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Greetings and welcome to the

Thank you, operator. Hello, everyone. And thank you for joining us for

Thank you, Scott. Good afternoon, everyone, and considering the date May the fourth be with you. 2023 is off to a strong start. We continue to execute through a volatile macro backdrop, producing our seventh consecutive quarter ahead of consensus and raising outlook. In the first quarter of 2023 we delivered revenue of $158 million, up 25% year-over-year, with adjusted EBITDA of $24 million, up 28% year-over-year. Our adjusted EBITDA margin of 15.3% expanded 40 basis points year-over-year. Q1 was another proof point in our belief that the market is moving in

Thank you, David. And good afternoon, everyone. In the words of the great Yoda, do or do not. There is no try. I'll spare my voice impersonation, but in all seriousness in the first quarter,

Thank you. Ladies and gentlemen, at this time, we will be conducting a question and answer session. [Operator Instructions] Our first question comes from the line of DJ Hynes with Canaccord. Please proceed with your question.

Hey, guys, congratulations on the nice quarter. Chris maybe one for you. I want to ask about the scales customer ARPU. I mean, it seems like a slightly larger Q4 to Q1 seasonal dip than we've seen in the past. I'm just curious kind of how that may inform your views on marketing budgets this year. Any implications with respect to thinking about net revenue retention or other metrics?

Thanks, DJ. I wouldn't read that into it. I think in this case, it was more driven by the high number of growth that we saw in that 100k to 1 million category. So that grew 16% year-over-year in count that was kind of the second straight quarter that it did that. So it's more being influenced by those pilots starting to kind of scale. If you look even within the bands of that 100k to 1 million, most of that growth came in that 100k to 300k cohort. But the super scaled group and cohort as you saw increased seven quarter-over-quarter that was obviously a great rebound from last quarter up 18% On ARPU basis, the revenue up 31. So we're really happy with the scale of customer count. From a net revenue retention, obviously, last year was 112 year for that was 113. You can kind of back into even though it's an annual metric per se that you can back into that the first quarter was even ahead of those rates.

And let me just say, DJ, it's we're not seeing right now any slowdown in the marketing echo system on our end. In fact, what we're seeing is as there's more volatility, there's less friction in new companies moving to us. And we're seeing many of our existing customers moving more budget. Now, you might not have seen all of that evidence in the first quarter. But we're definitely seeing that coming online in our pipeline and as we're growing.

Yes. Makes sense. Good to hear. Maybe as a follow up, one of the questions I occasionally get from investors looking at

I think, first of all, it's important to note that a lot of those people have been added over the last 12 months. So we have been ramping up our salespeople, and one of the metrics we look at is sales productivity per person on how long they've been with us, Chris, you should probably touch on how much more productive people who have been with us for a while versus the percentage of people who have just joined us?

Yes I'll get to that. [indiscernible]. I'll definitely highlight that. I think DJ, just important to understand that it's a fair question. About half of the sales teams are hunters. And we still see a massive new customer TAM in front of us. We have called little over 400 total skilled customers, there's 10,000, large U.S. enterprises. So about half the sales team's devoted towards hunting, the other half towards farming. Same time, we have 400 skilled customers that average revenue per annualized is a little over 4 million, they should all be many times bigger than that. So we've focused the team's very much on kind of two different areas of the market. In terms of productivity, as David mentioned one of the areas that was really stood out to us this quarter is just how well, those 12 month and beyond tenured reps are performing. These are the reps that went through the first sets of training that when we divide the salesforce into hunters and farmers there, that class that kind of went through that initial wave. I think there's an interesting metric, obviously, our sales and marketing ratio is better year-over-year. There's an interesting metric, I think Barclays puts out around the magic number, which is the change in revenue growth year-over-year, divided by your sales and marketing expense. And if you were to plot that for called the 20 or odd core software companies that are public ours at about 1.3 going off of last year's results is in like the top five. So really happy with the efficiency. But we don't feel like we need to kind of wildly add reps. I mean, in fact, we're, if anything, we feel like we don't need to add as many because of the productivity that we're seeing right now.

