and subscription working year, half,

talk that continue the expect on we our me, had the Also, show customer and solutions involved the direction, key based at the together that market the where April their integrated to in-person Microsoft demand week, Avid customer we a several as and with new from previewed things continue prospective ingest and the in to for well and we for And in at demand we let's also signals MediaCentral early healthy most major Microsoft they our NAB to quarter Edit with innovation met Composer, recently have investments industry's we're reinforced clients of over-the-shoulder the Teams. technical show, annual on roadmap. reaffirmed since the first show beyond. business and last important customer as at Association innovative service. Demand that for around the they forward and about NAB many our our playout meetings trade We our stream solutions made perspective. SaaS I SaaS what the was seeing. Customer and XXXX. say in with we just and Now, Voice dozens our enhancements strong new the includes solution customers We've directly events And offering listened available for with of products with seen Avid's this streaming of this early where view. experience on Media second Customer addition an see to had needs, event into had feel trend to Avid and We've business going XXXX Edit-on-Demand

offering just We the have including Artist tier, re-tiering paid first subscription subscription creators new also versions as that as released Pro price introducing well a replaces of now discontinued. a last aspiring new Pro the Tools week music points, Tools at targeted of freemium we

higher-priced the and As applications. that the is moves end added Flex expand that, part value optimize opportunity Pro at where new Pro re-tiering, in are will end music and targeted these have believe enterprise deliver to to of will the Tools we numbers from tier higher re-tiering our first help subscription of both to customers since encouraging. Tools segment our wider initial market pricing we opportunity called greater at customers. the total market creation We of the launch higher continue a The the week our business a

We and will strategic with to unique strategic will forge continue solutions develop technologies, that new innovate plan. towards contribute new our partnerships

new and to market additional demands, to help pipeline in meet our the products have growth. customer We drive our and

we've that to support also will past our continue discipline couple the make been efforts growth efficiency of maintain but investments so of our plan. continue will cost we strategic years the We to X-year on focused and in improve

and said hardware very chain of have been to impacts the have taking issues. the measures And minimize supply chain as I macro We supply engineering experienced teams. they proactive before,

expect we improve our to of the necessary alternative these redesigns help near-term. aggressively headwinds for are are continue but that where in they doing selective to and over alternative currently us moderate optionality create looking demand. We can could sources unevenness time, to uncertainty supply, securing meet hardware the for We board and components and

XXXX in we and a prudent continue a flow. its As our result the profitable guidance range which of providing I expect for due we second supply and cash half we to growth revenue this, we all full Through we our moderate are as will continued maintenance the we being constraints trajectory. importantly, free deliver this, full total and efforts year of guidance maintaining mentioned. keeping range and improving year QX normal expect are for wider-than-normal believe the XXXX, guidance teams the of as to to earnings, Most the subscription are growth revenue but for are

over that, the let Take with Ken of away Ken. me it to the call So, details. turn review now financial to more

Ken Gayron

and Jeff afternoon everyone. you, good Thank

first revenue. During subscription by driven growing growth, robust our in our we recurring profitable quarter, continued business and our the performance

further and revenue the build focus our remainder with on high-margin stay long-term Our be track continue subscription of our to XXXX for model. to will

let's in We XXXX. key to first including and continued through the efforts turn free profitability financial expect quarter in financial details that, cash to these now result stronger results. improvement flow of metrics, our our With

We our continued by are base. subscription of the paid encouraged growth

for enterprise subscriptions first subscriptions of Our subscription We XX.X% total of of an increase of XX%. our cloud-based MediaCentral first in software the date year-over-year. to largest at grew growth of an quarter, and the during quarterly subscriptions. our customer solid. increased all subscriptions increase to end and base the during for the enterprise of in creative increase the with existing Subscription to had tools by transition the growth XX,XXX, furthers approximately quarter, Subscriptions our sequential growth tools was first rate X,XXX healthy about in solid increase creative tools growth subscription representing quarter. XX,XXX sequential XXXXXX approximately The XX%. approximately count creative confidence was reached a year-over-year

