- Earnings call transcript Q3 2022

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Whit Rappole

Good afternoon, ladies and gentlemen and welcome to Avid Technology's Third Quarter 2022 Earnings Conference Call for the period ended September 30, 2022. My name is Whit Rappole, Avid's Vice President, Corporate Development and Investor Relations. Please note that this call is being recorded today November 8, 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 the 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

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

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

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

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

Jeff Rosica

the Whit Avid's results joining strong everyone Overall, today us review the with my Thanks, we headwinds working despite earnings our the third including and that being that results more in operating results. global delivering It's to so quarter despite challenging that is pleased challenging third strategy also today. macro delivered thanks revenue in overall caused to were clear and environment by the are quarter, today. many globally conditions we're companies

Let details. me into dive the right

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

the our and quarter from very strong subscription First, this record our creative growth that of the adds all by in we're resulting revenue including the driven reacceleration terrific tools, at subscription results, in quarter. subscription enterprise very pleased Tools, performance software of robust Pro

we demand Next, integrated had than quite solutions realize even slightly our results of did remained for portion expected. though the healthy we business, lower

products proactive we and recovery are associated resumed chain a chain quarter. anticipated. overall strong happening delivered situation basis, solid pressures. companies foreign per the including global late we hardware management many supply facing, had revenue delivered business exchange growth, earnings so our that conditions macro the certain and successfully the and finally, prudent share rates, year-over-year current caused a currency we despite headwinds growth cost of the because we the by all audio from difficult conditions, a is the on with And on profitability slower delivered of basis, we continued of our worsening this Through inflation cost constant for quarter, production constraints While in improved global controls, supply than

over an all XX% this of year-over-year overall XX,XXX and we strong in delivered existing number subscriptions. we our bit subscriptions, some subscriptions growth business net more realized record. and enterprise a each creative We've growth subscription for customers, both delivered is these points. offerings, quarter. Now, the provide dig software specifics let in key tools on our which by cloud of additions of And With of overall and robust enabled in me adoption time new both

Pro Tools subscriptions. quarter, of creative creative Tools And qX Our since third beginning strong we net realized momentum We've a Pro our in and largest had tools of our driven growth. of quite Artists Media new Tool additions the strong from of Tiers. number QX, built our of remain Pro an Studio sequential subscriptions in part and subscription the Composer the launch by during XXXX, essential increase largely on performance the

continue and to we Tools new and creativity, Tools release professionals. attract September, further enhance expand creators generation and delivered Pro our more users' our music existing the In our Pro latest several audio innovate to to business grow audio of music of ecosystem. capabilities We of the next with

trend continue to the expected. subscription helped our converting world, than subscription a the on the previous was by will nicely in a not around quarter, That large pattern. in to long to and growth earlier customers with successfully that of QX, basis, deliver And half of companies, sequentially our and number on as our also substantial what constant close of of tracking in QX second key of seasonality offerings range, than subscription in timing contracts number is ZDF we enterprise favorable constant customer expect couple the which model. track such comparing a on performance of for that helping Admittedly, said, total of We expected typical to a agreements and be had revenue to currency when guidance we term currency the subscription track QX media revenue In enterprise the Avid our Broadcast basis. enterprise a stronger secured including subscription Finland especially YLE Germany. Media QX, companies to

year-over-year. quarter. Media high a to constant NEXIS value And subscription the enterprise uptick subscription XX.X% subscription to storage these growth. in in currency with we year-over-year a in portfolio our contributing Enterprise. on quarter, subscription growth saw We Composer of offering subscription and basis, also XX.X% the new expand resulted which additionally in continue Together, And offerings, is factors our revenue our grew continued revenue reported revenue

our the currency. third and revenue During resulting healthy continued X% our activity constant business, across in commercial for in year-over-year quarter, demand customers growth strong

a sizable Avid's increasing Europe, total had portion traded exchange as results on The reported. foreign mentioned UK in an As headwinds, impact as is our earlier, revenue business Japan. and I of the

in While seldom the the on impact of past, we have results. exchange talked currency foreign about Avid's

integrated because we our nature, resulting impacting seeing a of currencies progressed, constraints in our integrated the in backlog. not our year for increased in to business. As the the The obscure production have progressively current do the levels quarter, to believe yen supply want profitability growth thus we part for this for continued FX Customer global business. we supply to highlight the the headwinds we're and are Euro pound weaker much as which further has are impact and gotten to ability compelled solutions, chain and affect solutions in continue underlying business, to do this temporary exceed that are demand revenue

certain these are While recovery we our well progress including integrated the control of resolving and our some the lingering SX of consoles facing continuing than expected, production live late moving of we good resuming and QX, we're for challenges, made parts in sound solutions is as as slower impact in SX deliveries had to portfolio. our challenges services,

