GTM - NASDAQ

Good day, and thank you for standing by. Welcome to the

Thanks, Lauren. Welcome to

Thank you, Jerry, and welcome, everyone.

Thank you. At this time, we will conduct the question-and-answer session. [Operator Instructions] Our first question comes from the line of Alex

Hey, guys, congrats on a solid quarter. I guess maybe just, Henry, first one for you. Just a sense for trends in both the SMB and the enterprise as we kind of exit the year and the pipelines that you are seeing. Maybe tech sales hiring and also maybe just from a financial perspective how we should think about the growth rates of the two segments embedded in the guide differently for the coming year?

I should just add that we think there’s an opportunity here for us to become the de facto partner for enterprise data and AI in the upmarket with our customers and on go-to-market team. And that’s why we’re resourcing there.

And Harry, maybe on that, I mean, with everybody talking about AI agents, particularly on the go-to-market side, I think you guys talked about how it led to increase in close rates for you. Maybe just give us your perspective on kind of the state of the world right now and how key role you play in that ecosystem increasingly as we see here.

Yeah, I think the key thing about AI agents and building AI for go-to-market is it’s very different than when you build AI for support or services, where if you’re building an AI agent for support, all of the data that you need for the AI to understand lives inside your knowledge base, it lives inside the customer support tickets that you already have, it’s all first party data and you only need first party data to build a great AI agent for customer support. That is completely different when you’re trying to build an AI agent for go-to-market teams. That relies first on third-party data. It needs your first party data, but in order for a go-to-market AI agent to be successful, it needs data, it needs accurate data on companies, it needs accurate data on contacts. Those data points are constantly changing and then needs to be surrounded with a tremendous amount of signal data, who’s growing, who’s shrinking, who’s hiring, who’s laying people off, who’s researching certain solutions in the market, who’s on your website. These signals are critical and they don’t live anywhere inside of your first party data. So, when we think about the success of go-to-market B2B AI agents, our data asset that we’ve built is a necessary component to that. I think that’s why we’re seeing more uptake on our operations business. That’s why we’re seeing customers come to us with their first party data and say, this is not enough for us to build AI and go-to-market with AI and go-to-market. We need this to be married to and surrounded by third party data for us to be successful. So, I think, we are a key input into any go-to-market AI agent build.

Very clear. Congrats, guys.

Thank you. Our next question comes from the line of Elizabeth Porter with Morgan Stanley. Your line is now open.

Great. Thank you so much. First, I wanted to ask on the Copilot ACV. I think you mentioned a lot of that’s on the new customer side and the focus to transitioning the install base over is going to come more in fiscal 2025 and 2026. So I was wondering if you could just help us understand kind of that path to migration. Will these be more push upgrades at renewal or opt-in upgrades? Does anything to help us get a sense for how quickly the install base can start moving over to the new platform? Thanks.

We are in the midst of migrating our customers over to Copilot. We are doing it off cycle. So outside of a renewal date, we’re also doing it at renewal time. We’re still seeing a strong double-digit growth on migration when we move those customers over. We want to drive pricing discipline on our teams as they migrate over to Copilot. We released this quarter, our customer impact report that shows that our customers, particularly when they’re in Copilot, are getting a tremendous ROI and value out of the solution. And we’re happy to stand behind a pilot. And so in one of the examples that I talked about, we took 100-person pilot to over 1000-person deployment at one of the largest job search engines in the world. And we’re comfortable letting our customers try Copilot, see the value and then monetizing that value in ROI, either as part of a renewal or as part of an off cycle upsell. We are going at it in both ways, but we want to maintain pricing discipline for the value that we’re delivering our customers with Copilot.

Got it. Thank you.

Thank you. Our next question comes from the line of Tyler Radke with Citi. Your line is now open.

Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Brian Peterson with Raymond James. Your line is now open.

Thanks.

Thank you. Our next question comes from the line of Parker Lane with Stifel. Your line is now open.

Yeah, good afternoon, guys. You’ve got Jack McShane on for Parker. Thanks for taking the question today. I’d be curious to hear your guys’ thoughts on DeepSeek’s potential impact to your business. It was reported that you guys are leveraging the R1 model within Copilot. So, I’d be curious to hear how that may change things either on the cost side of the equation or maybe some potential performance improvements as a result.

Yeah. First, it wasn’t reported that we were using it inside of Copilot. We have tested DeepSeek internally and, I think that what we’re most excited about with DeepSeek in the ecosystem is its potential to drive price down across other LLM providers. We have always had a model internally at

Got it. Understood. And then one more quick one. I’d be curious to hear the characteristics of the 100K cohort and when I’m kind of parsing upsell versus maybe seed growth, how does that 100K plus cohort kind of compare to the rest of your guys’ customers?

Yeah, good question. It’s heavily upmarket, as you would imagine. And when we talk about vectors to take existing customers and expand them into that cohort, we’ve got seed opportunities, not just in our kind of more traditional space, but we’ve got expansion opportunities into AE, AM, CSM, RevOps use cases with Copilot. We’ve got cross-sell additional functionality, so operations OS, selling that to Copilot and legacy sales customers. So, we do have feet product price levers to upsell into the 100K cohort.

Understood. Thank you.

