Good afternoon. My name is Elian and I will be your conference operator today. At this time I would like to welcome everyone to the Zuora Fourth Quarter and Full Year Fiscal 2020 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session.

[Operator Instructions] Thank you. I would now turn the call over to Joon Huh, Vice President of Investor Relations. You may begin your conference..

Thanks, Elian. Good afternoon and welcome to Zuora's fourth quarter and full fiscal year 2020 earnings conference call. Joining me today are Tien Tzuo, Zuora's Chief Executive Officer; and Tyler Sloat, Zuora's Chief Financial Officer.

The purpose of today's call is to provide some color on our fourth quarter and full year results, as well as provide our financial outlook for the upcoming first quarter and the fiscal year 2021. Some of our discussion and responses today will include forward-looking statements.

So, as a reminder, our actual results could differ materially as a result of a variety of factors. You can find information regarding those factors in the earnings release we issued today and our most recent 10-Q filing with the SEC.

Finally, we'll be referring to several non-GAAP financial measures today and reconciliations to the related GAAP measures are included in our earnings release. For a copy of our earnings release, links to our SEC filings, a replay of today's call or to learn more about Zuora, please visit our Investor Relations website at investor.zuora.com.

And with that, let me turn it over to Tien..

Thanks, Joon. Thank you, and welcome to our fourth quarter and our full year earnings call for fiscal 2020. Before we get started, let me first address the current situation with the coronavirus and how it is impacting Zuora. Our top priorities in this situation are clear.

They are to keep our employees safe, to continue to serve our customers and partners and to do our part in preventing the spread of the virus. In terms of day-to-day work, we are confident in our ability to continue to deliver our services as usual. We run a mission-critical system.

For over a decade, we continuously developed, enhanced and maintain our business continuity and disaster recovery plans to ensure that our business, our customers’ business are able to run smoothly. We have a resilient and distributed infrastructure. We have a global workforce, one that is already adept at remote work in virtual collaboration.

And so we expect to be able to continue to support our operations 24/7, 365 or 366 days of the year.

We also recognize that we have a larger role to play in our communities and are doing our part to minimize any contribution to the spread of the virus by strongly encouraging employees to work from home, to practice healthy habits, cancel large gatherings and pausing all nonessential travel.

We've also made a difficult decision to cancel the in-person components of our annual Subscribed 2020 Conference. In order to prioritize the health and safety of our global customers, partners, employees and everyone who helps put on Subscribed. We plan to replace the in-person event with videos and live stream content throughout the year.

Finally, given the fluid nature of these events, we set up a global response team to closely monitor the development surrounding COVID-19 and develop appropriate plans in respond to various scenarios as they occur. In the meantime, we plan to stay focused and continue to execute. We will continue to create amazing innovations.

We will continue to deliver value to our customers and to help the best companies in the world win in the subscription economy. Let's now turn to our quarterly results.

When I look back at our fourth quarter, the headline is I'm pleased with our execution this quarter, and I feel good about the progress we've made on the recent initiatives we've been talking about.

For example, in Q4, we saw better win rates and improved sales productivity, which resulted in a record bookings quarter and a great start for our new Chief Revenue Officer, Robbie Traube. We grew subscription revenue by 21% year-over-year to $54.6 million, in line with expectations, and total revenue of $70.4 million.

We grew the number of customers with ACV value over $100,000 to 624, an increase of 38 customers, which is our largest increase in a quarter. We were recognized once again as the market leader for subscription management solutions by yet another third-party industry analysts, IDC.

We continue to do a consistent job of bringing customers live onto the platform. Last quarter, we saw 46 go-lives, including Derco, one of the largest auto distributors in Chile, Cinépolis, a movie theater chain in Mexico, Softbank Robotics, Topcon Agriculture, one of the big four audit firms and a global TV golf channel.

Nearly half of our go-lives were outside of North America. Now we also saw that professional services revenues was limited in Q4. This was partially due to timing delays that push services revenues into future quarters.

But more importantly, what you're also starting to see is us push services work to global system integration partners, which we will talk about later on the call.

Finally, a little over a month ago, we moved into our new office headquarters in Redwood City, allowing us to combine two offices and relocate to a bigger space to handle the growing needs of our company. In Q4, we also made really good progress on the initiatives that we talked about in recent quarters.

But let me take a moment to first recap why these initiatives are important First, our goal remains the same. As the market leader in subscription solutions, we see ourselves as a portfolio bet on the entire subscription economy, a position that gives us the opportunity to deliver 25% to 30% sustained growth over a long period of time.

