Linda Lee

Linda Lee of William Blair inquired about new CMO David Lee's action plans and their integration with the sales team. She also asked for an update on which industry verticals are performing best from a churn and down-sell perspective.

Answer

Executive Sharat Sharan detailed that the new marketing strategy, under CMO David Lee, is focused on a solutions-based, ROI-driven approach tailored to specific verticals like technology, financial services, and life sciences. This aligns with sales to improve pipeline generation, with early indicators showing improvement. On verticals, Sharan noted that life sciences and financial services now represent one-third of the business and exhibit higher gross retention rates. He cited a recent win with a major international financial services firm as proof of the strategy's success in diversifying the business and securing mission-critical use cases.

Linda Lee, on behalf of Arjun Bhatia, asked about the potential size of the customer win-back pool, the expected momentum for these clients, and the outlook for downsell and churn rates.

Answer

CEO Sharat Sharan stated that while it's hard to quantify the total win-back pool, he expects momentum to continue into 2025, particularly from the technology sector. CFO Steve Vattuone addressed churn, noting that in-period gross retention improved by high single digits year-over-year in Q3, marking the fourth consecutive quarter of better trends. He added that downsells were near a three-year best, and multiyear contracts reached an all-time high, indicating stabilization.