none of improvements likely into these this we're term as the will teams, further of our level work we integrated of grew of XXXX Again, that And our the we be solutions of solutions a resolve Though with enter what this a recovery typical said these or $XX suppliers million result backlog temporary unfilled of near above visibility we orders quite of of customer As our from for the the for XXXX. be to orders on opportunity anticipate to to success with constraints, progress more committed certain have will exiting issues. first making all that growth we we and integrated plan. are the the extend based levels this these clear, for our strategic portfolio. unfilled, and unfilled at of And point, of QX. than view business change parts into quarter. orders expected anticipate long half working headwinds combined term today seeing the With heightened of we magnificent during contractually

third strong. subscription proactive gross We plan. on year-over-year remain and our despite resulted temporary produced and by ARR to improve with produced XX% combined software continued offerings. non-GAAP us in operating year-over-year. year-over-year and maintenance growth drive macro also digital improvement prudent we we expenses making a in enabled previously, and cost to while growth XX% stable growth growth margin quarter, constant on performance higher delivered year-over-year innovation, headwinds with over our continued continued is to The mentioned currency focus Our conditions of business We've be continue an in EPS year-over-year investments gross our to fuel the continued for our takeaway approximately in XX% over double EBITDA adjusted growth revenue management, profitability the growth improve revenue basis, strategic margin saw growth margin the deliver in improvement of XX% sequentially overall that and total technology subscription transformation arr. margin subscription subscription digit to growth revenue The by in and profitability and driven in

a business share see forward where you from Let me we now with going things perspective.

businesses economic uncertainty the customer solid ahead in before macro of improving, that Supply us, of While, the production future very capture capacity I'm strategy, normalized across confidence we'll a help do and relationships, the to a confident not the to expected conditions but growth we all opportunities, globe. term gives plans we're navigate and innovation long And with challenging conditions trajectory which are global of business the face positioned that end almost availability year. well and fully this believe us together continued and market we outlook. appropriately. strong as positive

the standard improving, quickly our produce specialized constraints While the am I team's on some and of product facing efficiently components to to alternative and many of area more with we're in components of availability redesign and components. pleased the still products. support accomplishments ship is

become components and available. As designs new

help generation free Tools and creators us of deliver I'm before and Pro Tools drive enhancements the a to new giving pipeline We valuable and our new converting innovative will new subscription. to offer develop growth to help plan. nice paid and solutions, a on strategic a and see box growth. Intro, contribute offerings more forge to October, Tools third that our development our partnerships vendors party the products a to for to provide try Pro version offering users to our for free introduce the for new customers, Pro ramp a their to of next innovative user in that In demands we introduced in stream toward additional market software meet continue customer releases, by we will to encouraged

the we of Just ago, a the release NEXIS Carbon remote the official Pro uniquely editorial solutions. music and enables Edge for Unbox innovative been AES show, powerful new the flexible strong distributed last at new software on York audio two products couple of we introduced and workflows. and weeks that from availability announced also Studio post-production and In City creators, the and next the reviews these generation interface, of desktop New receiving more brand Tools Pre-expansion, solution the have community month subscription

As will been the few efforts maintain we on years. our past cost discipline for efficiency focused the to that so always, improve and we continue have

growth continue investments strategic digital plan. transformation support of new innovations, also will we While as our long as strategic our well in in make term to

we impacts our For of profitability are the from strong And exchange cash to deliver and in well believe ability supply the full factors. to and continue earnings and year, deliver temporary these currency we confident revenue we're constraints. fourth flow foreign the headwinds despite to despite generation quarter growth chain positioned

'XX financial is more reflect range are review Take EPS previous facing to we details. turn away, While non-GAAP within the in it narrowed, full conditions year adjust Ken needing we're our guidance that, me adjusted our our but let these the to macro guidance EBITDA provided to of and now now to Ken. With August. over guidance call

Ken Gayron

delivered at quarter end third despite was the And that over you, headwinds, everyone. range. growth high Avid our good Jeff. FX guidance afternoon the XX% Thank of earnings In

in financial robust management by Our the performance increase quarter, base. and business, subscriptions prudent including paid net performance our during driven cost our in of subscription an was record all-time

term our be expand with our flow enter metrics. and focus revenue, the our long remain to results. to quarter, details quarter us As improve turn higher cash on that, further let the subscription we will now margin profitability and track of third our With our financial fourth

of quarter paid We by enabled cloud largest ever are ended growth with our base. continued sequential the We of increase encouraged software the our subscription subscriptions.

