Greetings. Welcome to the Brightcove Second Quarter 2021 Earnings Call. At this time, all participants are in a listen only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I’ll now turn the conference over to your host, Brian Denyeau from ICR, you may begin..

Good afternoon and welcome to Brightcove's second quarter 2021 earnings call. Today, we will discuss the results announced in our press release issued after market close. With me on the call are Jeff Ray, Brightcove's Chief Executive Officer; and Rob Noreck, Brightcove's Chief Financial Officer.

During the call, we will make statements related to our business that may be considered forward-looking and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements concerning our financial guidance for the third fiscal quarter of 2021 and the full-year 2021, expected profitability and positive free cash flow, our position to execute on our go-to-market and growth strategy, our ability to expand our leadership position, our ability to maintain and up-sell existing customers, as well as our ability to acquire new customers.

Forward-looking statements may often be identified with words such as we expect, we anticipate, upcoming, or similar indications of future expectations. These statements reflect our views only as of today and should not be reflected upon as representing our views as of any subsequent date.

These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations, including the effect of the COVID-19 pandemic on our business operations as well as the impact on general, economic and financial market conditions.

For a discussion of material risks and other important factors that could affect our actual results, please refer to those contained in our most recently filed Annual Report on Form 10-K and as updated by our other SEC filings. Also during the course of today's call, we will refer to certain non-GAAP financial measures.

There is a reconciliation schedule showing GAAP versus non-GAAP results currently available on our press release issued after market close today, which can be found on our website at www.brightcove.com.

In terms of the agenda for today's call, Jeff will provide a summary review of our financial results, an update on our operations and a review of our strategy. Rob will finish with additional details regarding our second quarter 2021 results, as well as our outlook for the third quarter and full year 2021.

With that, let me turn the call over to Jeff..

Thanks Brian and thanks to everyone for joining today. I hope you and your families are enjoying a safe and healthy summer. Our customers continue to demonstrate that video remains the most powerful medium to connect with their audiences.

As many global organizations begin to plan for hybrid working environments, we see the opportunity to empower them to communicate, educate, motivate and inspire their teams across a variety of industry sectors.

We are also ready to serve the needs of marketers, as they are presented with the challenge to optimize all video content across a variety of activities, both in person and virtual. And we are so proud to continue to deliver solutions to media companies that are enabling greater reach and monetization of content across various engagement models.

So with that, let's get to our results. For the second quarter, revenue was $51.5 million, up 7% year-over-year, and adjusted EBITDA was $5.6 million, up to 33% year-over-year. We delivered a solid financial performance this quarter and exceeded the high end of guidance.

As we have discussed in previous earnings calls, we continue to focus on four strategic areas to drive the business forward, first and foremost, customer success and retention. Second, our continued investment in innovation to satisfy the growing demand for video, delivering comprehensive video solutions for use cases across multiple industries.

Third, leveraging the success we have seen in our direct sales effort and for accelerating the growth of our indirect channel. Each of these focus areas has a dedicated, experienced team with clear execution goals.

We are ahead of our plan in implementing all the necessary changes to our renewals business with people, processes and systems now in place, it will take the next two to three quarters to fully realize the benefit of these changes with our particular focus on increasing retention with our media customers.

We know we haven't placed all the elements needed to deliver on our long-term financial targets of 20% revenue growth and 20% plus adjusted EBITDA margins. We have the best video platform in the world and a product development team that is innovating better and more quickly than ever before.

We have 64% more engineering headcount than we did three years ago, and are reallocating these resources to deliver new products at record pace. Our go to market team is making progress winning business and expanding existing customers. For example, our Asia Pacific and Japan regions had amazing year-on-year growth of 30% and 50% respectively.

To continue this momentum and realize our full go to market potential, we will also be making significant investments in sales and marketing in the second half. These investments will put us in the best possible position to further accelerate growth as we complete our retention improvement efforts.