But what we see in these last couple of years is that the subscription economy is no longer just about high-growth SaaS companies, like Zoom or Foresight. Subscription business models are being adopted by some of the largest companies across multiple industries all around the world.

And so for example, you heard us talk about how we are now powering the connected car initiatives of seven of the top 10 auto manufacturers as well as Harley-Davidson and now, Derco. You've heard us talk about launching IoT initiatives with large industrial manufacturers, like Caterpillar, Briggs & Stratton and Stanley Black & Decker.

You've also heard us talk about launching energy as a service models with over a dozen major utilities around the world, like Origin Energy, sonnen, A2A, and Centrica. In fact, in Q4, 75% of the new logos we signed on were outside of the high-tech vertical.

These included a major investment bank in America, a top international truck manufacturer, an aerospace manufacturer, one of the biggest tech supply retail chains, one of the largest utilities in Japan, one of the world's oldest chemical and pharmaceutical companies and one of the world's largest news organizations.

In fact, today, we have 225 customers who record an annual revenue north of $1 billion. And these larger enterprises, ultimately become great, great opportunities for expansion and growth. A good example is SNCF, the French railway system. A couple of years ago, we helped them launch a new monthly pass aimed at students and millennial travelers.

They had over 100,000 people signed up in just the first 90 days. It was a big, big success. But now we're working with them on a huge expansion project to handle all 100% of their monthly and annual passes. So now we have a national railway system running entirely on Zuora. And so this is our model.

In addition to signing on hyper-growth disruptive companies, it's important for us to become the subscription platform of choice for the world's largest companies. And then as their revenue mix shifts more and more to subscriptions, we benefit.

That's why we believe that when we reach $1 billion of revenue, our customer count will be closer to 2,000 companies than, say, to 10,000. The last year, we recognize that in order to really capture this large upmarket opportunity, we had to make some changes. And so specifically, we focus on four things.

First, we focus on building a strong strategic sales team, one that takes a more consultative approach. That's why we couldn't be happier to have brought onboard, Robbie Traube as our CRO in November. Robbie have extensive experience and a proven track record selling to the largest companies as he drove sales for Adobe's Experience Cloud.

Robbie is taking the work we've done last year and continue to invest in the right infrastructure and processes to help us scale predictably with our largest customers. Second, we focus on increasing the leverage of our sales team by building stronger alliances with our GSI partners.

Firms like PwC, EY, Deloitte, IBM, Accenture and Capgemini, who already have a large presence in these larger accounts.

You've heard us talking about this in recent quarters, and this group is now part of Robbie's go-to-market team, actively working with GSIs sourcing deals, priming projects and helping our partners build practices around our technology.

Third, we focused on expansion by moving from just being a point billing solution to a broad product footprint anchored by a suite of solutions. And this is why RevPro is so important. And finally, fourth, we focus on building a great platform to help our customers customize, integrate and extend Zuora into their businesses.

We announced this in June of last year, and we've been really encouraged with the customer usage and adoption, that see increasing the stickiness for our products, and we're seeing more streamlined deployments for our services. The transformation from these four initiatives is working.

I'm really pleased to see the progress we're making in what is really a relatively short period of time. For example, on the sales side, Robbie is already having an impact. As I mentioned in the beginning, we had our largest bookings quarter ever in Q4, and we're seeing better sales execution in the field.

We're still early on, but the initial signs are really, really positive. On the GSI front, we have tripled the number of deals led by GSIs year-over-year. We're working on projects with Accenture, with CenturyLink in AICPA, and Capgemini for SNCF, where the partners are really taking the lead on the implementation work.

Now keep in mind that as we increasingly leverage our GSI partners, you'll see a shift in the mix of revenue as services revenue will represent less and less moving forward. And as you will see, we are reshaping our business and creating leverage in our operating model.

Tyler will cover this in greater detail in the financial section and forward-looking commentary later on in the call. On the product suite side, we continue to make steady progress on customer go-lives for our integrated Billing plus RevPro solution.

We followed up on our implementation efforts in Q3 and now are operationally live with our integrated solution with Siemens, LivePerson, Command Alkon, Unity and a large research firm with more to follow in Q1.

And finally, on the platform side, we continue to see great adoption of our capabilities with now over 200 customers live using our platform tools. The platform is helping these customers orchestrate events and automate manual processes. And it's helping us out with implementation times and wins against do-it-yourself projects.