Yes, very helpful, very detailed answers. Thank you, guys.

Thank you, DJ.

Our next question comes from the line of Ryan MacDonald with Needham. Please proceed with your question.

Thanks for taking my questions. And congrats on a great quarter. David I think there's been a lot of focus from the team about sort of continuing to solve for the

Well, thank you, Ryan. And it's funny because I just wrapped up four days at the Milken global conference where I was personally asked to host and moderate the generative AI panel for the entire Milken global conference and host the Chief Marketing Officer panel with the CMOs, Visa, Pepsi, LogicTech and other very, very large organizations. We also hosted a

That's really great to hear. Maybe just follow up for Chris, I wanted to touch on sort of mix of direct platform revenue. And I apologize if I missed it in your commentary, but you talk about what's driving that mix down and but you're obviously still sort of outperforming on the top line. So I guess the question really is how important is sort of reaching that 80% direct platform mix to

It's so important. What we saw this quarter was really a great set of new customer additions and even obviously within that super skilled group as well. It's interesting, when you look at how that mix can be influenced within a quarter, within year within a month. In our case, we added the combination of several new enterprises, but also began to onboard to

And by the way, we also saw our cost of goods sold come down nicely in our direct which we were able to more than offset anything that would have been on the other side Ryan. So we're really feeling good about this business right now. But like in any business, you're going to have some metrics that vacillate up and down. The biggest problem we have is we on boarded too many new very large clients, which artificially brought the off platform up slightly for one quarter. That's a trade we're definitely willing to make.

[indiscernible] the top line metrics keep moving up. So it's great to see you congrats again.

Thanks so much.

Our next question comes from the line of Jason Kreyer with Craig-Hallum. Please proceed with your question.

Hey, this is Cal on here for Jason. Couple from me just first to start, can you kind of talk about the pipeline of opportunities and how that's being influenced by your channel relationships? Just trying to understand if some of those relationships are starting to bear fruit in terms of revenue generation or if most of the leads from the channel are still in the pilot phase?

So great Question [indiscernible] we are seeing record velocity into our pipeline directly and through our biggest channel partner. I don't think I mean, we obviously it's Snowflake, we do a ton with them. They've been an incredible partner. They are bringing us major customer opportunities and we're lighting up major customer opportunities on their platform coming out of our people. So you hate to say you're winning across the board, but quite frankly, we're really seeing the channel partnerships, primarily with sale, primarily with Snowflake, working very, very well. But simultaneously, we are across the board winning.

Perfect. Thanks. And then just last one for me. you guys really been highlighting AI more lately. And I'm just curious if you can kind of give your vision for utilizing AI within the

So we've been talking about Artificial Intelligence, since it wasn't even artificial intelligence. We started talking about deep learning, machine learning before these large language models really started coming into play. One of the things I think has not been talked about. And as I think I said, when I hosted and moderated the generative AI panel at the Milken conference this week, one of the things that really gets lost is AI is only as good as the data that's put into it. And our ability to incorporate large language models today is quite frankly unparalleled. But in addition to that, we're able to put small language models into place in the form of a CDP that exists between us and our very large enterprise customers. So that CDP where you merge their data and our first party data into an unparalleled data echo system then can learn not just from the large language models that exists outside of

Perfect. Thank you guys so much.

Our next question comes from the line of Elizabeth Porter with Morgan Stanley. Please proceed with your question.

Great, yes. I did another quick follow up along kind of the AI side, but more particularly for the agents and the data opportunity engine. It's really interesting technology. So can you just give us a bit more detail on the capabilities kind of what is it augmenting versus replacing? And then how do you see the evolution of these capabilities playing into the top line for the financial model? Is it something that you think could be monetized via a separate SKU? Or is it monetized via taking more shares? Thank you.

First of all, thank you, Elizabeth. I wasn't sure anybody even bothered to read that press release. But I think that first of all,

Great. Thank you so much.

Our next question comes from the line of Richard Baldry with ROTH. Please proceed with your question.