Let me take a moment to describe what we did in the last quarter for each of our growth strategy areas, starting with renewals and customer success. TVNZ is a New Zealand state owned, commercially funded broadcaster and it's been a Brightcove customer for 10 years.

As their renewal approached, we knew we needed to express to TVNZ the importance of their business, and our commitment to media organizations. Using our new customer retention approach, TVMZ signed a renewal for two years, a first for this customer. I could not be more proud of the actions we took and the end result.

We rolled out a new comprehensive customer onboarding program including new training tools, education modules and direct access to expert resources. We have received overwhelmingly positive feedback from customers on the program.

As an example, the Scottish courts and tribunals shared feedback on its recent onboarding experience, stating that, " Brightcove onboarding program has been excellent. The level of service responsiveness and attention to detail is first class. Please keep up the good work".

We invested in new tools allowing us to better track customer activity and help. With this data, we can ensure all customers are positioned to succeed. In addition, we've hired new employees dedicated to customer success, and have plans to add additional headcount throughout 2021.

Within the quarter, we've seen a number of customer renewals with major revenue growth, which we believe are early indicators that our customer success efforts are working. SoftBank is a Japanese multinational conglomerate that has deeply ingrained Brightcove powered video communication in its strategy.

Under our recently expanded relationship, we will now work together to livestream professional Japanese baseball games to fans. Hydro does for Rowers, what Palecon does for indoor cyclists provides inspirational athlete lead lives and on demand classes. Hydro came to Brightcove a couple of years ago when their business was just starting out.

As you can imagine, the business is taking off and we're committed to supporting every stage of their growth. Their recent renewal indicates the success that they have experienced working with our team and technology. Of course, none of this is possible without our continued platform innovation.

We have the most intelligent, open platform that offers limitless scale, world class security and powerful integrations. In Q2, we introduced several new product innovations including China delivery. Through our partnership with Alibaba.

Brightcove became the first online video platform to deliver business video into China, helping enterprises and retailers expand their audiences and increase revenue opportunities. There's a lot of excitement around China’s delivery as China is projected to host $2.8 trillion in e-commerce this year.

In Corporate Communications division, continue to engage employees with more video. We have customers already using the feature; including Graph, a multinational Jeweller based in London, and Voice Group, a global technology company that sets standards in the markets of energy, oil and gas, paper, raw materials and transport and automotive.

We also introduced playback restrictions. Our most advanced security offer enables customers to protect their content from being watched by unauthorized users. Playback restriction, include options to restrict access, manage viewer access and permissions and prevent content piracy.

Although only released this quarter, we have a number of customers using this feature, including regional and national broadcasters, such as Egyptian Media Group, stadium and large event companies, major retailers and sports leagues.

We launched virtual events for business, an easy to use virtual event solution for highly repeatable midsize events like employee town halls, large group training and product unveiling. We announced this solution prior to our last earnings call and are seeing great traction.

An early example is, miss a life insurance in Japan, which will use virtual events for business to reach its audiences quickly, easily and securely. And we rolled out Brightcove’s live updates to scale our live streaming in preparation for large sporting events.

Like the USGA, US Open, where any viewer on the US Open website could follow any player on every hole, view of the holes from different camera angles and interact with live polling and stats. This breakthrough experience empowers leagues, federation's and sporting organizations to broadcast to millions.

Now let's turn to our go to market execution and the customers leveraging video to achieve real business results.

We had several significant wins and renewals this quarter including black news channel, a new independent network that describes itself as the nation's only provider of 24/7 cable news programming created by people of color for people of color, specifically black Americans.

Black news channel launched in February 2020, and turn to Brightcove to bring to life its vision for truth across apps, the web, smartphones, tablets and connected devices.

Sparrow Live is a new artist founded business, democratizing access to the arts by connecting musicians directly with audiences through interactive, creative experiences, all streamed using Brightcove. Dal-Tile Corporation is the leading manufacturer and distributor of porcelain tile, ceramic tile and natural stone in the US.