The consistent quarter, growth revenues. the million the first revenue XX.X% year-over-year. which of in subscriptions Now, subscription $XX composition of reached growth paid continued the moving drove to an our increase during number of in

discussed, the impact previously we XXX agreements can recognition. enterprise and show sequential As of revenue the to have due certain our size volatility ASC subscription revenue of

As continues to business to detail Investor our we revenue, more be discuss May increase of also per the revenue subscription in XX, $XX.X Day expected customers maintenance down quarter, model. seat first shift a a in trend to to continues X% during continue and the will part year-over-year. Maintenance million, on during enterprise the was solid our our

the customers As price encourage converting maintenance are subscription successfully We customers. to as increases we seeing in offerings, revenue expected, a from of as we conversion. those reduction are from the in implemented part subscription saw to of maintenance the we XXXX our strategy enterprise many related benefits

to convert offerings come year-over-year revenue subscription introduce as new first Avid including to in year, by this to maintenance customers XX% subscription and increased expect and Total maintenance continue as we XXXX, additional incrementally fiscal the NEXIS storage. subscription we revenue down we For quarter.

have enterprise we subscription discussed, business. some quarter-to-quarter our in there As variability previously is

by subscription revenue which using and quarter growth exceeded revenue to guidance and of model the of was in midpoint second in revenue. licenses for the deemphasize total perpetual strategic to license our XXXX million, in first and our financial equates perpetual a the as year subscription revenue. subscription revenue XX% we Perpetual $X.X as on from decline decrease range, year-over-year to half with perpetual increased first maintenance subscription the in XX% plan. the year-over-year significantly expect the year-over-year grow strategic the We with in XX.X% line the quarter perpetual XX% revenue continue revenue, growth and licenses software decline Even focus of

an Solutions Our of quarter, year-over-year. Integrated $XX.X of first X.X% Solutions healthy million with business in remained the revenue Integrated increase

year perpetual into ended integrated than products at from services Tools supply approximately consoles. guidance. of Integrated remain our solid was several live but steady risks solutions and QX be with limiting services macro balance the and and first backlog year-over-year. servers were sales quarter. to revenue Live video solutions, from issues. up decrease will and increased and the chain year-over-year issues, our revenue year-over-year our several products upside and $X Solutions of so the and control our live strong resulting issues, related backlog Pro limited had We from uneven revenue plan. quarter integrated million by supply Solutions sound Tools was $XX services mentioned, quarter impacted and couple line majority professional decline control a in recovery solid factored normal to Graphic this our Integrated quarter internal in revenue. also to and backlog was supply combined surfaces Audio sound by had more Total quarters, in storage next The ability headwinds, orders be the chain further hardware of year-over-year million product year-over-year. the continued strong the carried a deals over Professional from of chain could in year-over-year comes in the quarter, large supply in and into have by was of and end over meet Solutions Revenue due full being revenue growth the impacted demand second business. X% to first Jeff this we $XX.X in XXXX We product learning quarter. Pro in well. demand the consoles, saw as revenue in As to revenue continued graphics customer service with primarily Revenue and audio many hardware video believe revenue we recover million were due our the and at sound growth the flat services as the professional venues chain opened concerts basically have quarter

moving annual Now contract revenue and recurring value. to

focus and pay is improved sources in our greater strategy recurring to in gross on predictability continues years to margins revenue Our off business. recent and driving

basis, revenue first Annual in revenue from of revenue create sequential benefited quarter, end at on revenue, XX% partners. first a purchasing which some quarter, growth recognition ACV impacted recurring was channel of percentage the the recurring LTM due strong strategic strong XX% Gap] subscription The ASC to by our to and channel revenue. year-over-year XXX, subscription year-over-year. total ACV contract was increased up does value from year seasonality agreements unevenness in our ACV up As with increased is from partners. LTM the million revenue $XXX under ago. due a [Audio the XX.X% of

