Greetings. Welcome to Alteryx's second quarter 2021 earnings conference call. At this time all participants are on listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Chris Lal, Chief Legal Officer. You may begin. Thank you, operator. Good afternoon, and thank you for joining us today to discuss Alteryx's second quarter 2021. With me on the call today are Mark Anderson, Chief Executive Officer, and Kevin Rubin, Chief Financial Officer. Additionally, Paula Hansen, our Chief Revenue Officer, and Suresh Vittal, our Chief Product Officer, will be joining us for the question- and- answer session after prepared remarks. This afternoon, we issued a press release announcing our results for the second quarter ended June 30, 2021. If you would like a copy of the release, you can access it online on our investor relations website. During this call, we will make forward-looking statements related to our business, including statements about our financial guidance for the third quarter and full year 2021. These statements are not guarantees of future performance. They are subject to a variety of risks and uncertainty, some of which are beyond our control. Our actual results could differ materially from expectations reflected in any forward-looking statement. For a discussion of the material risks and other important factors that could affect our actual results, please refer to our SEC filings available on the SEC's website and our investor relations website, as well as the risks and other important factors discussed in today's earnings release. Additionally, non-GAAP financial measures will be discussed on today's call. A reconciliation of these measures to their most directly comparable GAAP financial measures can be found in today's earnings release. With that, I'd like to turn the call over to our Chief Executive Officer, Mark Anderson. Mark? Thanks, Chris, and thank you all for joining us on the call today. I am incredibly proud of our accomplishments in Q2. We continued to execute our operating plan and finished the quarter with solid results. Annual recurring revenue, or ARR, was $548 million, up 27% year-over-year. Revenue came in ahead of expectations at $120 million, up 25% year-over-year. As I've outlined before, 2021 is a transformation year for Alteryx. We believe we have the right leadership and the right operating framework to put Alteryx on a path to re-accelerate our business. I couldn't be happier with how the team is embracing these changes while demonstrating unparalleled value to our customers as we scale. Optimizing data analytics and leveraging automation across the enterprise are increasingly among the highest business priorities I hear from our community every week. At the end of the day, you can't transform your department and your business without first transforming your people. That's where Alteryx comes in. We upskill knowledge workers. For today's call, I'll give an update on our overall progress against our key imperatives. Kevin will then provide specifics on our Q2 performance, as well as our outlook for both Q3 and full fiscal year 2021. Before moving on, I want to describe what we are seeing in the business that resulted in us maintaining our ARR guidance while lowering revenue guidance for the remainder of the year. The decision was driven by two factors. First, we continue to see the average duration of our contracts pull in as our sales teams primarily focus on ACV. Second, we saw elevated sales attrition persist longer than we anticipated. With that context laid out, we'll go into more detail regarding these dynamics, but I want to re-emphasize that while we did take down revenue guidance, we did not take down our ARR expectations. This is important to highlight, as we believe that ARR shows the underlying health and performance of our business. Please remember, ARR is unaffected by contract duration. In fact, one-year contracts typically have higher ACV than three-year contracts. As a second point, while attrition will have some impact on ARR as well, we are encouraged by the growing productivity improvements, and given recruiting and training efforts, we expect to see improvements in the second half of the year. Finally, we are experiencing an improvement in customer retention rates. It is also important to highlight that one of the reasons we are maintaining our ARR guidance is that we are seeing better ACV on shorter contracts. This dynamic is partially offsetting the impact from continued elevated sales attrition. Moving on to our business updates. During the quarter, we welcomed Paula Hansen as our Chief Revenue Officer. Wow, did she ever hit the ground running. Under her leadership, we are refining the go-to-market strategy to place our best-in-class global sales organization in front of large customers and prospects who need our innovation the most. We are also reimagining the go-to-market development journey that is required to enable all customer-facing resources to meet the growing demands in this fast-changing market. While we still have work to do, as transformations of this scale don't happen overnight, I'm delighted with the progress that we have made. Paula is laser-focused on sales productivity. As I've said, this will be a key indicator of our progress. Looking at the quarter, we saw notable improvements in this important metric. Both longer tenure rep and new hires delivered solid results. I'm particularly impressed at how many new hires have become productive quickly. This gives me confidence