we subscriptions XX,XXX performance of enabled acquisitions Tools Our X.X% had our We Artists reacceleration total sequentially, year-over-year. full net Growth our acquisitions of Pro and since in performance enterprise the approximately the XX% tools. quarter end which solid. tier new XXXX XXXX in And of of continue of at XXX,XXX subscription healthy launched by quarter, A and this the reached first April creative Pro late robust exceptional and Pro Tools reflecting to with creative terrific quarter saw XX.X% strong new in be increase third year-over-year. in We subscription We adds approximately count which for the quarter. growth our was here. an added best the Tools had QX users saw Artists

with Composer strong a had quarter net had Media acceleration subscriptions that also adds. an We and

the XX,XXX, of representing increase increase our transition enterprise in to during existing grew subscriptions third in MediaCentral The about of subscription. our XXX%. to the business, quarter, confidence of enterprise our to subscriptions growth customer base XX,XXX approximately year-over-year Moving an furthers

become multiple price enterprise of business subscription the tools. is of price continues for As seat of an positively price overall per as our more the is our mix, our subscription part creative our a to meaningful seat, per seat enterprise impacting a

solid of XX% the by and the currency revenue a Subscription subscriptions and growth maintenance $XX.X revenues, subscription slightly year-over-year, and third an composition consistent the currency growth year, our Now continued and business. XX% constant currency on and and XX% months revenue term constant basis. year-over-year paid a and plan. million, XX% the growth maintenance reached be constant Maintenance increased continues XX% nine first XX% saw basis, a above in the the subscription of Total the which part moving for quarter, the at a of our to which quarter, third is of of basis. long increase during number on to drove

was million revenue down During the maintenance XX% third $XX.X quarter year-over-year.

XXX%. successfully afflicts in healthy to continue excess enterprise to customers we As our of convert at offerings subscription

related are customers. We those seeing in from a the maintenance revenues software reduction

issues, quarter. limiting demand of for our grew and are hardware, Tools ended the chain integrated orders production hardware our However, and supply several combined certain and $XX.X higher global perpetual quarter away related driven $XX $XX.X by to impacted million committed over third solutions pricing. the revenue improvement to rates ability with to unfilled the by We continued of integrated the continued third orders, Despite the services and products solutions of lower third supplies million in integrated live maintenance professional the due software demand consoles. from availability Solutions, capacity meet at solutions Integrated in transition customer Aavid integrated end million quarter, contractually licenses. in sound up which were the quarter of XX% $X solutions. power decrease was chips control year-over-year. prior over The the and was Pro for audio year-over-year, a X% renewal in solutions healthy million perpetual surfaces, was revenue quarter, unfilled for primarily Total the

to finding issues sources alternative redesigns means. through We selective and of resolve the supply, other are working

mentioned, we below the made in some of these months first of our the Jeff the overall, capacity challenges resolving quarter, XXXX. we As in in experienced but remains demand progress nine

expect to integrated revenue We fourth more the deliver quarter. in solutions

expect we before However, at year. fully orders the of to the on we And as elevated level the a the committed an expect to catch production shipments contractually and end end year. result, of of don't up the have

XXXX Perpetual with increased and the revenue to we year-over-year, declining these the headwinds full guidance. on into perpetual revenue have subscription software of was licenses Perpetual we continue them total decrease by the as perpetual a as exceeded We our Revenue, $X.X perpetual macro from focus significantly supply factored risks de-emphasize strategic chain licenses the to as license XX% understand revenue. quarter, today year-over-year in million, growth related subscription XX% decline. subscription Even and revenue revenue year

long at which third annual unshipped maintenance our currency. favorable $XXX.X nine increase XX, subscription currency maintenance contributed on in revenue was and value revenue Subscription maintenance subscription constant ARR million term chips plus adding revenue, bookings annualization to came XX% revenue, growth and approximately September million maintenance quarter XXX. Now subscription outpaced in third million or year-over-year. contract subscription moving revenue the and by revenue recurring constant we Growth revenue has to at year-over-year, revenue subscription under $XX.X subscription in of drive to base. At XX.X% an orders different customers to ASC to ARR as annual from would new solutions growth due Annual subscription impacted recurring two to XX% increased to the enterprise in ARR ARR strong agreements. the LTM of negatively the a negatively quarter, growth months the recurring was as recognition impacting of of integrated ARR growth the XX.X% primarily characters year-over-year first conversion have is year-over-year $X ARR due ARR Also, lower X%. XXXX based

focus growing gross margin. drive Our revenue recurring on continues healthy to

of As from and XX% with was revenue the recurring term quarter a up revenue year of ago, third total XX% in our LTM model. long line