To summarize, we executed well in Q4 to close out the year. And we're making good progress against the initiatives that are important for the upmarket opportunity we are seeing.

Now given our deal cycles, I expect much of the business momentum to happen in the back half of this upcoming year, and setting us up for subscription revenue growth rates improving to the mid-20s by sometime next fiscal year.

We have a great opportunity ahead of us, filled with strong market demand, a focused enterprise strategy and industry-leading products, leading to durable growth for many, many years to come. I could not be more excited about our future. And now before I turn the call over to Tyler for one final time, I wanted to take this moment to truly thank him.

Tyler, thank you for joining me so early on as my partner in helping build Zuora to where we are today. Back then, we were a small private company with less than 100 employees and today, we're a publicly-traded company with over 1,200 ZEOs around the world.

I know everyone at the company is grateful for your countless contributions in helping us create the subscription economy. After a decade with us, we wish you the best. I wish you the best in taking on a new challenge, and we're truly excited for you and your future. You will always be a ZEO. So Tyler, let me turn it over to you..

Thanks, Tien, and thank you, sincerely, for the kind words and the great journey we've had together. I have some personal words that I want to cover at the end. So for now, let's just - let's go through the numbers and performance.

So we've delivered another quarter of healthy subscription revenue growth of 21% and had our highest quarterly billings number ever, representing 25% year-over-year growth. And we met our non-GAAP operating loss target of negative $10.5 million.

Let's start with our key operating metrics, and then I'll discuss the transaction volume processed on our platform in the quarter. We had a lot of new logo activity in the quarter, resulting in account of 624 customers with over $100,000 ACV at the end of the period. This is a net add of 38 from the prior quarter and our highest increase ever.

This customer group now represents 90% of our annual recurring revenue, as it continues the trend to becoming a larger part of our business. In this quarter, as CRO, Robbie's team did a really good job of landing new logos and customers to close out the year. Turning to net expansions and upsells.

Our dollar-based retention ended at 104%, slightly down from the prior quarter as we had expected. As a reminder, this is a trailing 12-month metric. So we continue to feel the impact of the lower upsell and downsell dynamics from earlier in the year. The lack of cross-sell activity for our RevPro product continued to impact this number in Q4.

We also saw a slight uptick in customer churn arising from customer business failure in M&A. We've already made some adjustments to our go-to-market structure to improve our overall upsell execution and reduce churn.

As such, we expect this metric to be near similar levels for the next quarter, with real improvements showing in the second half of the fiscal year. As you know, our transaction volume metric can fluctuate quarterly, so looking at a trailing 12-month basis, our transaction volume grew 29%.

For the quarter, our systems processed $13.1 billion of transaction volume through our Billing product, representing 21% year-over-year growth. Keep in mind, Q4 was a tougher compare as last year's number included a large customer, who moved all of their volume on to the system in that quarter, resulting in 56% growth last year.

Now let's look at our financial results. Subscription revenue grew 21% and in line with our expectations. As a reminder, we had a onetime benefit of $1.3 million in subscription revenue in Q3, which impacts quarter-over-quarter growth. Professional services revenue decreased 14% year-over-year.

There are a few things at play here, both onetime and as a broader trend. First, we had a large project under a milestone-based contract, where while the project is going well, key expected milestones are pushed into future quarters.

Second, as we've highlighted in previous calls, we've had a focus to shift more of our services work to GSI partners as they're playing a larger role in our implementations. Tien talked about this trend earlier in this call.

Our professional services revenue will continue to reflect this change and not grow at the same rate as subscription revenue, and you'll see this when I cover our guidance for next year. Looking at our Q4 margins. Total non-GAAP gross margin was 58%, similar to the prior quarter. We maintained a healthy non-GAAP subscription gross margin of 77%.

Non-GAAP professional services gross margin was negative 11%, driven by the lower revenue levels. With lower utilization levels and our plan to shift more services work to our partners, we decreased our cost structure and professional services through resource transfers and reductions.

Non-GAAP operating loss was $10.5 million and in line with our expectations, as we continue to do a diligent job matching our expenses to our revenue growth. We're actively managing our ongoing operating costs, while making the right investments in our go-to-market and product initiatives to support sustainable long-term growth for the business.