that a reorg and enablement improvements will yield the right results. Another key to our operating plan is hiring on time and hiring at scale. We have ambitious hiring plans for the year as we continue to scale Alteryx globally. In Q2, our expanding recruiting team helped us achieve our largest hiring quarter ever. I continue to be humbled by the quality and experience of the people joining the Alteryx team. Despite the strong hiring in Q2, we did see attrition continue throughout the quarter. This will have an impact on our sales capacity for the second half of 2021. Upon reflection, we believe that this higher than expected attrition was due to a combination of two main factors. First, our transformation is driving a higher level of operational discipline, as well as a focus on large enterprise customers, and this approach isn't for everyone. Second, the impact of COVID seems to have delayed some people's decisions to change jobs. We believe it has caused some employees to reevaluate their careers and their location. Throughout the first half of this year, we've been busy working on mitigation plans to offset our near-term lower sales capacity. These include three key pieces. Fast start training, an increased focus on hiring execution, and creating data-driven campaigns to expand with killer use cases at every large prospect and customer. Remember, a large percentage of these attrits did not have the experience selling to senior executives along with Global System Integrators. In my conversations with other tech leaders, it's clear that attrition levels are high everywhere. In addition to our concerted go-to-market focus in Q2, we held our first virtual Inspire conference in May. It was our most successful customer conference to date, with over 20,000 registrants globally. We had over 60 customer voices present, including participation from strategic partners like AWS, Snowflake, and UiPath. It was energizing to bring our incredible community together to share their successes in driving business outcomes and automation. For example, 7-Eleven presented how they're leveraging Alteryx for their critical supply chain management processes with over 9,000 stores and thousands of products. With Alteryx, they were able to standardize, optimize, and automate this complex process that leverages multiple AI models. What was previously a two-day process was reduced to less than one hour with improved accuracy and confidence. UBS presented how they're using Alteryx in a heavily regulated environment. Since becoming a customer over five years ago, they've grown to over 3,000 users and are running up to 6,000 analytics workflows every day to drive business results across the company in important areas like revenue forecasting, financial fraud detection, capital planning, and much more. Phillips 66 is using Alteryx to improve their supply chain efficiency and margins, drive transportations and logistics profitably, and reduce risk through tax automation. They're achieving an incredible ROI. With our innovation, they've generated over $10 million in value, saving almost 40,000 hours of manual work and retiring 500 spreadsheets. During their Inspire presentation, they commented that with 1,500 analytics use cases, data is the new oil for Phillips 66. Inspire also provided us the opportunity to have higher-level conversations with our customers and prospects. On day one, I met with the CDO of a large financial institution in Asia for the very first time. They're just starting to use Alteryx to automate analytics across various teams, including tax, institutional banking, private banking, and risk. Together, we kicked off their citizen data science certification program on a two-hour Zoom meeting with over 600 of their employees. This rollout is a best-in-class example of how to deploy Alteryx within a large institution at scale. Currently, there are hundreds of employees now on the waiting list for the next phase of the program. The trifecta at work here includes executive support, a jointly developed project plan, and strong alignment on execution, all of which will help this customer supercharge their upskilling efforts. In addition to large customers that presented their amazing use cases at Inspire, other G2K customers expanded their Alteryx footprint in Q2 as we focus on the right business outcomes and on customers with the greatest lifetime value potential. This quarter, a leading financial software company in the G2K created an automation center of excellence that leverages technologies such as robotic process automation from our strategic partner, UiPath, and analytics process automation from Alteryx. This organization literally wrote the software for finance automation and now they're tackling key use cases internally via complimentary RPA bots and APA workflows. We are also seeing customers embrace Alteryx for speed and precision in sports analytics. There are well over 20 sports organizations using Alteryx for critical real-time insights, including teams in the NFL, Major League Baseball, auto racing, and global soccer. They're leveraging the Alteryx platform to create a competitive advantage. In Formula 1, McLaren Racing uses Alteryx for real-time analytics automation, as well as modeling in digital manufacturing, race day logistics, fan engagement, and throughout their back office. As you may have seen, we recently announced a marketing partnership with McLaren. With the Alteryx brand prominently displayed on McLaren race cars and team