Dal-Tile will use Brightcove to host, manage and publish brand building videos across all of the public facing digital property. All of these innovators saw a need civic, artist or commercial that wasn't being that.

They recognize the secure, reliable and scalable video experiences we've delivered for other customers that are now discovering what we can do for them, using our powerful platform.

In the second quarter, we welcomed many other new customers, including the Edinburgh Fringe Festival, one of the world's largest arts festivals, Rooster Teeth Productions, a community built Entertainment Company, and SMBC, one of the largest banks in Japan.

We're also proud to have been chosen as the live streaming partner for the Dana-Farber Cancer Institute's Defy Cancer launch event, which showcased how donor support is needed to change the impact of cancer in our lifetime. And Brightcove was also selected to be the streaming provider for SAP's Flagship Global User Conference, Sapphire.

Now, let's move to our channel strategy. We launched the Brightcove partner program 12 months ago, and within the first year, we have more than 150 partners globally and continue to see great momentum.

We're pleased with our channel performance and are on track to hit our target for 20% of bookings coming through our partner channel in 2021 and expect that to grow to 30% to 50%. Last quarter, we announced the new partner, L2, offering great value for performing arts organizations to reach new audiences virtually.

Today, we have signed five customers through the partnership. Lyric Opera, one of the leading opera companies in the United States, based in Chicago is an example of a new customer that came to us through L2 to provide their patrons the option of a digital experience during the 2021 to 2022 season.

We also continue to add new partners like UVU [ph], who is specialized in technology for publishers, and RWS to assist us with translation. Our most significant partner related expansion this quarter was in Asia Pacific, where we enlisted 12 new partners that will continue to drive growth in booking.

We're thrilled with the progress and growth of our partner ecosystem, and it remains a strategic focus area in 2021. I'm also pleased to note that we will host our annual play customer conference on October 5, and six.

During this two day virtual conference, we will announce exciting news about our product innovation for customers and partners across multiple use cases. At play, you will see how the investments we are making in our innovation are truly coming to life.

We will be showcasing a new way for companies to communicate with internal and external audiences with an always on Channel corporate TV, an intuitive Digital Video Marketing solution that enables entire marketing teams to be able to access, utilize and distributed video content directly from the marketing platforms these teams live in every day.

AI and ML innovation that will empower our media and enterprise customers to find, reveal and monetize the value from their video content. This will for the first time ever allow our customers to tap into the rich intelligence generated by our vast video repository.

A brand new Brightcove marketplace, which will provide a new ecosystem for development partners and customers to connect. Developers will be able to promote and sell their applications. And customers will be able to discover and provision apps that solve their immediate business needs.

With over 60 sessions across three time zones, customers and partners will share their experiences and knowledge with our community. And we'll be joined by other industry influencers and keynote session hosts. Finally, I want to share a change in our executive leadership team. Rick Hanson, Chief Revenue Officer is leading Brightcove at the end of July.

Over his 2.5 years at Brightcove, he transformed the sales organization and hired a sales leadership teams, it's taken us to the next level. We're thankful for Rick's contribution to our growth and wish him the best as he takes some time with his family.

We're excited to promote Brian Froehling to the role of Executive Vice President, Head of Global Sales. Brian joined Brightcove in August of 2019 to lead the America sales team. During his tenure, the team has seen tremendous bookings growth and executed at a high level.

Prior to Brightcove, Froehling held leadership positions at CA Technology, pivotal software and Symantec Technology.

In addition, given the importance of the renewals, business, and the early signs of success, Deb Richards, who joined us in the first quarter as Senior Vice President of customer success to lead our global customer success and renewals business now reports directly to me.

I'm also delighted to announce that Patrick Wagstrom has joined Brightcove as the company's first Chief Data Officer. He will spearhead an advanced R&D organization that integrates machine learning capabilities into Brightcove solutions, bringing advanced opportunities for customers and viewers.