Thank you. Our next question comes from the line of Michael Berg with Wells Fargo. Your line is now open.

Hey, thanks for taking my question. Michael Berg on for Michael Turrin here. I just want to double-click on the NRR in particular with regards to the seat dynamic. You talked a lot about upselling ops and Copilot. How was the seat environment looking? I guess in particular if there is any difference in the upmarket versus down-market as part of that equation? Thanks.

Well, I think first in the down-market, if you think about a customer that has, call it, 25 employees and 5 salespeople, we’re going to be 100% penetrated across that seat count. As you move upmarket, we’re much less penetrated. And so, in an enterprise customer with 10,000 employees and 5,000 salespeople, we might be only penetrated across 1,000 of those sales reps. And so, there continues to be a large seat expansion opportunity in the upmarket. I think the thing that we’re most excited about as it relates to Copilot is our ability to sell outside of personas where we have historically sold. And so, instead of only selling the top of the funnel prospectors, we’ve now expanded into account managers, customer success managers, who are using Copilot to get in front of risk, turn risk to know signals happening in their accounts, to know when the right time is, to call into upsell, to know to build an account plan on the fly and to have all of that data at their fingertips, so that they can be making better decisions. And so that persona expansion expands how many seats we can sell into, but across the enterprise, it’s very rare that we’re fully penetrated across all of the sales seats that we can sell to.

Helpful. Thank you.

Thank you. Our next question comes from the line of Brent Bracelin with Piper Sandler. Your line is now open.

Thank you. Good afternoon. Henry, I wanted to go back to kind of the 100K cohort customer. I think you added 58 net new customers this quarter. That’s the most we’ve seen in 2 years. One read outside looking in, is that maybe the worst of the churn for those software traditional customers is behind you? Is that a fair characterization? And I say that because a small software company could actually spend well north of $100,000 on the data, because there’s such a dependency around landing new customers. So walk us through that outside looking in thesis, is that correct or how would you frame the momentum you’re seeing on that new?

Look, I think that across our 100K cohort, the vast majority of customers in that 100K cohort are in our upmarket segment. And so, I think where we’ve gotten in trouble in the past is when you take a small customer in a

Thank you. One moment for our next question. Our next question comes from the line of Jackson Ader with KeyBanc Capital Markets. Your line is now open.

Great. Thanks. This is Kyle Diehl on for Jackson Ader. Maybe just two quick ones. When we think about the competition upmarket, are there any different puts and takes you guys could call out that you’re seeing further and further upmarket versus even maybe the mid-market and particularly with those Copilot first deals?

As we move upmarket, what we’re seeing is that our product market fit and our differentiation is meaningfully stronger upmarket than what you see down-market. And so, we’re in an incredible place to compete and win upmarket much differently than down-market. We have great product market fit, we’re resourced properly. We have the right products and that market segment presents the largest growth opportunity for us. When I think about the durable competitive advantage that we have, there are several aspects that combine to form that advantage. First, the breadth, depth, and accuracy of our data. The velocity of updates to that data, our highly value additive data types like intent data that directly drive revenue outcomes. In the upmarket, our industry-leading regulatory and compliance posture is incredibly important. And then, our pace of innovation around AI and go-to-market, that’s what’s driving our wins upmarket, and it’s also what’s driving our durable competitive advantage as well. It’s all of those things coming together.

Great. Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Rishi Jaluria with RBC Capital Markets. Your line is now open.

Hi, this is Chris Fountain on for Rishi. Thank you for taking my question. I wanted to ask about the down-market disqualification of new business policies that you implemented. I believe in the past you mentioned it was leading to a $2 million a month headwind. Has that amount changed from Q3 and are you expecting any changes to that level in 2025?

That hasn’t changed. We don’t anticipate any changes to that.

Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Patrick Walravens from Citizens Bank. Your line is now open.

Hey, there, this is Austin Cole on for Pat Walravens. Appreciate you guys taking the questions here. Just wanted to ask, I guess related to the upmarket, we’ve seen just kind of some continued layoffs out there in the market in Q1. Just given your commentary of being on that path to mid-single-digits. Can you just give us kind of a sense of the durability of that path and kind of what gives you confidence and then as a quick follow-up, just what might kind of accelerate that growth kind of even further beyond and strengthening that upmarket to maybe kind of double digits. What are the drivers there? Thank you.

Look, I think what you’re seeing in our enterprise, in our upmarket growth is slow and steady and focused execution on that segment. We have resourced it for growth. We have driven product innovation for that segment. We have continued to stay focused on that segment from a services perspective. And so, I don’t view this as one timing or that it all sort of came at once. This has been a steady drumbeat of getting a little bit better and a little bit better and a little bit better in the enterprise. And I think as a result, we’re seeing improvement across all of the metrics in the upmarket and we think that is momentum that’s going to continue into 2025. I think when you think about how do you accelerate that growth. I think it’s a couple of things, it’s Copilot and it’s our operation business. And with Copilot, our sellers are becoming more and more enabled to take Copilot to their customers. They’re more and more confident, because they’re using Copilot internally for their own operations. They now have a persona expansion opportunity within their large accounts. And so, there’s a lot of confidence that we’ll be able to accelerate the growth of both Copilot and operations within the enterprise.

Great. Thank you.