$XXX the currency. results our at Total Now quarter at up up million, let's was third the year-over-year, look X% Revenue constant operating for and X% quarter. third

had East under constant versus these reminder, a U.S. between XX% from continued the robust in and unfilled dollar, our contraction but million than of quarter, integrations The in and was quarter have revenue would shipped GAAP is In currency. committed growth reported basis Due solutions. more our continued orders for normal quarter. XX% in for the Non of gross the XXX for $XXX our -- in solutions in unfilled third XX.X% solutions growth difference over We margins weakness been in was the integrated XX% of was saw to committed the total market exchange there if British Japanese the foreign in to impact is quarter. third revenue yen. our not weakness meaningful points collect demand, of is If in total three constrained currency and XX% these more the and year-over-year. all an and X% all approximately we excess $XX currencies orders revenue had quarter, rates headwinds And contraction integrated the the occurred, the we a revenue and the and XX% pounds, of was revenue increase in X% up orders million Middle in As Americas. euros Africa, Europe, APAC. in

high Our improved up made business margin. a margin subscription revenue, the share gross large resulting of in

our nine third million Adjusted EBITDA EBITDA points both XXX improvement or and in quarter cost, driven in and impact in expenses We non-GAAP head term margin. drive by $X expect XX.X% months million through were operating up long When revenue due the the favorably was to by basis million was year-over-year, operating the FX support of year. in compared year-over-year, revenue impacted by we prior investments long was million chance a quarter model the first by $XXX,XXX margin million our base quarter, provide partial $XX in of does adjusting the third gross our Adjusted FX for the quarter in The in drive of to EBITDA inflation. increase term growth increase the million did Non can business. an innovation the $X.X adjusted product in our of the cost XX.X% as model. and $X in third impact for impact improving our the period. GAAP a gross expenses as mainly margin quarter, negatively subscription both to robust to global $XX.X $X

per up $X.XX third non-GAAP share earnings the for $X.XX Finally, quarter, was year-over-year.

results the look rest the let's at for third Now quarter. of

we're of investing effective the down profitable drive margin for strategy trend in of business $X.X stock a together hardware million product an the controls Our seeing in revenue cash will and of meet components was supply healthy demand to flow growth. million our year-over-year to audio sustained recurring to in $X.X a in the quarter inventory that expansion cost in due lower deliveries buffer has innovation higher business. increase quality with and Free resulted of provide

During shares third XXX,XXX $XX.X million. quarter for repurchased the

also for million $XX.X fourth bringing authorization shares the $X.X to repurchase repurchases XXX,XXX during quarter, million million announced total we or $XXX under XXXX. $X.X Additionally, shares, in the million, September

million drive quarter amended X.X debt we to to deploy prudently continue responsible way financial Also no execute credit $XX $XXX with the and we adding position million term financial incremental provides our avid liquidity flexibility term net as on October, times. more capital increasing credit to to value. shareholder returns $XXX facility from facility, in the for We deployment and strategy favorable growth work revolving change over will in plans with to loan the in We with of million pricing. $XX million most long This our to terms a enhance ended Avid strong shareholders. EBITDA in capital to our

turn now guidance. Let's to

As the our we seeing. we strength underlying including solutions in demand business are for are our Jeff the in said, healthy that confident

subscription our solid subscription in growth tools, strong enterprise continued and expect in performance creative our revenue from business. We continued

contribution subscription offerings, increased including Tools our expect product offerings. new Artists, subscription NEXIS We Storage Pro recent from and

to year $X.X our comparison will full total headwinds fourth be in full strengthening from the on expect million effects create for revenues with the continues the U.S. the However, plan a this year, year, $XX.X against our headwind we quarter. of dollar year-over-year million for

than addition, had unshipped In longer expected. healthy specialized ability components backlog is to current meet certain we orders to the taking the procure of demand and

we backlog hardware As unshipped elevated a complete as audio orders level result, to we fiscal our an our have of expect of in year.

its result, guidance. is year Avid adjusting revenue XXXX full a As

$XXX Our XXXX million now revenue guidance for total is $XXX to million.