Prior to Brightcove, Wagstrom led the Emerging Technology Group at Verizon was part of Capital One's cloud transformation, and led the development of the machine learning platform for their credit card business, and was also a founding member of the IBM Watson Group.

I am so proud of every one of our employees and the hard work they put in daily to make our customers successful. Without them, we would not be in the strong position we are in today. We are executing against each of our focus areas in performing well. Let me be clear, the work is not done. But we know we are on the right path.

We will use new products and services on top of the best video platform in the industry to solve the big problems that others cannot. We are in a position to accelerate revenue growth, and margins and generate value for shareholders by creating value for our customers.

We have the right team and strategy in place to achieve our targets to be a role of 40 company. With that, let me turn the call over to Rob to walk you through the numbers. Rob..

Thank you, Jeff, and good afternoon, everyone. I will begin with a detailed review of our second quarter. And then I will finish with our outlook for the third quarter and the full year 2021. Total revenue in the second quarter was $51.5 million, which is above our guidance range.

Breaking revenue down further, subscription and support revenue was $48.6 million and professional services revenue was $2.9 million. Revenue benefited from higher than expected overages of $2.1 million in the corner.

12 months backlog which we define as the aggregate amount of committed subscription revenue related to future performance obligation in the next 12 months, was $119.8 million. This represents a 10% year-over-year increase. On a geographic basis, we generated 57% of our revenue in North America during the quarter and 43% International.

Breaking down international revenue a little more, Europe generated 19% of our revenue in Japan and Asia-Pacific generated 24% of revenue during the quarter Let me now turn to the supplemental metrics we share on a quarterly basis. Recurring dollar retention rate in the second quarter was 86%, which was below our target range of low-to-mid 90s.

As we previewed in earlier earnings calls, we had two large media customers downgrade or churn in the quarter. As you know, we have historically calculated our recurring dollar retention rate, based on those customers up for renewal in the current quarter.

This approach has some significant drawbacks, namely that it includes a relatively small sample size, and only captures up-sells at the time of renewal. This leads to substantial swings in quarterly retention that make discerning underlying trends challenging.

To better align our reporting with most leading SaaS companies, this quarter, we are introducing a new metric net revenue retention, which we will report on a quarterly basis going forward.

We calculate net revenue retention, by comparing the current annualized recurring revenue, to the annualized recurring revenue from 12 months prior for those premium customers that existed 12 months prior. This new metric will provide better insight into our retention and up-sell efforts, and make our retention more comparable to peers companies.

We have posted a schedule showing historical net retention rate back to the first quarter of 2019, on the Investor Relations section of our website. We will continue to provide our existing recurring dollar retention rates through the end of 2021, as well for compatibility.

With that said, net revenue retention in the quarter was 98%, which compares to 99% in the first quarter of 2021 and 92% in the second quarter of 2020. Since the beginning of 2019, net revenue retention has ranged from 92% to 100%. As Jeff mentioned, completing the process of rebuilding our renewal business is our top strategic priority.

And we made substantial progress in the second quarter. There's a natural lag between when these changes are implemented, and when they begin to positively impact our retention rate. As we continue to make improvements in our renewals business. We expect this metric overtime to be consistently over 100%.

Our customer count at the end of the second quarter was 3,263 of which 2,280 were classified as premium customers.

Looking at our ARPU within our premium customer base, our annualized revenue for a premium customer was $92,000 which was up 6% year-over-year and excludes our entry level pricing for starter customers, which averaged 4,500 in annualized revenue.

Looking at our results on a GAAP basis, our gross profit was $34.2 million, operating income was $590,000 and net income per share was $0.2 for the quarter.

Turning to our non-GAAP results, our non-GAAP gross profit in the second quarter was $34.9 million, compared to $28.6 million in the year ago period, and represented a gross margin of 68%, which is up nicely from the 60% in the second quarter of 2020.

Subscription and support revenue represented approximately 94% of our total revenue and generated a 71% gross margin in the quarter compared to a 62% gross margin in the second quarter of 2020. Non-GAAP income from operations was $4.2 million in the second quarter compared to $3.1 million in the second quarter of 2020.

