Good afternoon. Welcome to the earnings call for Model N's first quarter fiscal year 2019, which ended on December 31, 2018.

This is David Barter. I am Model N's Chief Financial Officer, and with me on the call today is Jason Blessing, Model N's Chief Executive Officer.

Our press release was issued after close of market and is posted on our Web site, where this call is being simultaneously webcast. The primary purpose of today's call is to provide you information regarding our first quarter of fiscal year 2019 performance and our financial outlook for our second quarter and full-year fiscal 2019.

Commentary made on this call may include forward-looking statements. These forward-looking statements are based on management's current views and expectations as of today and should not be relied upon as representing our views as of any subsequent date.

We disclaim any obligation to update any forward-looking statements or outlook. Actual results may differ materially.

Please refer to the risk factors in our most recent Form 10-K and 10-Q filed with the SEC. In addition, during today's call, we will discuss non-GAAP financial measures.

These non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from GAAP results. Reconciliations of the non-GAAP metrics to the nearest GAAP metric are included in the earnings release issue today, which is available on our Web site.

I encourage you to visit our Investor Relations Web site at investor.modeln.com to access our first quarter fiscal year 2019 press release, periodic SEC reports, and the webcast replay of this call. Finally, unless otherwise stated, all financial comparisons in this call will be to our results for our first quarter fiscal year 2018.

With that let me turn the call over to Jason.

Thanks, David. Good afternoon and thank you for joining us today on our Q1 2019 earnings call.

Model N continues to focus on improving execution, and this effort was rewarded by strong quarterly results that beat our guidance. Total revenue for the quarter was $35.1 million, subscription revenue came in at $25.2 million, and adjusted EBITDA was $2.9 million.

I'm particularly pleased that the overachievement in the quarter was driven by strength in recurring revenue. This was a good quarter for us, and it puts us in a position to achieve our 2019 goals.

This quarter is also another milestone on our path to improved growth and profitability and evolution as a SaaS company. On our last earnings call, I outlined a series of strategic and operational programs I had implemented based on my assessment of the company.

The goal of the initiatives was to ensure continued customer success in our core vertical markets, while also driving improving levels of profitability, growth, and cash flow. Please allow me to recap the changes we made and then I'd like to structure the remainder of my prepared remarks with progress updates in each of these key areas.

First, I announced that we would be refocusing the company on the life sciences and high-tech markets, and then our go-to-market and product teams would be that our go-to-market and product teams would be realigned to capitalize on the unique opportunities in these markets. Second, given the different selling motions, I shared that we would be aligning our sales team to focus on customer sales and new logo acquisition.

Furthermore, I shared that the primary focus of our customer sales team would be on customer success, expanding Model N's product footprint in an account, and transitioning on-premise customers to our cloud. I also shared that we had formed the center of excellence dedicated to cloud transitions.

I'm very pleased with how our team has responded to these changes and we're seeing encouraging progress. I'd now like to share more contexts on each of these important focus areas.

As discussed on our last earnings call, we had our best ARR bookings quarter in company history in Q4, and that momentum carried into Q1. I'm particularly pleased with the diverse mix of our bookings in the quarter.

Deal volume is strong. Account rep participation was broad, and we saw a nice balance between customer sales and new logos.

In addition, we saw a good mix of bookings between life sciences and high-tech and prove that we can win business with both medium and large-sized companies. I believe the diversity in our Q1 bookings represents further evidence that we are focusing on the right growth levers, and I expect our execution to continue to improve with time.

During Q1, we added a healthy number of new logos, and are on pace to close as many new accounts in the first-half of this year as we did all of last year. These new logos accounted for a material portion of our Q1 bookings.

As we have talked about in the past, we are less than 10% penetrated on a logo basis in the markets we serve, and I continue to believe that new logo acquisition is an interesting growth opportunity for us. This quarter supports this thesis, and I expect our execution in new logo acquisition will continue to improve as our account executives have more time to develop their territories.

We also saw encouraging results around customer success in sales into our base, and I'd like to share a few highlights with you. The first was a large expansion deal at one of our existing high tech customers that is one of the top producers in the world of microprocessors and graphical processing units.

This particular customer has been a long time Model N user and recently undertook a strategic initiative to further optimize revenue and margins in an effort to maintain their market-leading position. As a part of this revenue management initiative, which was sponsored by their CEO, the customer expanded Model N usage from one to three products, and is in the process of rolling out the expanded solution to an additional 500 users.