Thanks. I'm sort of curious if you think that the generative AI will target as most likely or superscalar customers first. And then sort of a side note to that; how much do you think that it could actually help you with cross sale? So when it's giving recommendations or auto piloting will it be able to demonstrate other channels that may not have been adopted whose ROI could be equal or higher, sort of showing them opportunities that they may not be able to access yet? Thanks.

Well, Rich, as usual, I think you nailed both, right. So yes, there is no question that the larger the enterprise, the more the efficiency matters to their bottom line, the more they're going to be willing to adopt generative AI faster. What we're hearing from most companies is they love the concept of the closed generative AI solution in what we call the small model versus the open model. Now, I think we all saw that open AI got hacked for the first time. I'm under the impression another algorithm was just annoyed by how much attention ChatGPT was getting. So they hacked it to get a little attention for themselves. But the truth of the matter is, we still don't understand how the importation of data into ChatGPT is going to be benefiting the collective including large enterprises' competitors. Inside of the generative AI, that

Last for me. it'd be you are seeing layoffs from your a lot of would be competitive, we'll call it, presumably there is they let go of their worst people first, but it does leave good people unsettled and unsettled internally. So in an upside growing beaten race scenario, why not pull back a little bit on the profitability side really go after some of the better talent that I would think is more easy to go after these days? Thanks.

Well, you sound like me in my last HR meeting and this is not, I've got to be very, very careful here, right. Because but you would assume an organization would not lay off its top 10% of people in that scenario which is not to say that people laid off we're not incredible individuals who could do a great job organizationally. We are absolutely positively focused on bringing the world's best human capital into

Thanks, congrats on a great start to the year.

Thanks, Rich.

Our next question comes from the line

Yes. Hi, good afternoon. Thanks for taking my questions. David, can you give us an update on the CTV channel, I know, that's one that's been gaining a lot of traction in the past couple of quarters. So any sort of incremental update there would be appreciated?

Yes. So we continue to see CTV as one of our fastest growing channels, especially inside of our scaled customers. What we're really seeing is we're seeing by way of example, the highest percentage of our customers ever in the first quarter use the CTV channel. We continue to see what we call connected CTV, where we're using our data cloud and our AI to best target where to run the marketing as a massive differentiator inside of what we're doing there.

Got it. And final question for me is just really around incremental details on the pipeline. I mean, it's great to hear that RFP levels and the overall pipeline are still at record levels. I mean, can you give us a sense of where these are being sourced from? Is it typically companies that are using point solutions, or they're not renewing their deals with some of the legacy marketing clouds? Any sort of incremental detail there would be great.

Yes. I mean, listen, companies are tired of using point solutions. They're expensive. They don't talk. And the expense that most people don't talk about is you have to bring in one of the major professional services companies on multimillion dollar integrations to get them even to speak to each other. Whereas if you use the

I think David the only thing I'd add

Got it. Well, thanks for answering my questions. And best of luck with the remainder of the quarter.

Thank you very much

Our next question comes from the line of Arjun Bhatia with William Blair. Please proceed with your question.

Hey, thanks, guys, for taking the questions here. David maybe just continue on the AI theme like obviously, we're living in kind of a rapidly changing paradigm with the rise of generative AI. I'm curious how you think it might change the marketers job and how it might change the CMOS role? And what does that mean for how you sell

Yes. I think Arjun that's a great question. I mean, I want to reiterate, I feel like we are where the puck is going, not going to where the puck is going, meaning we as you know, rearchitected the

That's super helpful and very insightful. I appreciate that. Chris, maybe one for you, obviously we saw some good trends this quarter in the scaled and super scale customers and you had that big deal in retail. I'm curious, just as we look at those metrics, are those new customers coming internally through expansions? Are you starting to see new customer lands in those in those two buckets as well? How should we think about some of those trends playing into the metrics?

Out of the eight new scaled customers that we added quarter-to-quarter six were new to

And Arjun we just continue to see not just record RFPs by number of enterprises, we're seeing deal sizes that are by far the biggest we've ever done.

Very interesting. All right, appreciate the color guys and great job on the quarter here.

There are no further questions in the queue. I'd like to hand the call back over to David Steinberg for closing remarks.

I continue to be incredibly proud of our