Adjusted EBITDA was $5.6 million in the second quarter compared to $4.2 million in the year ago period and above the high end of our guidance range. Adjusted EBITDA margin was 11% in the quarter. Non-GAAP diluted net income per share was $0.11 based on 42.2 million weighted average shares outstanding.

This compares to net income per share $0.07 on 40 million weighted average shares outstanding in the year ago period. Turning to the balance sheet and cash flow, we ended the quarter with cash and cash equivalents of $40.4 million.

We generated $8 million in cash flow from operations and free cash flow was $5.7 million, after taking into account $2.3 million in capital expenditures and capitalized internal use software. I would like to finish by providing our guidance for the third quarter and full year 2021.

For the third quarter, we are targeting revenue of $50.5 million to $51.5 million, including $1.5 million of overages and approximately $2.7 million of professional services revenue. From a profitability perspective, we expect non-GAAP operating income to be $0.5 million to $1.5 million and adjusted EBITDA to be between $1.7 million and $2.7 million.

Non-GAAP net income per share is expected to be in the range of $0.01 to $0.03 based on 42.4 million weighted average shares outstanding. For the full year, we are revising our full year outlook.

We are now targeting revenue of $211 million to $213 million, including $7.4 million of overages and approximately $12.5 million of professional services revenue. From a profitability perspective, we are expecting non-GAAP operating income of $14 million to $17 million and adjusted EBITDA to be between $19.1 million and $22.1 million.

Non-GAAP net income per share is expected to be in the range of $0.30 to $0.37 based on 42.3 million weighted average shares outstanding. For the full year, we're now targeting free cash flow of $7 million to $10 million. As you consider our guidance, the biggest drivers who are change in outlook are the challenges related to our renewals.

This is a combination of churn being somewhat higher in the first half of the year and the pace of recovery somewhat slower in the second half. We have completed the steps necessary to put the renewals business on the right path. We expect the renewals business to be a meaningful driver for growth in 2022.

We believe that accelerating revenue growth is the best way to drive long-term value for our shareholders. In order to take advantage of the market opportunity in front of us, we will be increasing our investments in sales and marketing in the second half of the year.

We have consistently demonstrated our disciplined approach to spending and our ability to scale the business. This approach gives us the confidence to make these strategic growth investments at this time. To wrap up, Brightcove delivered another strong financial performance in the second quarter.

While we continue to work through improving our retention rates, we're executing against our strategic priorities and increasing the value we deliver to our customers. We look forward to sharing the product announcements Jeff mentioned at play.

We believe this positions as well to drive even better top and bottom-line performance as we continue to make progress towards our goal of being a Rule of 40 Company. With that, we'll now take your questions. Operator, we are ready to begin Q&A..

At this time, we will have our question-and-answer session. [Operator Instructions] And our first question is from Eric Martinuzzi with Lake Street. Please proceed with your question..

The outlook from the renewal -- the retention perspective, Robbie just finished talking about the churn a little bit higher the first half and the recovery a little bit slower in the second half. But, as we go back 90 days to that existing guidance or to the previous guidance where we're talking about kind of a midpoint is $214 million.

And now we're looking at the midpoint, a couple million below that. Was the churn that much greater than you would have thought.

Are you just being more conservative on the recovery being slower? What's the bigger driver of that that midpoint reset?.

Yes. The bigger driver the midpoint reset is really around the recovery being slower. As we looked at the second quarter, we were pretty close to where we thought we were going to be for the second quarter. And it's really the back half of the year..

Okay, because that's what I signed. I know Q1, we had a bit of a surprise on a couple of media accounts. Q2, we already kind of knew about as far as the retention exposures, but -- okay. And then….

And Eric, just real quick, as I mentioned in the prepared remarks, it does tend to focus on the media side where we're seeing that slower recovery. We're really comfortable with where we are on the enterprise side of the business. And what we're seeing there the retention rates..