In Q4, our sales efficiency indicator, GEI, or Growth Efficiency Index, picked up to 2.3, as we had indicated on the last earnings call. This metric is calculated by dividing our trailing 12-month non-GAAP sales and marketing expense of $97.1 million by the year-over-year increase in trailing 12-month subscription revenue of $41.7 million.

Now let's dig into billings and free cash flow. As we mentioned, we had a strong quarter for calculated subscription billings of $74.5 million, representing 25% growth year-over-year.

This is primarily the result of strong sales efforts in Q4 where we're also helped by early renewal activity and higher annual mix, each contributing approximately 2 percentage points. As you know, quarterly billings can fluctuate. So looking over the full fiscal year, subscription billings growth was 23%.

Given the quarterly fluctuations and some of the early renewal activity we saw in Q4, subscription billings growth may come in slightly lower than our subscription revenue growth in Q1. For the full year, we expect subscription billings to grow slightly faster than subscription revenue and mostly driven by the second half of the year.

Turning to cash flow. We once again did a good job of managing our expense base and showed improvement as free cash flow was negative $4.5 million in the quarter and ahead of our expectations. There are a few things to note. Total CapEx spend was $8.5 million with $6.4 million of that related to facility spend for the headquarters move.

This was offset by $4.8 million in reimbursements, which are recorded in our operating cash flow, resulting in a net impact of negative $1.6 million to free cash flow for facility spend. We also had a shift in payment timing of $4.1 million into Q1 related to headquarter facility spend.

Excluding the facility spend, free cash flow would have been negative $2.9 million. I'm pleased to say that we performed well in terms of free cash flow for the quarter.

Looking ahead, we expect free cash flow to be approximately negative $8 million in Q1, which includes the $4.1 million timing shift for facilities CapEx from Q4 and some replacement equipment related to the move. We expect full year free cash flow to be better than negative $22 million.

Additionally, we plan to be at a cash flow breakeven run rate by the final quarter of this year. This was a commitment we made to our shareholders when we became a public company two years ago.

And while we've not reached the revenue levels that we originally planned, we believe it's important that we manage our business accordingly to deliver on this promise. We ended the quarter with $171.9 million in cash and cash equivalents, remained fully funded against our current operating plan.

Lastly, our fully diluted share count as of the end of the quarter, January 31, 2020, was approximately 126 million using the treasury stock method. Now let's move to our outlook and guidance.

As a reminder, we have strategic initiatives this year to shift more of our professional services work to our GSI partners, which means we're investing time and resources to develop deeper relationships with them. These efforts will result in lower professional services revenue expectations for the year.

But over time, we know that this will also result in superior margin structure and create more efficiencies for our business. Now for our guidance numbers for Q1 and fiscal '21.

For Q1, we are currently expecting total revenue of $70.5 million to $73 million; subscription revenue of $55.5 million to $56.5 million; non-GAAP operating loss of $12 million to $10.5 million; non-GAAP net loss per share of $0.11 to $0.10, assuming a weighted average shares outstanding of approximately 114.6 million.

For the full year fiscal year '21, we are currently expecting total revenue of $300 million to $307 million; subscription revenue of $239 million to $243 million; non-GAAP operating loss of $33 million to $28 million; and non-GAAP net loss per share of $0.29 to $0.25, assuming weighted average shares outstanding of approximately 116.7 million.

With the transformational changes we've made, we expect our business to show acceleration in the second half of this year, with improving revenue growth rates towards the end of the year. In terms of the impact of the coronavirus, we all realize there are near-term macroeconomic uncertainties.

We have not made any specific adjustments to our guidance at this time. But as Tien mentioned, we are working to understand how this may impact our business and recognize that this is a dynamic situation that we are monitoring closely. And finally, on to more personal news.

After being a part of Zuora for the past 10 years, I've decided to pursue a new challenge at another company starting in April. I'm incredibly proud of the company we've built here. I feel the teams we have in place are best-in-class, and I feel good about the progress we made in our business transformation over the past year.

Tien, your leadership and vision has helped shape the subscription economy. The vision you painted out at dinner with me 10 years ago has not only come to fruition, but done so faster and wider than anyone could have expected.

As evidenced by our Q4 performance, I think that Zuora's better positioned than any other company to continue to be the leader in helping companies go through the subscription journey. Zuora will always be a special place, and I'm incredibly thankful to my team, the ZEOs, directors and shareholders, as this has been a journey of a lifetime.

Tien, I am most grateful for you bringing me on this journey and trusting me to go through this journey with you. I have all the confidence in Zuora and the team here to continue being the leader in subscription management and realizing the vision of the subscription economy. And with that, we're happy to take your questions.