attire, we are excited to further our brand awareness by partnering with this amazing organization. We continue to focus on our partner ecosystem this quarter. As we expand our leadership position within the analytics market, we recognize the leverage available to us through these strategic relationships and believe that a vibrant ecosystem of partners will function as a force multiplier. An example is our recently announced strategic alliance with KPMG. This alliance is positioned to help organizations accelerate data-driven business transformation around tax operations by delivering greater efficiencies in cost and risk management strategies. Today, KPMG professionals and the Alteryx sales team are strategizing on deals and collaborating in the field with customers to drive business outcomes across supply chain, retail, life sciences, insurance, and more. This quarter, Snowflake named Alteryx as an elite partner. The fact that we have progressed to the top tier of their tech partner program in just the last few quarters is impressive. As a result of more comprehensive field collaboration, combined with the elegance of the integration of our solution, we now have well over 500 customers in common and growing. Our innovation engine is firing on all cylinders. Earlier this quarter, we announced enhancements with machine learning, Intelligence Suite, and Designer. We also unveiled Designer Cloud, our first major step forward in our cloud strategy to make access to Designer ubiquitous. It's currently in beta, and we have hundreds of customers participating. The feedback so far has been consistently positive, with customers praising the design, flexibility, interoperability, and new features. As we move closer to GA, we will provide more details around deployment, features, and pricing. By being thoughtful and focusing resources on this beta program, we expect to get important feedback from participants that will help us successfully roll out this important stage of our cloud strategy. In closing, we're making great progress against our 2021 strategic imperatives, and I'm convinced that we have the right plan guiding our business transformation. We're attracting high-quality talent and augmenting our capabilities to support a more enterprise focus go-to-market motion. After Inspire, our community membership soared to over 290,000 users strong. This community is unrivaled in our industry, and their engagement levels are only going to get stronger. Our leadership team has the experience to lead the coordination of these resources while delivering more innovation faster to customers, dramatic reduction of friction in all of our processes, increased sales productivity, and high-quality technical and distribution partnerships. I remain confident in our ability to successfully transform Alteryx to deliver long-term value for our people, customers, partners, and shareholders. The opportunity ahead of us is massive and growing at global scale. I believe Alteryx will be one of the winners in this highly fragmented data analytics and automation landscape. I'm incredibly energized by the opportunity we have in front of us, and I'm confident that as we emerge from the pandemic, customers will see a stronger, faster, and more equipped partner to make their transformations successful. With that, let me turn the call over to Kevin. Kevin? Thank you, Mark. Overall, we delivered a solid performance in the second quarter. We ended Q2 with $548 million in ARR, representing year-over-year growth of 27%, and reported Q2 revenue of $120 million, up 25% year-over-year. Both were ahead of expectations as we continue to see improvements in sales execution as a result of the transformation efforts we walked you through last quarter. Additional highlights for the quarter include we ended Q2 with over 7,400 customers, including 770 or 39% of the Global 2000. Overall net expansion remained at 120% and a stronger 129% within the Global 2000. Additionally, in Q2, we saw improved customer retention rates. We continue to see gross customer retention in the 90s, reinforcing the strategic value we bring to our customers. As a reminder, the customer churn that we do see typically occurs within smaller companies, especially those with a single seat of Designer and up for their first renewal. Before moving on, I want to remind everyone that unless otherwise stated, I will be discussing non-GAAP results. Please refer to our press release for a full reconciliation of GAAP to non-GAAP results. Our Q2 revenue was $120 million, representing 25% year-over-year growth. We continue to see contract duration shorten throughout this quarter. I'll provide more color on this dynamic when I discuss our outlook for the remainder of the year. Our Q2 gross margin was 91%, which was generally in line with Q2 2020. Our Q2 operating expenses were $116 million, compared to $88 million in the same period last year. The increase in our operating expenses is primarily attributable to increases related to headcount and payroll-related expenses. Our Q2 operating loss was $6 million. Net loss was $5 million, or a loss of $0.08 per share based on 67.2 million fully diluted weighted average shares outstanding. Turning now to the GAAP balance sheet and statement of cash flows. In the quarter, we spent $10 million in cash flow from operations. Our liquidity position remains very strong, with just over $1 billion in cash equivalents, short-term, and long-term investments. Before turning to the outlook for Q3 