Okay.

And that recovery being slower on the media side, what is it -- is it COVID-related? Is it competitive landscape issue? Is it budgetary? What's driving the foot dragging?.

Yes. It really tends to be those large media customers that continue to explore that do-it-yourself type infrastructure. And as we've talked about over the last couple of quarters, we're really weighing down the number of large customers that we have that has fit that profile.

The new business that we're selling on the media side is much stickier as we're selling in the apps to solve the business problems like beacon into the media customers versus just the video delivery that some of the larger customers will be willing to take in-house..

Okay. And then, just one more on the outlook. The implied number for the fourth quarter, I'm coming out with roughly $54 million, that's kind of the sum of the first half of the year, and then subtracting the midpoint Q3 guide. And then -- that seems like a pretty substantial step-up roughly $3 million by my math.

And what's behind that step up Q3 to Q4 that overages driven? Is that pipeline map? What's the state?.

So, from overages standpoint, we're still forecasting the 1.5 per quarter. So, that's in both Q3 and Q4. So it's really based on what we're seeing in terms of anticipated sales performance and retention performance in the third quarter..

Got you. Okay. Thanks for taking my question..

And our next question is from Steven Frankel, with Colliers. Please proceed with your question..

Good afternoon. Look, I want to go back at the same issue, as it is the issue and just dig in a little deeper.

So, when you're saying slower recovery, are you saying churn in the back half is going to be a little higher than you expected, because someone -- you have customers that are thinking about going DIY, is that specifically what you're hearing on the back half of the year that's leading to this reduced guidance?.

Hey, Steven, it's Jeff. We have more in, so you'll recall, we put out a pretty strong message years ago that, on the sales side, we were going to improve the quality of the forecasting, the integrity of all of that, so that we do a better job on our guidance.

We now have a lot more insight into our renewals out, out beyond the current quarter, the current periods than we had before. And that's really the result of all the things that we've implemented to focus on renewals. And so, when we look at that, that gives us a better sense of where the risk is and where we want to be very conservatively in this.

It doesn't take into account the fact that the renewals team now has earlier insight and is actually intercepting at an earlier stage and working to save those.

But we just need to see a couple of quarters of those actions actually paying off to know that, yes, indeed, when we do these three things, the risk of losing the customer goes down this percentage. So we just need to see that for a couple of quarters to say, okay, the machinery is now working. And we feel better about where we're going..

Okay.

And then on this notion of investing in sales and marketing, could you kind of break that down into how much of this is headcount driven, which will take a while to become productive, versus maybe spending money in new and different ways to try to accelerate revenue growth?.

Yes. And Steve, it’s the second one that we're really focused on, there's not a ton of headcount additions that are over and above what we had in the original guide.

It's much more on the demand generation side and focused demand gen, where we're seeing those opportunities in the market, to really accelerate that bookings growth and the revenue growth in the future..

Yes. PLAY this year is October 5 and 6. It's virtual event. And we intend to do some pretty good product rollouts. And so we want to make sure that we're not choking or holding back the demand gen machine for going after those new businesses..

Okay. And where do you think you are in the journey to raise premium ARPU.

Are we plateauing here for a while until some of those new products come out later next year? Is that the way we should think about it?.

Yes. No. I think, I understand that we -- sequentially, we were down quarter-over-quarter from Q1 to Q2. But that's a function of some of those large media customers that we had already identified churning out. If you think about it, we're still improving that year-over-year. We're up 6% year-over-year.

We think that we still have a lot of green space in our existing customer base to continue to sell our existing products. We don't need to wait for the new products that we're going to be talking about at PLAY.

That said, when we do start launching those new products that's going to open up even more opportunity for us, both on our existing customer side, but then also with new logos..

The other thing that gives us comfort is, most of the upside in the ARPU was really driven by North America over the last couple of years. And so, now we're applying those same kinds of best practices to the rest of the world. So we see some good upside potential, as we start to implement those. We know it works. It's worked very well here.