At we of hardware revenue. of this with for a and exchange its headwinds, change in guidance exchange revenue is XXXX, the our which sales million incremental audio supply remainder maintenance full time, business result gap $X the with year headwinds, product recover at midpoint modifying $XXX an solely total in XXXX we prior that foreign cannot is from, we a chain from the for guidance subscription bridging in As million related to Avid lower look had, our issues. of the as macro foreign

headwinds revenue foreign $X fourth year on will exchange quarter. year, of the million subscription be full this expect from We expected for in million the with $X the headwind and maintenance the

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

the For guidance its EPS is adjusted Avid year, full for tightening and non-GAAP EBITDA.

tighter guidance approximately adjusted now smaller result our $X for EBITDA million decrease million. by XXXX Our foreign aligned reflecting are a as million, is is a to range exchange EBITDA $XX our XXXX million of from prior with the $XX band midpoint of on revenue. The at $X impacting adjusted solely guidance our headwinds

$X headwind would the million, midpoint its of Excluding by of XXXX million. $X Avid the EBITDA have guidance exceeded FX

share of and earnings of in $X.XX prudent outstanding. XXXX, million of shares $X.XX, management assuming guidance reflecting chain impacting This business. headwinds March XXXX which hardware in for our guidance non-GAAP a exchange $X.XX, are given is business initial reflects per foreign that global spite unchanged to the midpoint from Our temporarily supply XX.X is and the conditions

million guidance With that, call amount to expected rate turn interest to inventory. back to other and would the our an flow of $X approximately million $XX exchange million cash by are EBITDA of impacting to foreign free We higher XXXX headwinds to $X million items, expense adjusted base adjusting to higher for Whit. due due like higher $XX capital a I working including

Whit Rappole

take and happy Thank Ken. And prepared That our concludes to we're you, questions. now Jeff remarks.

please Maxim, be Aarde Nehal Jack question go followed to from first is from Chokshi. Our ahead. Vander by Jack,

Jack Vander Aarde

you Okay, great. me? Can hear

Whit Rappole

Yeah Jack.

Jack Vander Aarde

Okay. Fantastic.

subscription disclose existing you new you were that of new during if enterprise it. continue. avid enterprise you customers quarter. mentioned avid those were I or entirely? or believe guys. can to taking win, start agreements Okay, the won you Great questions. of And strong third that? could subscription missed business in can Thanks the think I with agreements for these great, maybe just customers of my momentum I many these Jeff, general, number then or provide see I How But conversions did a Jeff,

Jeff Rosica

ones question, is majority the this it seen disclose significant it's quarter. Good say, a But disclosing very a think number, and to it Jack. we didn't conversion. I'd we're large number I closed we've It's the we number No, in of including usual the not a quarter. couple is pattern customer of that as

them new that traditional that about I have and in So bit a or bit But we're because expansions mix. as a off the in able some line seen there's did it's mix said a do couple deals ongoing. we of is before, said we obviously expect done? in second them close expected. half QX, for was sales key we've So get street. get to team seeing we what early of customers of in overall, the we're the helped or And get down to QX we the But what a of customer little the in right

Jack Vander Aarde

I is net from quarter. enterprise enterprise subscriber of just in had, discoveries the were second in the the of kind or And you the XX,XXX And on adds been touched actually third up quite ticked a up quarter. terms seats so follow which looking were a great. at dipped total last year Okay, bit actually,

agreements. good of much winning of that's exponentially, enterprise this enterprise up time So you related around, it's subscriber seats is throughout expanding know, subscribers, us how or How it. see of this the a multiple the enterprise to the picked existing new number to of many

Jeff Rosica

these is, these agreements these enterprise when with when to deals, usually both subscription There's bit or goes Jack also of cut subscription these contracts along customers. we a is But license with we each expansion an a obviously agreements, of or enterprise conversion is the with seats. there agreements

including a quarter, I large both with the some of very of in we little number great success third with did as said, a a So some bit couple of ones. have deals,

I've around. growth this, so of of and as move right And many to But say impacts so quite many orders said get, the closed before, enterprise of depending guidance, in a the can look can, they business. few considering fully see we're did we attempted be in part a quarters we've how it's line, obviously, I how deals our traditionally said It FX. momentum. quarter. over we in we And this in sure before, close really lumpy make But enterprise I right, line obviously, you bit as understand will you the to can seeing is trajectory continued of business, the QX. the a the given good, said, to our have what with buy

Ken Gayron

very And investor Jack, to we enterprise from at healthy say, customers. said demand obviously, to offerings, that. positive if adding subscription, besides seeing not consistent what day, slightly new moving our our would subscription healthy customers we're we're customers those And I having for we're uplifts, with

nicely. is night model move and to line growth with in that high-teens subscription as maintenance we So And delivering we're continues progress forward.