Operator?.

[Operator Instructions] First question comes from the line of Chris Merwin from Goldman Sachs..

Thanks so much for taking my question. Maybe, firstly, I just wanted to ask about RevPro. In other words, a few customers last quarter that you talked about going live this quarter.

Anything you could say more about other few customer wins there? And how we should think about that impacting your model as we go throughout the year? Because I know, in particular, you talked about an acceleration in the back half? Thanks..

Yeah. So as you know, we've been on this journey to deliver the integration between these two products, and that has gone well over the last few quarters. And so we're under deployment. The deployment is going well. We're starting into the new fiscal year, if you will, past the Q4 go-lives.

And so now customers really are coming live and giving us just increased confidence that the integration is solid. And we do expect to turn back on the upsell motion..

That's great. And then, as it relates to the shape of the year, I know you talked about, I think, an acceleration in the back half. And I think one of the kind of speed bumps in the quarter was churn. I think your customer churn picking up a bit.

So can you just talk - maybe two part question, talk a bit more about what caused that churn? And then also your visibility and confidence to do the acceleration in the back half and what implicitly you're assuming for churn there? Thanks..

Yeah. We flagged that it was a minor uptick. It was really - we had a couple of customers that were acquired by larger companies, right? These larger companies might have run another solution. And we have a really, really sticky product, in general, right? But sometimes the larger companies do decide to move the systems onto their own internal systems.

There is also a couple of business failures, too. I mean, some of these business failure are the ones that you've actually seen in the press. And so it was really just a confluence of some of those events, but we feel really good about our position, because the core product is fundamentally a very, very sticky product..

Great. All right and all the best Tyler and Tien giving me opportunity. Thanks so much..

Yeah, absolutely..

Thanks, Chris..

And our next question comes from the line of Brent Thill from Jefferies..

Hi. This is Luv Sodha on for Brent Thill. Thank you..

Hello..

Hey, Tien. How are you doing? Just wanted to ask a quick question on coronavirus, maybe the macroeconomic impact. I know that given part of your pricing is based on transaction volume.

Let's say, if there was an impact - macroeconomic impact and transaction volumes were to slow down, do you guys have any comments on how that would impact revenues going forward?.

Yeah. I think, Luv, I think - this is such a new state for so many of us, right? And those of us who were around in 2008 certainly remember market gyrations, but the whole coronavirus thing is going to be something new.

We have customers where you can see that this is actually helping them, right? More people staying home, more people asking for subscription services, but we have the other factor as well. And so I think it's just too early to tell.

I think what we're focused on right now is making sure that we continue to execute the company, right? We continue to serve our customers, right? We feel really good about our ability to, obviously, keep the service up and running, right? That's not really impacted. But we want to make sure that as we shift to moving more employees at home.

I mean, the good news is already distributed workforce. The good news is we've already adopted a lot of the technologies that companies are using. But this is certainly a situation that we're monitoring, along with everybody else, just because it's so new..

Got it. Got it. And congrats, Tyler, on your new role. Just wondering, I mean, in terms of the transition, I know you have someone filling in for the near term.

But I guess, how far along are you in the search? And how soon can we expect sort of news for new CFO?.

Yes, I'll go ahead and field that. I mean, the good news is Tyler has built an amazing team of incredibly strong leaders. And so we will be creating an office of the CFO that's led by one of the leaders.

We're fortunate to have Ken Goldman, who's been a major adviser to us for a number of years, have been on the Board since 2017, and he will continue to play a very strong role.

And we have retained a leading search firm to really help us run the right process, right? Whether it's an internal candidate or an external candidate, we want to make sure we run the right process and just get a fantastic leader to step into Tyler's big shoes..

Got it. That’s all from me. Congrats, Tyler and I’ll pass through..

Thanks, Luv..

And your next question comes from the line of Terry Kiwala from First Analyst..

Hey, good afternoon. And thanks for taking my questions.

I'm wondering if you could talk a little bit about in the quarter and then moving forward, whether you saw any elongation of the sales cycle or material changes in your close rates?.

Well, when I look at the Q4, we actually saw that on our win rates improve and our sales productivity numbers improved. And so we feel fairly bullish about the business. If the question is really related to what's going on right now with the travel bans and so on and so forth, I think, it's too new, I think we're all taking it day by day..

Great. Thank you..

And your next question comes from the line of Stan Zlotsky from Morgan Stanley..