This is a great example of how strategic our software is and how it helps our customers flourish in the dynamic end markets they serve. Second, we had two strategic yet very different Go-Lives in the quarter, each of which is important, because they demonstrate how our solution scales from emerging growth companies all the way up to the largest most complex companies in the world.

The first go-live is at Nevro, a new customer that we talked about on our Q3 2018 earnings call. Nevro is a growing global medical device company that is subject to the same complex regulatory requirements as the largest life sciences companies in the world.

Nevro turns to Model N to help manage these complex regulatory and revenue management challenges. I am happy to say that Nevro went live in under six months on-time and on-budget.

They are also a great example of how our cloud deployment model allows us to address a greater portion of the market. The second go-live of note was that one of our largest customers who's also one of the largest pharmaceutical companies in the world.

This go-live was noteworthy for a number of reasons. First, the project retired a number of antiquated legacy platforms resulting in significant IT savings.

Model N is now the single source of truth for customer, pricing, and contracting data, some of the most important information for a life sciences company given the profitability and compliance considerations. As a part of this upgrade, the customer also implemented a new Model N product, Validata [ph], which helps companies with improved pricing compliance and profitability.

This upgrade is driving better business execution, significant ROI, and positions the customer to move to our cloud. Speaking of our cloud, I would like to share some broad context with you on the progress we're making in this important area of our business.

First, all of our core products are exclusively available today in a cloud deployment model, and all of our contract signed over the last three-plus years are structured as subscription agreements. We run the majority of our cloud applications on Amazon web services and now have more than 60% of our customers live on one or more of our cloud products.

We also have a number of large SaaS transition projects underway, and I expect one of the largest of those customers, Gilead, to go-live this year. Gilead will be a great addition to our portfolio of SaaS customers, and will be an additional proof point for how our solutions scale from emerging growth companies up to the largest most complex companies in the world.

The final point I will make on our cloud business is, as announced on our last earnings call, we've created a center of excellence internally to package up and leverage the best practices from our cloud sales and implementations today. I continue to be encouraged by the work this team is doing, and believe it will help accelerate our path of selling and delivering successful SaaS transitions over the next couple of years.

Before turning the call over to David, I want to close by thanking the team at Model N. Part of the reason I joined the company is our great products that solve mission-critical problems for our customers, and I was also incredibly impressed by how deep the domain expertise is at our company.

In addition, I've been inspired by the passion our team has for our future and how supportive they have been around focusing our business and evolving how the company is run. I have also been excited about the new talent that we've added at all levels since I joined the team.

These new team members have augmented our domain expertise and brought additional SaaS strategy and operational skills. Our strong Q1 is a testament to this team, and I'm honored to be a part of it.

I'm also excited about our future together and feel we are well-positioned to realize our 2019 goals. With that, I will turn the call over to David.

David?

Thank you, Jason. The company executed well in Q1.

We're building a company with healthy subscription revenue growth, which will serve us well going forward. Strengthen the business was driven by our Q1 bookings with both new and existing customers.

Our focus on realizing greater efficiencies also contributed to bottom line performance and a significant improvement in cash flow. Let's now turn to some first quarter highlights.

As a reminder, the results for Q1 are based on the modified retrospective adoption of ASC 606. In addition, they also reflect the updated P&L format we've been discussing with you for the last several quarters.

In the first quarter, total revenues were $35.1 million and represent a healthy beat above our Q1 guidance range of $34 million $34.4 million. The outperformance was driven by our subscription revenues, which now comprise 72% of total revenues a meaningful improvement from last year.

Our subscription revenues were $25.2 million in the first quarter nicely ahead of our guidance of $24.2 million to $24.6 million. It's important to note our subscription revenues reflect a headwind of approximately $1 million from the cumulative effect adjustment related to the adoption of ASC 606.

Professional services revenues were $9.9 million for the quarter in line with our expectations and represent meaningful progress as the company drives down the cost and time of our implementations and further leverages partners. The overwhelming majority of professional services revenues in the quarter were for SaaS subscription implementations as we burn through the legacy perpetual license on premise implementation backlog.

Before I move on I want to remind you that my commentary will be focused on non-GAAP results, which exclude the impact of stock based compensation and the amortization of the intangible assets a reconciliation of non-GAAP to GAAP results is provided with our earnings press release issued earlier today. Non-GAAP gross profit for the first quarter was $19.9 million, which is a 57% margin.

Gross margin for professional services was 26% and gross margin for subscription revenues was 69%, which is a meaningful improvement over the 64% margin in Q1 of fiscal 2018. We expect to see subscription revenue, gross margin improvement as we move through the year and we expect to achieve our full-year target of 70%.