at for have Non-GAAP XXXX. points the was of quarter. X.X% quarter Total was was headwind quarter would revenue first as up look XXXX first gross quarter, the constant let's At XX.X% year-over-year, quarter year-over-year. basis XXX currency for revenue the FX up year-over-year. results in X% Now first increased first million our our operating in margin $XXX.X a the

in share $XXX,XXX for model a support investments business one-time of $XXX,XXX gross expenses up quarter, due $X.XX to reduced margin efforts points $X.XX our compared resulting income Solutions revenue operating the year-over-year, year-over-year million well the period. to a repurchases. subscription in gross margin million increased high-margin our per quarter increase Our year-over-year, in million in reflecting larger and quarter, $XX.X due year-over-year, both as of $XX.X Adjusted Non-GAAP prior quarter by EBITDA to first Integrated the innovation to up an associated in mainly share and XX.X% first expense earnings made-up was were $X.X travel in revenue basis the count the improving the the Non-GAAP increase improvement or asset improvement margin. a long-term EBITDA non-GAAP IT and was first to product and an first margin. increase driven million the $X.X with commercial XX operating for the in was share drive as X% write-off. share Adjusted gross

our $X.XX. Excluding discussed the earnings write-off onetime non-GAAP have per above been share asset would

first Now results let's for rest the our at of XXXX. of the look quarter

of for Free drive down in profitable use higher to year-over-year in effective cash working Our due trend was primarily reducing innovation $X $X.X capital, quality the strategy together quarter expense, an revenue a compared digital investing payable in expenses cash flow to resulted investments. interest revenue primarily transformation was in to first quarter recurring efforts. growth. million in sustained mainly $X of has the due $X and and million with controls related our million cost Free the to digital to flow increase prepaid of to accounts cash related XXXX, to in a million to reduction deferred year-over-year relating also growth our capital a increase and expenditures, in lower transformation

we Now was growth in X.X and leverage to continue total EBITDA free and has liquidity, flow and which to end to X.X our debt of enabled XXXX. At the the spread our amended QX moving adjusted which maturity in rate EBITDA net reduced to to debt our by points times reducing interest XX EBITDA. loan the extended the credit and of leverage facility times basis our also us February cash

announced given shares May at we of an to and these we repurchased $XX.X our $X.X first X.X good a for enhance the shares at have the shares in for shareholder $XXX long-term Day. repurchasing use million. million million the XXXX that We May we $XX.X to have is Investor our we repurchased total in provided And through business for believe returns, model bringing XXXX confidence our targets in approximately additional prices XXXX. repurchases million, capital quarter the September authorization, under Xrd, million During shares XX,XXX XXX,XXX

flow as to $XX with in acquisitions, We responsibly to We our at we including liquidity, in value. and tuck-in the million long-term continue repurchases and strategic deploy drive to continue look well share shareholder will ways as cash undrawn our as cash ended will free revolver. million had $XXX total quarter

guidance. Let's now turn our to

underlying business our are in said, progress in we Jeff confident strength through the XXXX. as As we

contributions new revenue Artist in growth creative tiers our from enterprise strong subscription subscription solid that previously. from expect Jeff expected in tools business, Tools mentioned product continued introductions, for from and the performance new Pro including subscription performance We

higher-margin We base. expect we revenue the managing of due of is addition, to the solutions most able well believe be our a free to cash XXXX. improvements positioned continued In our our to recurring on Avid streams integrated continued backlog drive flow, movement to recover and further cost in focus business, during QX from to

For quarter earlier. range XXXX, the guidance solely $XX million to to than revenue is integrated is wider second of the wider The normal. $XXX we related supply solutions revenue to total risk a chain range discussed our million,

XX% for is quarter revenue representing in XXXX of growth of quarter and $XX second the Our first year-over-year midpoint million, $XX half million guidance second and the XX% the XXXX. maintenance subscription for at to growth