Jack Vander Aarde

then hop just more in fantastic. I'll maybe Okay, the queue. And back question, one

Just your across pricing pricing question portfolio. strategy on entire the activity and overall

impact any you're products? thinking or enterprises when are solutions major integrated whether FX also make your impact it, Have for about subscriptions or your planning you of So including to any material to on the pricing offerings, individuals the for that experiencing? changes you it's product

Ken Gayron

perpetual, position our materials. know, pricing drive integrated to I well to And at software customer to input profitability. And would certain and Avid great areas we've and Yeah, certain further been subscription as maintenance, that question. selected revenue say would looking as well of we've in very drive with profitability. said as you monitoring and base. I we've able take both as certain offerings actions the been customer growth solutions, growth That say our incremental demand been it's a a no, obviously, costs as has good for our well

unit So it's leaders I every Jeff day piece business and an on that and our work of the business active obviously

Whit Rappole

Thanks Jack.

having So I technical they think issues. Nehal's

ahead, Jefferies. to going go we're from Please Samad. to Samana skip Samad So

Jeremy Sandler

guys, Hey, all hear you ' right? can me

Jeff Rosica

Sure we can.

Jeremy Sandler

Samad you thank much. Sandler for so Jeremy This Great, on Samana. is

off, backlog, I size, a the on start customers So of our you hardware to you as contracts? on result of how you're there? a shortages, just subscription guess Or maybe like holding to are seeing signing a what solutions integrated much off can seeing hit

Ken Gayron

It's a question. good very Thank you.

as we backlog of in those does does So, it the solutions integrated revenue and subscription pull software deliver when part solutions, it.

on follow would $X think that through. way the probably revenue $XX the have had was subscription as So, backlog sold we it of about million million

to would if Additionally, subscription, that maintenance it. had pulling some integrated solutions it have probably wasn't backlog

impact So at those we as before, as ARR as said does look I've it numbers. our

the I what million $X on well. as maintenance we so side think saw is And

Jeremy Sandler

that Understood, historically? particular appreciate the growth. so, strengthen. Has currency constant we color breakdown. I'm that in all constant the versus guess are good guess basis, I to which changed at makes subscription on guess And it's currency sense. seeing, I see currency I that you deals

Ken Gayron

of of all, East. past regions Yeah, we comes pretty just Middle around changes the Middle around had -- working the which can just and and it on that would deals Europe is It A first strength East, contracts a say strength. business we've that. the especially good I on lot and all based I America Americas, North from world, quarter, answer we're or

we Europe, quarter, really we Middle success had great This in really strong America. East, also success had but in

bit I a of both. little think So

now is performance really but seeing probably East job, are So have especially good Middle both really pick I this. we on are But pretty region, even America doing Europe, out to we're APAC up markets. the performance in pick seen a really want been APAC well. the good starting to laggard and wouldn't seeing North one And teams think I and from good and really,

Jeremy Sandler

you. my you Thank question. guys taking Got for

Whit Rappole

Jeremy. Thanks, Appreciate.

Nehal followed the So now to by we Chokshi have Northland Frankel. Steve found be Nehal in queue. back from

ahead. please go Nehal, So

Nehal Chokshi

great as the share Also that of to take subscription see And Ken, a detailed Thanks, both you on It's Whit. thanks, that pretty will continued signal the the cash strong down. buyback, maintenance, yeah, the takedown, as that's clear. for the bridge well revenue, nuances in 'XX to QX, to XQ Is strongly negative 'XX. believe A the fundamentals unshipped in a backlog? here. from a Maintenance year-over-year negative couple due that basis purely of on XX% business. X% decelerate the in

Ken Gayron

Yes, would of I rate unshipped Additionally, also, little enterprise having backlog continued I say on we've that attach those the getting subscription. in terms seen from a on shipments? that would headwind we're success maintenance, say a success more and the is

had, that respect in But in our maintenance to term been to little maintenance. it, delivered that subscription if we probably and it. ahead the of to impacting the general, would a also unshipped have attachment bit plan being had the track backlog but numbers to that's with So we've slightly we continue long

Nehal Chokshi

is $XX a stronger a your there? the down about subscription then talk incremental million quarter. adds, a And create the $XX subscription as and versus incremental subscriber understand. I why tick six ARR I'm year ARR in in million was there the Okay, quarter quarter and understand to despite enterprise ago high expected trying Can net and you that well.

Ken Gayron

the to would solid. say ARR I Yeah, continues be

pointed kind And some those deals did out has success recognition enterprise of between differences revenue when quarter, are strong as Jeff I think characteristics, in quarter subscription the the have we enterprise subscription. your entered. on different on point

Additionally, an percentage by look the when impact we total at quarter side. had ARR points exchange foreign this on numbers the three

foreign it that number? impact the headwind exchange So did

Jeff Rosica

quickly. number Let so me roll number just look the at

Okay.

yeah, $X ARR. in that probably incremental million represent would So around

Nehal Chokshi

Okay, you. sense. correct. That Thank makes

Whit Rappole

Nehal. Thanks,

Our come ahead. go Steve, Rosenblatt questions Frankel Nichols. at to Josh next Steve followed from by be please

Steve Frankel

Good afternoon.