and full year, as Mark just discussed, we are lowering revenue guidance while maintaining our ARR guidance for the year. Let me provide some additional color on why we are lowering revenue guidance, but reiterating our ARR guidance. As we have discussed for several quarters, revenue and ARR are each affected by different dynamics that don't always trend the same. For revenue, we've discussed how sensitive our revenue is to the contract duration. While I indicated earlier this year that we expect to see our average contract duration shorten, this is occurring at a faster pace than anticipated. In a year at this scale, every one-tenth in annual duration could impact revenue by $10 million. This accelerated change in contract duration is in line with one of the early changes Paula and team have made to significantly reduce the discount incentives for customers choosing three-year subscriptions. While we continue to offer these contracts and many customers continue to contract for multiyear, the average is coming down. This is increasingly the preferred buying cadence from our customers, similar to what other software companies experience, where one-year contracts are becoming more typical. As you may recall, our contract duration for 2019 and 2020 was 2.0 years. This year, as a result of the strategic decision to focus on ARR and reduce the financial incentives for customers choosing three-year contracts, we are seeing contract duration trend below 1.5 years. Let me provide an example to illustrate how contract duration has a significant impact on revenue, but not ARR. We have included this in our quarterly investor deck posted on our website today. In my example, let's assume a customer purchased $1 million of software from us and elected a three-year term. As a reminder, we have historically offered meaningful discounts for customers electing three-year contract terms. That would result in $3 million of TCV or bookings for this deal, and we would recognize approximately 40% or $1.2 million of this deal up front and the remaining $1.8 million over three years. In contrast, if this same customer were to elect a one-year contract, the ACV would improve from $1 million in my previous example to approximately $1.3 million as a result of less discount for a single-year contract. Revenue recognized on this one-year deal would be approximately $500,000 up front and $800,000 over the year. There are two key points I want to emphasize. First, the three-year contract results in $700,000 of additional revenue up front due to the longer term and more dollars booked. Second, despite the higher revenue recognized from the three-year deal in the first year, we actually realize less ACV. With the one-year contract, we achieved $1.3 million in ACV, or $300,000 more ACV, which directly benefits ARR. As we continue to strategically focus on ACV, we expect to see benefits in ARR going forward. Throughout Q2, we continued to see elevated sales attrition as a result of the overall market, as well as the changes we are making in the organization to align the business with a go-to-market strategy that is aimed increasingly towards enterprise customers. We are seeing this increased employee attrition during a time when we are investing heavily in capacity and growing, making it more visible to our team and impactful to our business model. We are hiring great talent with the experience that aligns with our current strategy, but some will take time to ramp. We are investing for the future and sales capacity will improve as these newer employees ramp and attrition slows. While we continue to have good visibility and confidence in our ARR outlook, these factors are putting pressure on our revenue forecast as reflected in our revenue guidance. Our guidance assumes the following. First, we continue to expect a modest and gradual improvement in the macro environment for the remainder of the year. Second, we assume the average duration of our subscription agreements will continue to shorten. Third, we assume that approximately 40% of TCV booked in the quarter will be recognized up front, with the remainder recognized ratably over the time of the contract. I'd like to remind you that our guidance is subject to various important risks and cautionary factors referenced in our call today and in today's earnings release. For Q3 2021, we expect to end the quarter with ARR in the range of $572 million-$575 million, which represents year-over-year growth of 27%-28%. We expect GAAP revenue in the range of $121 million-$124 million, which represents a year-over-year decrease of 4%-7%. We expect non-GAAP operating loss to be in the range of $17 million-$14 million and non-GAAP loss per share of $0.21-$0.18. This assumes 67.5 million weighted average shares outstanding. For the full year 2021, we now expect GAAP revenue in the range of $520 million-$530 million, which translates into year-over-year growth of 5%-7%. We are maintaining our full year ARR guidance and expect to exit 2021 with approximately $635 million of ARR or approximately 29% year-over-year growth. We expect our non-GAAP operating loss to be in the range of $15 million-$5 million. Our non-GAAP net loss per share is expected to range from $0.26-$0.12. Our non-GAAP net loss per share assumes 68 million basic shares outstanding. Finally, we expect an effective tax rate of 20%. In summary, the transformation journey we began at the beginning of the year is showing positive results, and we believe that the operational plan