XXXX per non-GAAP earnings is Our assuming guidance $X.XX, shares for second million XX.X share $X.XX quarter outstanding. to

Our $XX.X our March affirming chain second through EBITDA guidance the that XXXX believe the year. also are guidance moderate quarter $XX.X revenue this we solutions supply adjusted we X, impacts issued will is that to XXXX, million. At we to as for year time, integrated million full the on for currently

Our revenue $XXX to million. guidance total XXXX for million $XXX remains

guidance subscription represents midpoint. and which revenue million to the year-over-year Our $XXX XXXX XX% a remains range at of million, $XXX growth maintenance for

shares remains to XX.X $X.XX, non-GAAP Our earnings $X.XX outstanding. million XXXX per assuming guidance for share

$XX Our guidance remains million. adjusted $XX to million for EBITDA XXXX

Our $XX weighted be expect the to due million which to second of guidance for integrated backlog million, solution remains XXXX orders. the free $XX will we half the to cash year, of more flow

our Relations on investors Investor We strategy that, the on back XXXX. our progress our to Day to XX, like call Avid's invite we With Lastly, and further May Tuesday, website. Information detail long-term turn Investor all model. we’ll to the the hosting Day, will be an can Whit. online our I'd be found Investor attend event. provide At under on business,

Whit Rappole

prepared and the happy on That Ken. prepare take now and while we questions. Jeff we our you, to are remarks Thank concludes queue. Hold

be Samad to Our ahead. Northland first question by from Nehal, is from followed go Securities, Chokshi Samana. Nehal

Nehal Chokshi

Thanks, Thanks. Whit.

signs of as softening to pipeline seeing ago, appears Netflix weeks result two just was of earnings back on a video but any going are programming? Netflix be what production you So

Jeff Rosica

question. good a it's yes, Nehal,

because think that answer having early sessions. I finished to whole And I anything. really Netflix was Customer surely no. simple an to can to bellwether our haven't the going this space to so a even streaming the healthy and basis, services, there a many even the competition the quite much so and on still global here. pipeline the happening seen but I Voice across and move is we frankly in we're just is globe pretty opportunities players we seeing say No, and know in very NAB US what's of

Nehal Chokshi

your the Okay. plus come indicate to March guidance unchanged $XX provided. then was lower end regarding that you had what Great. guys for Certainly, cost would results, which million towards that's quarter in case. million the the of maintenance $XX $XX And million guidance the is subscription the at

Ken Gayron

Nehal, for question. and you Hey, that thank good question

revenue result was certain the impacted product look product the slightly quarter well creative of component. because business some includes of backlog by from customers supply but subscription wins sales, with remain that When only in solid not with subscription on related impacted lower strong sales the maintenance we revenue product continued side and maintenance in in And below continues the was enterprise our trends, delay a to at the the the large came our we in chain, on business side. those maintenance as So as solid underlying maintenance. quarter. the The in with our momentum very sales

were of that solutions we below did because But will midpoint integrated the product the an maintenance well, impact ship. on have backlog our guidance. we business to the of and continue Although believe the did slightly that subscription sales very

for that's it We're about subscription feel and good the the subscription We will continues our very and associated guidance. introductions very very why excited new get maintenance about solid. product year-end to the maintenance and business be we

Nehal Chokshi

see. I

Okay. indeed that QX, flattish called guidance that your But to seasonally revenue out Q-over-Q you term-based are QX and softer That to then that subscription of in will historically the to what on QX called believe And is gives this effectively portions QX have subscription. seasonality tend have out be past, makes have confidence there's some given -- significant flattish is you you What sense. I since here? subscription especially and relative Q-over-Q. maintenance

Ken Gayron

the also tools. strong product question. new have feel we creative that Great the by the second down We the about growth as well encouraged success. new to Really, Tools been Pro in quarter enterprise the introductions, the initial as it business subscription in good comes core offerings

those elements to innovation. through subscription year and innovation me will give about very team And say I that introductions. strong We're very company. drive about new subscription would of excited the these very the improving growth year confidence that continue the we'll our our for new for All is drive revenue excited

Nehal Chokshi

Got it. Great. for Thank you taking questions. my

Ken Gayron

you, Thank Nehal.