And now we need to export that..

Okay.

And last question, other than the Rick departure? Has there been any meaningful turnover in sales ranks during the quarter?.

It’s a great question. And we certainly have been vigilant watching it, just because I mean, there is so much noise out there, about people are jumping as they come out of COVID. And we're just not seeing it right now. We're paying very careful attention to it. We're touching everybody. But at this point in time, we are not seeing it..

Okay. Thank you, Jeff..

Thank you..

And our next question is from Mike Latimore with Northland Capital Markets. Please proceed with your question..

Great, thanks. Yes.

On the Salesforce itself were they at full productivity in the quarter?.

Pretty much, and we had a -- we have we -- there's always some number of openings, but it's not a number that we think is negatively impacting our ability to go win and engage..

Got it. Okay.

And then in terms of the revenue retention process, you obviously, do the consulting -- you have consulting last year, you hired a head of the group earlier this year, I guess, are all the changes in place now, for revenue retention processes, or it's just a matter of, executing them? Or do you think there might be additional changes in terms of the revenue retention process for your own product?.

Mike, I'm pleased with what this team has done. We're actually ahead of plan on implementing all of the changes. And I give credit to Deb and her team on how aggressively they're going after it. And I'm also pleased with just the really the broad expanse of the things that they're doing all aspects of this.

And a great example, as I noted a couple of minutes ago was TV New Zealand, TVNZ have been talking to us for some time about components of DIY, or downsizing their relationship with us. They had always been a one year renewal customer for the last 10 years. And with a lot of the new things that the team has put in.

We were very pleased to see that they didn't renew for a year they renewed for two years. That's how convinced they are that they were the right partner for them. So great, let's scale that up and aggressively go after all of our other major media and quite frankly, enterprise customers, because it's not unique to media.

The same things that we're doing for media, we can be doing for enterprise..

Okay. Got it.

And on the enterprise side of things, how would you characterize the pricing environment there? I mean, I guess ARPU are growing year-over-year, but is pricing, stable is getting more aggressive? How do you think about it on the enterprise side?.

Yes. On the enterprise side is stable, and we're still able to capture price increases year-over-year, we're not seeing any dramatic price pressure on the enterprise side..

Great. And then -- and just last on, it sounds like you're going to invest more in demand gen going forward, I guess.

How is the pipeline built over the last quarter? How demand gen has been here today?.

Yes. We're early in that. We really started over investing in the second quarter. As we started to see the opportunity, we expect those investments to start paying off. So as we've talked about, over the last couple of years, we've really implemented a disciplined approach to how we look at our investments.

So as we start seeing those investments we made in the second quarter payoff, we'll double down in those areas. And we'll pull back on those areas, where we're not seeing the necessary returns. We also, I'm impressed with the level of precision that the marketing team has now, versus six months, much less a year ago.

In the past, we had identified growth segments we were investing, in demand gen activities. We actually now knows sub segments within those segments, that are getting the most immediate traction. So the spending, I think is more precise and more surgical, because we know that the ROI is going to be better..

Okay, great. Thank you..

Thank you..

And we have reached the end of this question-and-answer session. I'll now turn the call over to CEO, Jeff Ray for closing remarks..

Thank you, Operator. Thanks, everyone, for joining us. I do want to reiterate, October 5th and 6th is really important. And so I encourage you to sign-up and join us for play. It's going to be a very, very different event. We're very excited about the new product pipeline activity. We're very excited about, how we can make better use of AI and ML.

And there's a few other things that, that we're eager to show. We're also encouraged by the fact that, some pretty big leading customers are working with us on these things. And that gives us a high level of confidence, in the direction that we're taking this company. I hope you continue to be safe. And your families do well.

And I look forward to talking with you in the near future, it's not beyond. Thanks, everyone. Have a good day..

This concludes today's conference. And you made disconnect your line at this time. Thank you for your participation..