we are executing to will allow us to achieve $635 million in ARR or 29% growth for the year. We have a great team, strong product market fit, significant market opportunity, a powerful business model, and a strong financial position with over $1 billion of cash on the balance sheet. With that, we'll open up the call to questions. Operator? At this time we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the cue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question is from Michael Turits with KeyBanc. Please proceed with your question. Hey, guys. This is Eric Heath on for Michael. Congrats on the strong quarter of ARR. Just wanted to ask on duration, you noted it's shortening given the change in sales comp, but just wanted to ask if it was purely due to the sales comp change or if you're potentially seeing any impact in customer commitment levels just as they await the rollout of Designer Cloud. Hey, Michael, that's-- Mark here. Thanks for the question. Yeah, really on the customer front, what we're hearing is, first of all, real joy that we're innovating in a manner that's consistent with the kind of feedback that we've been getting from them in the last year or two. Really nothing else different other than that. I think we're continuing to work strongly with our partners, both on the tech side and the distribution side. Yeah, feel really good about where we're going. Yeah. Maybe just let me add, I think what we're seeing is, as we got through the year, I think customers are increasingly adopting an annual cadence to how they're buying subscription software. I think that's certainly what we've experienced. I wouldn't attribute any of this to any other factor. Got it. That's helpful. I just wanted to touch on kind of the G2K side. It's an increased focus for you guys this year, but looks like it might have dipped a little bit from last quarter. Could you just walk us through maybe why that was and if it was purely related to sales attrition? We maintained 39% of the Global 2000 for the quarter. The list of Global 2000 does get updated on about an annual basis. We did go through a refresh of that, which resulted in a handful of lesser accounts. I want to emphasize, we have 39% of the Global 2000, and they represent net expansion rates of 129%. There's a massive opportunity of expansion within that customer segment. Got it. Thank you. Thanks, Michael. Thank you. Our next question is from Brent Bracelin with Piper Sandler. Please proceed with your question. Thank you, and good afternoon. That's encouraging to see the $35 million sequential build in ARR and stabilization in ARR growth to 27%. I guess my first question is actually for Paula, if I could. I know it's only been four months for you here, but I would just love to hear, one, what attracted you to join Alteryx after 20 years in sales roles at Cisco and SAP? And two, what are your early observations on the go-to-market strategy and some of the refinements that you're making? Thank you, Brent, for the question. I have been listening quite a bit since my time joining here, listening to customers, to partners, to our team, and to our loyal community at a global level. Before I joined, I was really attracted to the fact that customers like the ease of use of our platform and the business impact that it delivers. Since joining, I've been incredibly inspired to find out just how much they really do love us. In those conversations, I've seen a couple of emerging themes, that I think are really indicative of the opportunity that we have ahead of us. The first is relative to the automation appetite in departments like finance and supply chain. A number of other departments like sales and marketing and engineering have enjoyed modern tools and AI and upskilling for a number of years. I think the automation opportunity in finance and supply chain in particular is at the forefront right now, which is really positive. Secondly, we see close to half of our customers right now appointing Chief Data Officers whose remit is to marry the business strategy with the underpinning data and analytics strategy. I think both of these are really great validations of the Alteryx opportunity. I'm thrilled to be here. I know with the go-to-market strategy that we launched at the beginning of the year, that we have a great opportunity ahead, and I'm very confident in our ability to seize that large opportunity. Yeah, Brent, if I can just add to that. I've onboarded a lot of execs in my career over the last 20 years, and I can tell you, I've never received the kind of internal response from our associates around the world just on the interaction that they've had with Paula. It's been amazing. Great to hear and look forward to hearing more from you in the future, Paula. I guess just one quick follow-up for Kevin, relative to kind of these discounts. When did you change kind of the discounts being offered on three-year contracts? Was that in kind of January or more recently in April at the beginning of this quarter? Was there also a change to sales commissions paid on one-year versus three-year contracts? Yeah. Thanks, Brent. Appreciate the question. The changes specific to discounting and one versus three, was made more recently. We're certainly expecting that to play a factor as we look forward into H2. The question around comp alignment just in general, we have orientated the company, including the sales organization on ARR, and in particular ACV. I'm not surprised to see that manifest itself in contract