Whit Rappole

Our next ahead. question Jefferies Jack from is from go Samad to Aarde. be by followed Vander Samad Samana please

Samad Samana

Apologies for that.

me. appreciate upgraded audio. years A questions a your Sorry disconnected few how when me I my to we'll panelist, for No it it out. matter many go by, never patience. Zoom figure

then new to how a philosophy I'm new think great the should just the upgrade for that guys. that tiers And higher North we from maybe the talking about about hear along and curious, point But price think about South you're thinking both for priced you Is what about? tiers, funnel? that how you the impacting lower pricing guys entry creating on hobbyists, strategy? it's you First, Jeff, opportunity both the on the are

Jeff Rosica

that that even the tools we which It comes Yeah, been tier, set. seeing in our broader strategy. We're we This Tools kind product. Pro that's going of Pro music which just premium new in tier, in we've really We tier. product created entry started We've just significantly that Studio, that's part called really is Day time had that artist with -- this part feature were first GrooveCell calls call help SynthCell because even we is but actually us a used the in a functions, we is isn't that we without Pro but since with right really user. a in think also we Tools to and so also real Tools really And how that we've our funnel going out demand well us, did think for strengthened point to middle talked volume the were go and tiering. now about out re-tiering we've a made needed new strategy, to over after of and that's and getting seeing but traditionally an a that some created an the it's think than experience a last previous about prior music nomenclature our there's which that Pro tier and for year. features new the the just are there that a Tools really of first expand has that we as entry user was And in And that creation price experience The I product building a Investor created It we first we come. full is to standard. and know product, we even be the TAM, creation question more the space. for a aggressive our not But but right offering. our good change there. tiered to step what we have Samad the that We artist it's and has like more put question. eliminated help offering first highest point to our it was tiers was you felt more played middle really the good it's have we the

product first the step is so again artist there. our And

in brought traditionally post post higher-end year. per Actually $XXX On the film that up about for price. higher more is TV audio, and and studios, it's music end, recording we've production which tier

to be putting We're put tier, we're value is to value have more continue do and to higher more in end there value. value more -- put we more And for that going in going market for we there. believe so pay of in that the looking will the because

question. a I real but music for proceeds opportunity so after per especially the think in and opportunity at market the creation only that go get user And a to music next-gen more I allows hope your wider us end, here creators. not higher there's answered to

Samad Samana

helpful. another again. finding back of the same call should the ROI one where very about spend you're as we efficacy allocating next maybe over then don't did, curious couple or lead and marketing around dollars I'm let's maybe good that to or marketing it the gen And and that conference, going let's in-person I NAB it the maybe be dollars That's influencing to know be if around how sales Definitely. you think pre-XXXX you're call quarters? of the it's

Jeff Rosica

that a Yes a about good internally. a we question, very topic lot talk

level never go used So at that the NAB. shows if go like we'll it to we at to spend spending marketing trade we was. never the even back We'll be to

we example investment of this what of an don't a front I but year, giving As probably me, our it exact cost the numbers in -- number, of was the I'm to did have the prior around you rough X/XX pandemic.

I what not we point exhibits think lot a our dropping to we go ROI a the NAB prospects. what at center environment to and better key was to of back and turn did focused the we'll and good, quite meet pandemic. this meet more much more be new on scale than just because trade We but prior I out some data-driven NAB an just the So better marketing for really on used think and did lot will And dollars spent are saw floor, and we to meeting this may a at put money to marketing digital show on we show. more year a customers to on focused the size never

to going NABs the of we've traditionally going that really feel even And on and we're the cost getting from liked and we we're I big I good very said what as for same exhibit the the that about show and had floor. what say level without to beyond. going these careful we if in those opportunities be shows. having feedback see of customers at meetings year we had I'll forward we saw going really this ,remarks NAB. the trade my prepared at as We think we're even So forward,