you in of But So very that the business? well. consumer the surface, I you anticipate as the is a impact subscription a seen you to going wonder quarter of side had churn have underneath the side strong and recession or the do

Jeff Rosica

Obviously, Hi, on road. eyes and like the is we're eye Jeff. macroeconomic Steve, keeping on down to keep an trying this conditions our we're everybody,

We way. that trend haven't anything seen yet

a very showed in fact, numbers. of It Our actually in churn saw But very very say numbers hard lot way. us working our teams would far any and our seen improve as weakness have surprised stable. haven't been retention I pleasant so continue churn a our us. We strength. we And to QX to are

open and attention we're wide we'll environment. goes. are indications see seeing there's we're there's of in indications seeing. right and now, But front So far, keeping no that anything seeing, how no the paying us, macroeconomic Obviously, the we're to we've our but not we eyes got holidays

Steve Frankel

had in we QX, annual is a that have component renewal QX, And subs that up see up, or you've typically that do front large coming early paid in most that? you period big of a that of when Is so bucket.

Jeff Rosica

happen long. teams enterprise the especially motivated side, to as a pure the as customers think all very on year we're annual seeing I get subscription those they all across yeah, They're from can. And away, Well, fast customers quarters. them move move upfront, but are really to to trying

QX, little said But more some enterprise space, bit quarter As prosumer for and overall, the quarters. the strength space, think a QX, seeing little on for I the we'll more creative because a we've of tools see we're holidays than to quarter.

Steve Frankel

do end? and Okay. conversions, be we're going of you where by that where you'll converting And with you base success do to in where enterprise your think you maybe in kind year are and think maybe the

Jeff Rosica

customers, our large the where, customers and go. year the of give to is a I those sized way down two. what lot probably the the an in I -- in would of We've inning percentage, But more we'll range of I'd say about we're don't over obviously have the in exact far. a talk inning, large now to of converted the kind probably we're the would so more still third medium to XX% of small lot be working we think some way to we're it's XX% midtier we're working second or in it. it next the businesses

Steve Frankel

FX? cost from structure the you're expense seeing Great. levels, global line And and any thoughts economy given on the the pressures top on

Jeff Rosica

a original situation, the We're to margin things, we to and got careful situation, careful, unfold because it's spending careful. starting being of we as especially good far cost plan get a into we saw we very ahead don't with supply are the was, Obviously, of August been chain were from question. obviously, cost macroeconomic FX, of our we want as just We plus, our when far. where we That then partially on September. keeping what we're revenue FX went have standpoint. so saw through Yeah, eyes partially below because our

investing that hands That as going we're being that is tail Ken's transformation we and innovation to the go. So in selective we carefully, to We're keeping performance said, are sure prudently cash prudently keeping we're careful. us. our to managing costs. and the investing important those very keeping we doing. we're earnings ensuring for in we're show continue I very flow work on And the make But being keep obviously, his say I'm

Steve Frankel

Great, the queue. thank you. I'll into jump back

Jeff Rosica

Thanks, Steve.

Whit Rappole

Thanks, Steve.

Chung. Paul to Our is go Riley ahead. from by question be followed next Nichols please at Josh, Josh B.

Josh Nichols

Yeah, historically to strong than what's business, a a it's for solutions work thanks. Strong going and know been with enterprise the you outpace of kind to handle bit little guidance, based half in implying what through I thought the much the little first ending seasonally hardware that longer and on year slower are the adoption, subscription to consumer backlog a you despite bit I better as wanted lead end how is to the million. I get guess where like backlog. continues taking going quarters. integrated a quarter to $XX terms that into typically quarter of next like you're the far on as current is year. of XQ of that

Ken Gayron

that take one, I'll Josh. maybe So

by would And integrated we great seeing to are our through revenue a doing sales. expect But do it And start have, backlog at that to take working that improve say the we couple than So, that I to million. do backlog kind of few to end revenue. months driving job team more areas we're conversion of we ago. That did drive lower. quarters solutions backlog those than be backlog of But is We gradual to the going we a by said, higher we to are will QX, it's of the at improvement. that grow that to year are backlog that. is drive higher mid-XXXX. a to two $X initially have And mid-XXXX, managing thought confident that areas hard

Josh Nichols

the to or so a you fourth it to -- down do be sequentially that be flatter a think could is quarter little in bit going the And or backlog clarify just

Ken Gayron

I terms seeing I of think gradual demand. healthy improvement, see we're think in issue we you, giving the is

same seeing there's the time, are improvement, but at lot demand. of So, we a

kind better situations. take a resolve of going the about to the support guidance on that. it's It's some And improving. view for just our quarters, us. our of incorporates I supply of So, went I couple these But think chain supply positive certain think mid-XXXX, chain by doing is, much