Hey, guys.

Can you hear me okay?.

Yeah..

All right, perfect. So a couple of questions from my end. First on just the way you think about guidance for next year, I realize everything is still really new.

But as far as how you approach your guidance setting methodology between Tyler leaving and all the uncertainty out there, do you consider potentially maybe widening out the ranges for your guidance, beyond typical in order to account for the uncertainty? Or maybe just tweaking some of the close rate assumptions? Or at least maybe the timing of those deal closings?.

Stan, this is Tyler. I'll take that one. I mean, when you look at the kind of macroeconomic environment right now with coronavirus and all that, we said we haven't actually taken into account any changes based on that, because it is too early. And as Tien mentioned for Q1, we'll look at those sales cycles.

I think, in general, though, if you look at what we've been talking about, we made a lot of changes last year as we brought Robbie onboard, the execution was really, really positive in Q4, but it does take time for everything to filter through.

And we said, I think a lot of the changes in the execution you'll see it in the numbers coming in the back half of the year. So we give guidance based on our best picture of the business today. We haven't changed that going into this year based on what we see..

Got it. Got it. Okay.

And just similarly, on the implementation side of the business, from a services side of the business, considering that you guys do have a fairly heavy lift from an implementation standpoint, how are you guys thinking about getting customers up and running with some of the travel restrictions around getting people on-site to do the work?.

Yeah. I would say we've looked at that pretty deeply across the entire parts of the company in terms of making sure that we can continue to serve our customers, right, whether that's on the technology operation side, certainly, on the sales side, the engineering side.

There's been parts of the world that's where coronavirus had hit earlier, and we've had a lot of experience making sure that working at home doesn't impact productivity. Bringing customers live is the same thing.

We already do actually a lot of that work remotely, right? There's certainly upfront in the blueprinting phase that we're looking at and seen it, let's make sure we can do that. We have a fairly good methodology. That's what's allowed us to really have a consistent pace of customer go-lives. That knowledge is pretty well documented.

And right now, we're in the process of making sure that we're training up our partners and educating them, so that we continue to get leverage in the organization. But at the top level of your question is, we don't think that working at home is going to slow us down in terms of our ability to deliver for our customers..

Got it. And maybe just - and my apologies if this already was asked and you guys have answered, but I'm just jumping between a couple of calls.

But - when you think about growth potentially accelerating into the mid-20s by fiscal '22, what are the puts and takes to get there? Is that some maybe slippage out of this year or maybe some of the longer deal cycle, though, this year closing in next year? Or is it - is there something more fundamental that you're seeing in the pipeline?.

No. No, there isn't. I mean, fundamentally, we believe that we are in a fantastic market, right? It's a long-term market.

None of the fundamental story is intact, but we're really trying to make sure we emphasize is more and more of the subscription economy marketplace is not just these fast-growing disruptive companies, right? These companies, Zoom and Foresight are two that we referenced.

But we're just seeing a lot of traditional companies outside of high tech moving to the space. And so the initiatives that we're really executing are to make sure that we continue to land these large company logos that ultimately provide incredible expansion potential.

And so we highlight the SNCF example as a company we started working with two years ago, had an amazing launch that was a huge success, and now they're shifting the entire business over to us.

And so those initiatives and Robbie being 90 days into the role, is having to say, look, Q4 and the performance we saw shows that the thesis of the marketplace is intact. It shows that we continue to have a strong technology lead. We're in the sales cycle. It shows the value of strong sales leadership.

But Robbie is also new, we're entering a new fiscal year and we want to make sure, right, there's time for all the initiatives to really take hold.

And so it makes sense really that the leverage and the business momentum that we'll see from these initiatives is really more in the back half of the year, it'll show up in revenue numbers, right, given the subscription-based business model in the middle of next year..

Yes. Stan, if you look at what we really kind of worked on this past year, and we argue we'd paid the price for, which was kind of go-to-market leadership uncertainty, right? Our RevPro and Billing integration, right, and really starting to put together our partner focus.

We invested for the last six months and we're starting to see the light on some of these things. It's still going to take some time, but these are things that give us confidence as we move forward. The hardest parts are behind us..

Got it. Very helpful. Thank you, guys..

[Operator Instructions] And there are no further questions at this time..

Great. Thank you so much for joining us, and we'll talk to you next time. Thank you..

Goodbye. And this concludes today's conference call. Thank you for your participation. You may now disconnect..