Samad Samana

then model-related questions. And Ken to great maybe That's hear. some

a control. know in are that things are but Just the company's I of many also there out of control, lot that are the company's

you past should the the of of guidance the in QX you've the few and anything, we for terms framework done I just guys about it you out an have but well rest call maybe that about in think last over as on Just there? just versus of can, uncertainty years anything navigated as let's changed couple based what year think quarters? the you uptick

Ken Gayron

that, terms the the No. of we very is for the to felt chain it Thank it's to for the strong range that for in and in guidance chain you for the on At conditions, for but quarter year. due QX, the feel gives of solely was line conditions the related The the in and full firmly widening the second supply we supply very question. We will Really, resulting widen strong guidance supply will the chain. environment business Again, appropriate solely achieve our we about and numbers. point, business The of in be strong. both the top orders to the high yearend achieving is the of at backlog conditions, yearend believe and coming recovered our a this products health this terms point. the numbers confidence demand the and me macro profitability.

Samad Samana

next Perfect. tier last just anything whether subscription analyst. over be tie cohorts couple dynamics I by promise to lapping would retention it's and But of And or just now over subscription helpful. strong very last type as for on the it turn you're I'll years, one retention, to me we could some that by the

Ken Gayron

Yes.

off. have NPS de-bookings We're certain I time we in the investments would made into the our metrics Day, creative company. but for point, that in to customer this we'll at our And Investor of tools. seeing a seeing call would retention I talking translates say that paid the on continues we're about little feel that So improving, out in a certain the I in products. it in solid we that be management scores like success spend would reduction the more say general,

trends. then second about really And customer our enterprise feel good we those So base is sticky. extremely

had of our they've loss We any model. have come subscription customers any enterprise onto as not subscription

metrics in very very, regard. So that strong

Samad Samana

Great. care. Thanks forward and look Take at to more all for Analyst questions Day. the the hearing

Jeff Rosica

Samad. Thanks,

Whit Rappole

Great.

next from go muted. ahead Jack, Josh please. by Jack you’re Jack Maxim question Aarde still from Vander like Nichols. followed be is Our you to looks

Here you go. There go, you Jack.

Jack Vander Aarde

times. three it did I

me? Good. hear can Great. You

Ken Gayron

Hi, Yes. Jack

Jack Vander Aarde

you're and the but bit look about timing from not forward guys. customers at what is talk about your Day How learning anecdotal points course. any little shaping of to from covered on talk data conversions? additional questions. Investor a a you that how appreciate hearing up Jeff, Hey, and what of of Great. few of you enterprise I that into specifically discussions are those just more of the subscription this update kind can model you're might I'll that yet. just existing jump maybe and hearing evolving are kind demand illustrate

Jeff Rosica

uptake this talked question, seeing response we're customers. been commercial very would surprised. is these a as really response these we're about the view the the really, we response both that's maybe Yes, little from customers team say you commercial We team our a would and during pace the they're good is mean in and of this quite quite originally not slower I we're that obviously, Jack. seeing I positive. from good tells as What that And is our activities, at. pleasantly thought talking be just that strong. customers NAB before – with customers. from we've meetings good were I'd bit the also to really – originally engaging commercial think we us I generally say they customer We've in day-to-day

also think we're delivering customers are has conversions this to I they these is very and the see they're on talked share their And about to economics our and the what But larger success like at before, converting of of more good. obviously subscription. in value as a percentage these economics getting. really the any point customers We're to drives don't us well it Ken a been I for wallet. It's end sight improved getting economics of frankly lot quite going and feedback helpful.