Non-GAAP operating profit for the period was $2.5 million. This exceeded our non-GAAP operating profit guidance of $1.5 million to $1.9 million and it reflects our focus on scaling the business.

Non-GAAP net income in the first quarter was $840,000. We produced a non-GAAP net income per share of $0.03 based on 31.5 million shares.

This was ahead of our guidance of a non-GAAP net loss per share of $0.01 to a non-GAAP net income per share of $0.01. Adjusted EBITDA for the first quarter was $2.9 million, which is well ahead of our guidance of $2 million to $2.4 million.

This reflects the beat in our subscription revenues. At the end of the first quarter, total deferred revenue was $42.5 million.

This reflects the adoption of ASC 606. The cumulative effect adjustment reduced deferred revenue by approximately $8 million.

We've also made adjustments in terms of how we contract which lowered deferred revenue by approximately $7 million. The changes we believe will make it easier for our customers to transition to the cloud.

As I've shared on prior calls, deferred revenue is not a perfect metric for our business. We ended December with $52.2 million of cash and cash equivalents compared with $56.7 million at the end of the fourth quarter.

Free cash flow used was $4.4 million in Q1, a meaningful improvement from the prior year period when we used $9.8 million. As a reminder the payment of our corporate bonus and our Q4 sales commissions naturally impacts cash flow in Q1.

We also paid a dividend tax of approximately $500,000 in Q1 associated with the repatriation of our cash from India to the U.S. We remain confident in our ability to meet our annual free cash flow target of $8 million to $10 million.

During the quarter, we pay down $250,000 in debt. And then at the start of Q2, we pay down another $4.75 million.

As our free cash flow continues to improve, we expect to further reduce our outstanding debt. Before I provide guidance, I'd like to provide a little context on how we are thinking about the rest of fiscal 2019.

As we sit here today, we have improved visibility into our subscription revenue outlook due to the strength of Q1. We're focused on scaling Model N as a SaaS company and building a healthy base of recurring revenues.

We're also focused on driving higher levels of profitability with our cloud-based products. We continue to expect professional services revenues will range between 25% and 28% of total revenues for the full-year.

But for modeling purposes, it is reasonable to assume we will be towards the lower-end of this range given our focus on SaaS. We believe this is a significant improvement over last year, when our professional services revenues represented 39% of total revenues in Q1.

For Q2, I expect that gross margin for professional services to decline to approximately 10%. This is an expected and temporary reduction in the professional services gross margin and it's in-line with transitioning our staff from on-premise to SaaS projects.

We do expect our margins to climb and return to the mid-20s percent range by the second-half of the year. For the second quarter ending March 31, 2019, we expect total revenues to be in a range of $34.3 million to $34.7 million.

And within this we expect total subscription revenues to range from $25.4 million to $25.8 million. At the top end of the range this represents 2.4% sequential growth.

On an annualized basis this translates to approximately 10% growth and it aligns with our rate of growth at the end of fiscal year 2018. Non-GAAP income from operations is expected to be in the range of a loss of $100,000 to income of $300,000.

This would lead to a range of a non-GAAP net loss per share of $0.05 to $0.03 based on a weighted average share count of 31.9 million shares. Adjusted EBITDA is expected to be in the range of $300,000 to $700,000.

When modeling Q2 please take into consideration the professional services gross margin I noted earlier, the seasonal increase in payroll tax and our Rainmaker customer event in March. These Q2 factors represent approximately $2.5 million in onetime EBITDA pressure and will not impact our second-half profitability metrics.

For full fiscal year 2019, we are reiterating our guidance and expect total revenues to range from $138 million to $142 million. And within this we continue to expect total subscription revenues to range from $100 million to $105 million.

We continue to expect total GAAP revenues to include an ASC 606 impact of approximately $7.2 million. We expect non-GAAP income from operations in the range of $7 million to $11 million and non-GAAP income per share in the range of $0.05 to $0.17 based on a weighted average share count of 32.4 million shares.

Adjusted EBITDA is expected to be in the range of $8.5 million to $12.5 million. We continue to expect free cash flow to be in the range of $8 million to $10 million, a meaningful improvement from fiscal year 2018.

I'm pleased with our strong first quarter results. We're growing the company the right way on the back of subscription revenues which leads to enhanced levels of profitability and shareholder value.

We're focused on execution and delivering on both our 2019 and our longer term goals. With that, let me turn the call over to the operator for questions.

Operator?