Josh Nichols

the right And new question. power as company's buying unfavorable the I a clearly up if well, with here, guess credit little Or besides bit then, strategy, I lot I'm just you seeing you're What ramped stock more you facility seeing buybacks, the M&A talk potential like, could on curious today. about a thanks. terms front? Last the allocation are what in getting prospects market just that you're but of mean, capital

Ken Gayron

Yeah.

the to in obviously, shares we I to shares. were to terms and to interests rates had think the in tack continue accelerate term we repurchasing the we, And M&A of know, what's great going look the for drive terms do prospects driving of an have of us our And, model, work business. the of business. favorable a going terms. I Jeff change shareholders returns board plan. at on right we're together for strength opportunity, in We the best providing repurchase to versus more were with in We partnering us, given we our of the business. the interested no and with excited capital and very banks in about long you with And are believe

Josh Nichols

That's for Thanks. me. it

Whit Rappole

Josh. Thanks,

Our go final questions are Paul, ahead. from at Paul please Chung JPMorgan.

Paul Chung

thanks Hi, question. taking for my

there? integrated are talk I on assume in boat another there. the you just follow kind Can of about competitors your So pricing solutions. same the dynamics the up

from flow adjustments guess that's the Should free are we mostly kind see, conversion So drive And is of outsized there cash any dynamic cash in any second that you free there? pricing results can to then of the other you. I conversion a you make? question seem on power in the there And inputs and backlog kind 'XX? next more expect Thank year? flow

Jeff Rosica

this Jeff. Hey, Paul, is

shortages, redesigned gotten about and ourselves us some are with around specialized of the in we Ken which What some those take this to take we that seen that up. that the bring your on components question. designs of a gotten of just supply ICs, and site. we've standpoint. supplies, a components, can is we help around There sometimes the doing has have question supply we'd lot of I'll some and can first, chain certain getting we're more FPGAs, hoped certain a constrained to more our being just working have the supply components in So more But and integrated better, a availability, On common struggling PCB not redesign, free get. fraction let cash more components, in flow the part I'll it's earlier the what had or common even aggressively still were of year a situation. those power We're availability. specialized first common more much of the work solutions rather the supply more where, certain for that areas, because the not, from than it's And risk the we environment we're components, specialized we're proactive to willing waiting choices it. we have times spec,

the the is are still some But around more for So situation getting better. products. there lower specialized especially our issues volume, and components FPGAs, specialty other

But direction, recovering heading the are as So but not definitely fast the direction. expected. right right had heading as in we in we

the production. us. to gotten get Others, back we're still have struggling redesigns products for supply Some getting and finished available the to

Ken Gayron

cash And on extremely extremely cash point. business our is Paul, remains flow strong. strong our software flow for the

building hardware where is On headwind healthy in of the we're still can, we're orders obviously, the there's because the a inventory certain demand remain the of increase also business. And that because backlog side we costs in unshipped seeing.

revenue. deliver we're kind components that come We're of And to to we're So in for certain we're components. revenue. last not in where a waiting those shipping position building inventory the for in those product

as of an standpoint, the there will cash side XXXX. of on So from the improvement, look solution conversion integrated we at be a business kind

Jeff Rosica

the I pricing it. I of side forgot on Paul, question to answer sorry, is should your say, this Jeff,

the we as one inflationary I component that just supply and just and wouldn't the drivers I of are say using, and I questions etc. freight going mentioned think the it's understands think earlier costs, So up there we including pricing are Ken -- also is power. have market costs that earlier on our side,

obviously, to pricing. opportunity our So we the are position using

couple We done increases. done already. increases We've a price actually of a of rounds of number have price

products, some show the higher orders the up to will have at we prices. come because start of ship of newer that in Some as

just margin profile the pricing But over that. we of volume think looking I we'll solutions -- so and a really the of And had next over taken are of several help months. been business. yes, carefully better we increase see part drive at course, that continue actions integrated the the And last will to the proactive are for number

Paul Chung

Great, thank you.

Jeff Rosica

Thanks, Paul.

Whit Rappole

concludes Jeff turn That remarks. Q&A session. right. I'll the now it closing back for to All

Jeff Rosica

macro right, we across long including growth, healthy so continue profitability global demand the our that hope we and All has and evening. Avid achieve headwinds profile And strategy caused I are to through to thank again. for and closing, Thanks conditions managing forward In participation everyone questions. you continue and by beyond. growing our to reiterate we wonderful your XXXX the company's targets will just to I our enable a through end term we for the to want move business. as our solutions, markets see believe subscription your

Avid Technology (AVID) 9 Nov 222022 Q3 Earnings call transcript