duration as well. I think the point that we were just emphasizing is, we are seeing it come down a bit faster than we had anticipated, but it's coming with the positive result that we're seeing better ACV as a result. Got it. That's all I had. Thank you. Sure. Thanks, Brent. Hello, operator, can you hear us? Hello? Yes. Hi, operator, can you hear us? I apologize. Just going through some technical difficulties on my end. Our next question will be from Jack Andrews with Needham. You may proceed with your question, and also as a reminder, we do ask everyone to please limit themselves to only one question. Good afternoon, and thanks for taking my question. I was wondering if you could speak to, given the early beta feedback in terms of your cloud product, could you speak to any changes in your sales playbooks that you think you might need to implement with the looming launch of this product? Hey, Jack. I'll kick it off, and I'll hand it over to Paula and perhaps Suresh. listen, I think we've approached this beta process really with the intent of listening deeply to customers in terms of how they want to consume what we think is incremental innovation, and what personas we want to sell to and how we're going to charge for it. Really excited about how the beta's going, and I don't see a big difference in our sales playbook per se, because listen, I think over time you're going to see more and more innovation being cranked out from Suresh's R&D organization that's going to allow us to deliver much more customer value to our customers, with partners and with our customers. It's really not that big of a change in the playbook, but Paula, you might have some context. Yes, our conversations with customers around our cloud solution is that they see it as an opportunity to expand the accessibility to the innovation that we offer and really build upon the success that we're having with them and the investments that they've already made in the on-prem solutions. We're really encouraged by the opportunity ahead with cloud and envision that many of our customers will operate in a hybrid environment for years to come. Appreciate that. If I could just ask a quick follow-up question to Kevin. You mentioned your guidance assumes that duration will continue to shorten. Did you mean that that should shorten below the 1.5 that it currently is? Yeah, my comment, thanks, Jack, during my prepared remarks is that we are seeing contract duration dip below the 1.5. It's reasonable to assume that that could happen as we go in the back half of the year. Thanks very much. Thanks, Jack. Our next question is from Tyler Radke with Citi. Please proceed with your question. Hey, Mark. Question for you. I think one of the things you talked about when you joined the company as CEO was just around removing friction and making it easier to do business with Alteryx. I know there's been a lot of changes on the go-to-market side, but where do you think you are in that process? Do you feel like you've been able to unlock some deals that were held up, and how are you thinking about that for the back half of the year? Tyler, thanks a lot for the question. For sure. I think friction is our enemy in technology these days. I think more and more customers are doing much of the research and even beginning sales cycles without interacting with a human being. I think that was one of my big drivers in bringing Suresh Vittal on board to run product management and engineering for us, because his experience at Adobe, having walked a mile in these shoes, it was unrivaled, frankly. What we've seen as proof points so far, Tyler, are, check out our website, a significant improvement over where we were late last year. Also, our time to download of our trial version has come down substantially. I think also as I think about the close to 300,000 Zealots that are members of our community, take a look at the community site, and you've seen how we've re-skinned that just in the last few months. Much more interactive, much better quality, I'd say, time. We're seeing the attention span and the growth of our community expand as a result of that. Great. Just to follow up on the sales attrition here. Do you feel like we've kind of worked through the majority of it? I know you said you've seen it kind of continue here into Q3, but how much more, I guess, downside is there? Just from an overall productive sales capacity level, are we kind of at a level that was lower than entering Q2? Maybe is it comparable to a quarter that you saw 12, 16 months ago? Just any color on kind of where the ramped productive capacity is relative to prior quarters? Thanks. Yeah, you bet, Tyler. Thanks for that question as well. Listen, I think, our sales team prior to last year or prior to this year, was focused on a different set of imperatives. The transformation that we're doing in go-to-market is really aligning the right resources to focus on mostly larger customers, G2000 and above type customers. We've augmented those resources with a significant doubling down of our customer success organization so that we can really earn the right for permission to do more, earn the permission to do more, and expand. I think we were surprised, frankly, with the sustaining of attrition through June and July. That said, it's been a six-month process in terms of the levers that we're pulling to work on mitigation here, and I think we mentioned those in the script. Most importantly, we've brought on a tremendous resource to focus on enablement