Great. Thanks for taking my question, and congrats on the quarter.

Just a question here on the fiscal 2019 guidance, just thinking about the outperformance in fiscal 1Q really across growth and profitability, but only a reiteration of guidance, is that just a bit of conservatism baked in, or really is there something more in there that that we should be thinking about?

Hey, Koji, this is Jason. Appreciate the question and participation on the call.

So, we came into this year with a lot of momentum and strong visibility into our key metrics including over 80% visibility into our revenue number. We certainly feel great about Q1, and I think we're on-track to have a very good Q2 and see a path to our plan, and I'd personally just like to see some continued execution on the company's behalf, and I think with that comes the opportunity to raise guidance, but no, there is no -- nothing kind of underlying beyond what you've read in the press release and heard in our prepared remarks, we're really happy with the momentum in the business right now.

Okay. Great.

Thanks for that. And then just one question here on the recurring revenue, maybe I missed this in the prepared comments, but did you have any give that the SaaS revenue contribution was to recurring revenue?

We did not, right now what I think we're looking at it as a bundle of subscription contracts and I think we're working with customers in that way.

Okay. Great.

Thank you for taking my question.

Thanks, Koji.

Hi, guys, Kevin here on for Brian. Thanks for taking my call.

You've talked previously about scaling back sales efforts for customers outside of life sciences or high tech verticals this year, but I guess, to continue to support those customers going forward. I know there is a smaller areas for you, but would you expect to see any changes across our customer base and do you think those are verticals that you potentially look to come back to over the intermediate term?

Yes. Thanks, Kevin.

We're really excited about our two core verticals of life sciences and high tech, and as I said in my prepared remarks, we're less than 10% penetrated from a logo perspective and just see a ton of additional opportunity in the wide space in our customer base. So we don't feel like we have to step too far outside of those core markets right now to drive growth, and I think Q4, Q1 are good examples of that.

That said we have committed to products that are sold into other verticals that will continue to support them and support those customers and have not changed that policy.

That's helpful. And then given some of the recent proposals for changes across the rebate and drug pricing landscape, I'd be curious to hear how you see that potentially impacting your business going forward, and do you think that's something that could simplify, or maybe further add further complexity I guess to revenue management within your customer base?

Yes. I wish I had a crystal ball that would tell me what's going to happen in Washington.

So, yes, I mean great question there's been a lot of changes proposed. The two biggest of which are adopting reference-based pricing here in the United States like the rest of the world does, and then overhauling the rebate system that's paid to different distributors of pharmaceutical therapies.

So at this point, these things have been proposed. I will tell you that having visited the majority, the 10 largest life sciences company over the last six months.

This is a boardroom topic, and I would say the prevailing wisdom in those boardrooms is there are going to be changes. This is such an important topic with voters and with Washington.

And I think for us it is a net tailwind, because it is going to increase the complexity of how products are priced and sold here in our market. I think we can continue to expect regulatory and reporting pressures to show that providers are -- excuse me, that manufacturers are being compliant with updated pricing.

So, I do think something is going to happen here. I do think it's a net tailwind for us, and I do also think it really reiterates and underscores how important our products are to helping our customers deal with the complex regulatory pricing regimes that they live under

It's very helpful. Thank you

Great. Thanks for taking my questions.

Nice job guys on the quarter. So, Jason maybe one for you, real good color on and good to see kind of the go-live activity in the quarter, I mean the life sciences go-live that you mentioned, where effectively you're the single source of truth across customers pricing and contracts.

I mean I think it probably goes without saying, is there any other customer where you're the single source of truth across that very important data, in my mind, and what is the potential at this life sciences customers to grow from here, or are you effectively kind of where you want to be, and this is the game plan for the rest of the 150-plus customers or, however, you want to phrase it?

Yes. Hi, Chad.

Good to talk to you. So while lots of great questions in there, so first and foremost, I would say the go-live that I referenced is, you know, it's the blueprint of where our life sciences customers are getting to, and I think are trying to get and getting to a single source of truth.

So that's point number one. Point number two, I will say this is a great example of where the cloud is a catalyst for us to have discussions with these customers to modernize their system, consolidate systems, eliminate customizations, and get ready to move to our cloud.

And that's kind of how this project started and what was one of the main objectives of it. I would say for this particular customer, I was out there visiting at the end of last calendar year, and their feedback to me was, Jason, this project that we have just completed is not just a blueprint for us, but it's blueprint for the rest of our company.