here. subscription I model the and in is making cloud. Every only Kevin think first different about customer over has jokes CTO carefully is very looking we're He on then next me themselves our SaaS cloud really the to interested and moving to move to that that hearing real is environment. more accelerating. move getting flexible sitting to said a time not also customer they're one business workflows a

for So of a we enterprise ahead lot us see customers. runway of really the good

Jack Vander Aarde

a That's great. That's maybe And helpful color. enterprise just subscriptions. follow-up on

previously new sequentially. XX% robust growth up how existing that's How from of these are conversions customers Avid? many there. so many customers? are And Clearly to maybe of or XX,XXX from So, subscriptions

Jeff Rosica

helps successful so still much offering early migration it's It XX% is comes a around as good. give our you that customers. that. put of similarly guidance. really And Yes. I'm and It I business rough into pretty new in to the going our a exact tracks funnel to seeing data tracks think are go subscription really subscription us wouldn't we after very XX% want enterprise looking -- We're business – again customers a it company much which and pretty as subscription new But tracks I to points.

good, really and but we're already building conversion seeing been strong has Our funnel.

what our ancillary drive doing the could in expand accounts. of have also customers. opportunity a really to customers. grow those footprint, and share an using said seen current is each as our many And the in current have our of we're I we pushing times good current also an footprint converting to may opportunity competitors. share a competitors customers, this obviously, a using large to customer way within But we're base wallet. We We expand to but see as We and higher out one this things of about customers in footprint our are have as

Jack Vander Aarde

then the the quarter, exiting And just or specific are on the those approximate more Very color of on end it which the of Ken $XX And helpful maybe. quarter million the Approximately Integrated color. lower you quarter. maybe one backlog related maybe for you at exited can Solutions, some than what to? hand, the inventory product solutions more at like when normal seems provide looking from

be Just helpful. category? specific color related would a have satisfy that to of product Just any inventory more to do you the Is kind all backlog? it

Ken Gayron

Yes.

is of kind a in bit Pro in the me let backlog talk say components. of million the $XX half little of mainly about I It's the would business. hardware. again Tools audio it So

to very So unique Tools Pro very, the obviously, ecosystem.

half control and is sound other live The in surfaces.

of are those XX% that's XX% So backlog, the -- backlog. categories of the probably three

have the related that it's business. a amount small very We the graphics hardware some audio servers is to but largely and in side,

of, as In how a experience, as terms be a the positioned, terms of They've go confident suppliers through able with I we'll in to feel our the backlog XXXX. and uneven this alternative at relationships. year chain confident It I very in it redesigns. I'm the you will class. to this year-end team about confident could them where and that the little half in again, first ways supply shift lot very able We're but through very feel expect lot in probably looking most well is second as to the our feel in backlog looking can we see to to and quarters, team the guidance, of itself at and deliver be of we're being here deliver of XXXX. I of deliver more but Avid product supply guidance. by resolve a backlog kind chain that inventory this in the got It And that's at I very team of the navigating confident

Jack Vander Aarde

back jump in I’ll guys. time queue. the appreciate I Fantastic. the Okay.

Ken Gayron

Thanks, Jack

Whit Rappole

Securities. our Thanks is Josh, please Nichols of go question And next Riley B. ahead. Josh from Jack.

Josh Nichols

for taking my Thanks Yes. question.

Can hear me? you follow-up. a Just

Whit Rappole

we can Yes

Josh Nichols

Tools on you those you into some from? then you are this? hardware of the point. few like being And that last little a a dive are Clearly, also Just Pro specific components the the Could is times most the a be follow-up kind you'll so of confident seeing that Where bit of able you sourced and what mentioned components lot causing terms you that that fulfill that are of gap? have you additional is in the may on that what market be actually fill able Like kind demand. can a in -- coming this of makes to to what confidence, it supply backlog. be of

Jeff Rosica

out. question. it try lot I'll that, in but A Good lay to Yeah.

we of really a not China. even – I most that which hardware. or any lot So of are flexibility It's much other certain and screens, a this power it in varies we're in much companies don't I'll have have things and come when some sources There in because now as we power chipsets component supply generally that the from We the trouble for think the environment cases, of don't in supplies near-term. first lot got that are mean, That's And around are more China from But The general, upside the our around to these of the is things Pro supplies it, behind managing. our we components. not where waiting on sound. it's control getting availability of of good of it. other or I confirmations specifically, lot a limited of network that, hearing live as In up product environment And case little we've demand, in Tools short in have really audio yes, it's connectivity, power say ship got of have our Josh. – services challenge does Tools some again even up today. some the drivers chain all, supplies difficult yet we're is we're situation as will It's having used the different you're constraints. arrive. there's to isn't have. is demand in helping, the market but of Pro is we've all across – some very more we're all keeping Audio because IO to products a Audio IO supply some

product. down is knocking to one fully. And haven't they there's ship the problems. they us been of able can't to XX% chip it only a a just few be not XX% team or to that able takes It's in for product resolve that Our

in we we that we don't – it two than a related. cases different they years set aggressively resolve the it's to and us itself supply. we Again, correctly. chain to one. world said what the the with chips can what the are an my important. window they're on rely is lot other sure chip we is It's We got confidence for specific then or have greater in situation in chip a it's spins I or cases the chips can There cases supply alternate going where largely got that, say, up. couple maybe passively boards is and in to of more can connection I clear depending with are that, and have and are doing and we we something out get get really that's just by of waiting hardware boards us in areas visibility as connectivity up I'm we're let's us we'll A successful And a hold than answering if on opening choice, think on few working are out to scouring the we've using And gives on just redesign a example make Josh this a supply not remarks, build stuff just network can that risk the the network a of the see for those higher we've that narrow an doing is, is aperture if as either sitting prepared of that a situation thing Or for and one. important of horizon, gives chip do optionality. associated. It where in does we something, us it what those re-spins particular

this can We on are how being the get quite resolved. in near aggressive we term

time. it again, take does Now

Sometimes, do we optionality. we redesigns do lot it few more supply But a a take also that us door, once is our it the but months. get in the gives

doing this needs are what get We to resolved. done to be

Josh Nichols

just there's little me. I'm more where here can growth, year-over-year guide of XX% bit comp But demand last tougher little calculation probably I bit for to up cloud see in that solutions, are the What's subscription or business? XQ a You and is like question seasonality right? -- for may XX% a back XQ, the so in for business two which XQ. looking be like quarters. envelope usually driving easier do are implies been kind subscription, less you seeing you to that? than Last used it know than you Is more has looking at have the that, that above the because an -- of for against comp

Ken Gayron

an do QX. last of the Yes. both. I selling combination We enterprise a would in We it's were easier comp say, cycle. earlier really have

got a great we expect has of in our the to we've already lot years a funnel that than opportunities that X.X Now team opportunities more customers, our calling QX. And the enterprise efforts execution successful aggressive be at quarter. look and in close and continued those prior to drive those

do we result, subscription provided strong was guide and again to that a at we in is very the growth, subscription as expect to which QX. closer maintenance XX% growth XX% in be our midpoint. And the So

And to We the high in first in the half by in growth the teens year that's that products for new in innovation come -- the And the as subscription second expect that we driven enterprise re-tiering the and new year. Tools full of the Pro are remember, growth. area and have as also encouraging we it's servers. have whether NEXIS results graphics well

why that's guidance in feel given growth QX strong the I realizing So the good factors. about of all those terms

Josh Nichols

me. for That's good. Sounds all

Whit Rappole

Jeff Thank to I turn That closing the you. it back session. Great. now will concludes Q&A for remarks.

Jeff Rosica

XXXX our participation solutions, to managing continue Thank our strategy achieve your beyond. strong for Annual we headwinds XX on as we evening. across questions. our you our move we May and good profitability and Investor growth hope continue shortly to our temporary and you event to are demand Well, to us thank I long-term we markets details a chain targets, again for available your and on IR will through the and closing, Avid website. supply and good have through the for for believe end company enable forward the are and see you Day In will join

Avid Technology (AVID) 5 May 222022 Q1 Earnings call transcript