And we've done this in essentially a small part of our company and we've got 100 or so other operating units around the world that we want to roll this out too. So, whether you're talking about the specific example that I think will be a showcase for the rest of our customers that just went live or those in the future.

This is the opportunity for us, Chad, and we are literally just getting started on it. And this is why we've talked about our installed base and selling into it as being such a unique opportunity and why I wanted to make sure we've got the majority of the company focused on it.

So, significant runway left even with that customer is fair characterization?

We feel good about the runway in that account. We feel good about the runway and how it applies to other accounts.

Awesome, sounds good. And then maybe a follow up for me, it was good, Jason, to hear that Celgene I think is anticipated to go-live.

I guess considering their proposed acquisition by Bristol-Myers, I guess is there any kind of risk there. How do you view that's an aerial playing out?

Yes. So, a few things that I would share both Bristol-Myers and Celgene are both big customers of ours and use different footprints of our products inside of their respective companies and so we're very actively working with both companies on their integration planning.

I frankly see it as an opportunity. Celgene's is kind of a little bit bigger footprint.

So I think it is an opportunity for us to demonstrate the value we're adding there and potentially expand inside of a larger company. I would also add that, we have multiple projects going on right now at Celgene including a couple of just fund up in the last couple of weeks.

And I think that's an important point to make because it really underscores that M&A does not absolve life sciences companies from operating in this complex regulatory environment or operating profitably and returning to their shareholders. So we're very, very actively engaged in both accounts and I'm pretty optimistic about what will happen.

Good. Good to hear you win a new business and everything's on plan and then maybe one last one quickly for David.

Just on deferred revenue language, David, and the $7 million kind of contract related adjustment there, I guess any further elaboration on kind of what that is and then secondarily is this a onetime kind of $7 million adjustment in this quarter and it doesn't recur going forward? Thanks.

Great question, Chad. So it is one-time and it has to do with ASC 606 and it just happens to do with a new body of literature.

And so one of the elements that we've included in our contracts is just some added flexibility that allows you to move from one contract to another by virtue of the language just the literature requires it ultimately we don't get to count it as deferred even though it's contractually mandated payments under a contract, but by virtue that I can allow you to adopt new cloud products or transition your economics to buy more cloud products it ultimately has the effect of actually reducing the deferred so…

Thanks.

-- it just happens to be just a different regime of literature in this case.

Okay, thanks guys

Absolutely. Thank you, Chad.

Thanks.

Hi, good afternoon, Jason and Dave. Congrats on a nice quarter.

I guess first off just expanding upon one of the previous questions around the regulatory environment. Obviously there are a number of proposals out there, I guess within the customer base and as you're having customer conversations does this heightened regulatory environment, obviously you talk about it being a net tailwind, but in the near term does that cause a bit of paralysis amongst customers in making decisions or purchasing decisions as they're trying to figure out the environment.

Hi, Ryan. Yes, great question, and one I've certainly been asking on my own travels in our life sciences customer base.

I'll share one additional piece of, two additional pieces of context to help understand that one. First of all, in the short term, as I mentioned companies still are compelled to be compliant with current regulations, compelled to deliver results to their shareholders and their board and investors.

So I don't think, first and foremost, I don't see anyone taking their eye off the ball as the game is played today. The other thing that I will share that is just again I would say I've been kind of an aggregate a bit of feedback and dialogue I've had with customers is they think it's going to take anywhere from 12 to 18 months to get resolution on what exactly gets done and then there is going to be potentially an equal amount of time to actually implement it.

So I think most prevailing wisdom is there are probably two to three years out from being compliant. We can't stop running the business today and abiding by today's regulation, while we wait for Washington to sort this out.

Got it, got it. That's really helpful.

And then along the lines of some of the strategic changes you made and you talked about a lot last quarter and some of the nice returns you're seeing thus far. As you're looking out into the remainder of the year, what additional adjustments do you feel that need to be made within the sales organization and do you feel that as you're looking at those opportunities is it more of a you need to address additional sales capacity at all or demand generation, as you're trying to balance out that net new logos versus expansion within the existing base?

Yes. I mean the way to think about that is it's somewhat on the margins.

I think most of the realignment that we did was in Q4 of last year as we had visibility and line of sight to the full-year numbers and then really as we entered Q1, the realignment of our sales force was largely complete and frankly set the sales force up to have I think better years because they were more aligned with the growth levers and in areas of the market that we are strong and have the chance to win our disproportionate amount of business. I think as a part of that alignment, your question is insightful as a part of that alignment, we also realigned all of our marketing programs in demand generation to focus on the growth levers I outlined, the trends there are also favorable.

As we talked about in the last call and this is a common theme again on this call that our pipeline is up significantly versus the prior year period, so we continue to see great momentum there. And then as you said, at the beginning, it's kind of on the margins, we're doing a little bit of hiring if were to go out and look at our Web site right now, you'll see that we're doing some hiring in life sciences on the hunting front.

And to me that's an area of the team that needs to be augmented. We've got great, great customer sales teams in both high tech and life sciences that say we've got strong shops as well in high tech hunters.

And I think getting a couple of additional life sciences hunters, really rounds out the team and I have to say I'm optimistic about that. I've been involved in interviewing some of the final candidates and I think we're getting a great look at some good talent.

Great. Thanks very much.

Thanks, Ryan.

Oh, great. Thank you.

Is there anything you've seen in terms of any change in your view of how fast large life sciences companies will go through their digital transformations?

Yes. Hi, Peter.

I mean it's top of mind for every customer that I go and visit and along with that transformation comes modernizing their internal systems to drive more agility and responsiveness to the market. And I think we're starting to see that - that desire to get current modernized systems and drive digital transformation in some of the own results -- in our own results that we posted, 60% of our customers are now running our products in the Cloud.

We've got nearly 20 Life Sciences customers that are running our core revenue management products in the Cloud and over a dozen or so customers that are in various stages of modernizing their infrastructure and moving from on-premise to the cloud. So I still think this is -- it remains a very interesting growth opportunity for us and that's why we're so focused on it.

I think one final point I would make on that is reiterating what I said in the script in addition to all the customers that we have live today running our cloud products, we've got a really important go-live coming up with Gilead, who is one of the largest life sciences companies in the world that's betting their future on digital transformation and better business agility to accommodate their M&A strategy and I think that's going to be one great additional proof point for us we go through this year.

Okay, great. And then one quick question for David.

It looks like professional implementation gross margin will trough pretty quickly and then rebound, can you just give some color in sort of what's going on, I guess, in particularly next quarter?

Absolutely. So I think what I try to highlight is and suggest is that we're just at that point where we wrapped up our on-premise projects in Q1 and so there is a little bit of a lag or a lull as people are moving on to new projects and so you see a little bit less utilization, but as I mean we've managed utilization and cost pretty well over time.

So I think it's, as I suggested it's pretty temporary in nature.

Great. Perfect, thank you.

Yes.

Thanks, Pete.

Hi guys. Congrats on the quarter.

Thank you.

Thank you, Steven.

Can you give us a little color on what's going on in the minds of your sales prospects are there any issues that are driving their interest, are there - which products are they most interested in?

Yes, so great question. So the thing that really drives demand for our products whether it's in life sciences or high tech is a combination of profitability and margin considerations, as well as especially in life sciences this acute focus on regulatory compliance pricing compliance et cetera and so while they're two very different industries there's definitely a big focus in both of them on profitability and compliance.

I would also say that certainly mid-market customers, which is obviously where we see a lot of demand in new logo, most of these are fairly complex business despite the fact that they're mid-market and so they have complex enterprise requirements and view software as one of the key ways to automate their business drive better profitability drive regulatory compliance. Fortunately they're not immune to these things as emerging growth companies.

Thank you.

Thanks. Good afternoon and congrats on a good start to the fiscal year here.

I had two questions. Dave, what would we think about maintenance this year which I recognize is embedded in your subscription line?

Should we still think about that to be flattish to down 5% or so?

I still think about it is as flat as to slightly down. And so I think what I shared in the last call still feels like kind of the right type of outlook and perspective.

Okay. So that hasn't changed there.

And then with respect, Jason, I think you talked about the strength of bookings in the quarter and said they were seen to be weighted I think more to new logos versus expansions. Can you give us a little bit more on that?

Is it 80/20 new to existing 70/30, how should we think about that?

Yes, it's a good question, Gene, and thank you. What I would say about the quarter is I liked the diversity of bookings.

We had a nice diversity between our core industries of life sciences and high tech. We had a nice diversity of emerging growth companies and large enterprise.

One of the other things I mentioned in my prepared remarks is we also saw really nice participation across the board from our reps that serve as those different industries and then yes, I mean very strong new logo acquisition we don't break that out publicly, but I did share that because I think it's a great example of how underpenetrated these markets are and how with focus we can we can drive a material amount of bookings from new logos. So I would leave it at as a material amount in the quarter.

All right. Thank you.

Appreciate it.

Thanks, Gene.