to make sure we're teaching the right lessons to the right people in the right roles. Really focus on refining our overall marketing messaging and branding, so that we're not the best-kept secret in analytics any longer. We're really proud about the innovation that we've built, the pioneering that we've done in this space, and most importantly, what we're going to do for customers in the future. Our next question is from Koji Ikeda with Bank of America. Please proceed with your question. Hey, Mark. Hey, Kevin. This is Koji. Thanks for taking my questions here. Just another question here on contract durations and the total guidance revision here for the full year. Thank you, Kevin, for all that explanation. I think I understand the puts and takes there with the contract durations and how it's affecting revenue. I guess maybe it could help a little bit more if you could talk about taking the midpoint of the guide here. It looks about a $45 million total revenue guidance cut. Maybe if you could just kind of bifurcate that and talk about how much of that is being affected by contract durations and then from the elevated sales attrition. Yeah, thanks for the question. I appreciate it. In my prepared remarks, I tried to provide some quantification of how contract duration and its movement impacts revenue. You should kind of rule of thumb at this scale, and a movement of 0.1 of contract duration has about a $10 million effect on revenue. If you look at that relative to the commentary going from 2.0 to potentially sub 1.5, we're seeing a meaningful impact on the forward guidance relative to duration. A secondary factor certainly is attrition that we've talked about. However, we are certainly encouraged by the second quarter of productivity improvements that we've seen. I would point you to contract duration as being the primary driver. Got it. Super helpful there. Just one follow-up, if I may. Just thinking about contract duration and how it's affecting revenue. How does that affect the way we should be thinking about 2022? Maybe the better question is, how long should we expect contract durations to affect revenue growth? With Designer Cloud coming into the story pretty quickly here, how do we think about contract durations with the Designer Cloud product? Thank you for taking my questions. Yeah, thanks. I would say this. As I kind of said in one of the earlier responses, I think it is becoming more typical of larger enterprises to get into this buying cadence of once a year. I would suggest that we're going to start to see a new normal with slightly shorter contract duration. As I said in my prepared remarks, we're certainly going to see customers continue to elect multi-year, and we'll continue to offer those for those customers. On the whole, I think the sales motion is going to focus on capturing and maximizing the value that we're offering to customers and the ROI that they're achieving. I would think that we're going to start to see a new normal as we get into the end of this year relative to duration, but we'll continue to update you over time as we see changes. Got it. Thank you for taking my questions. Appreciate it. Yeah, thanks a lot, Koji. Our next question is from Derrick Wood with Cowen and Company. Please proceed with your question. Oh, great. Thanks. I guess, maybe to Kevin on the sales attrition. It sounds like new hiring has been strong, and I'm just curious if you've been able to kind of more than offset the attrition. Maybe, you can just give us a sense for how much sales capacity is up year to date, or where you'd like to be by the end of the year? Thanks, Derrick. I appreciate the question. As Mark mentioned in his prepared remarks, we had the strongest hiring quarter ever this last Q2. That's super encouraging when we think about how we are going through a transformation. We are hiring as we're investing heavily for growth. Attrition is slightly more pronounced when you're going through these growth and investment cycles than it would be if you're just trying to maintain headcount. I think that's an important context as we think about setting up certainly for next year. We are continuing to hire at a very rapid pace. As Mark mentioned, we've doubled the size of the recruiting team. We're continuing to double down on how we enable and send our reps out into the field and instilling really a culture of transparency, feedback, and coaching, which we think is resonating across the organization. There's a lot of aspects to attrition and hiring that we're focused on, and we hope that, as we go through Q3, we're going to see a continued strong hiring. Yeah. Derrick, if I could just add some context there. I think we're also hiring extremely high-quality salespeople who want to come here and build a career at Alteryx in a really important space that has long-term viability. This isn't my first rodeo in terms of building out go-to-market teams that are focused on expanding TAM and prosecuting it. The productivity of many of the new hires that we've hired have jumped in and gotten very productive very quickly. I'm thinking of one young fella in Detroit that is doing an amazing job for us from day one. There's many out there like him, believe me. We're very much focused on sales capacity and what that means for the overall business. We're working hard to get better at predicting things. Yeah. On that, Mark, you mentioned in the press release that you've seen significant momentum in your go-to-market strategy, and I'm just curious if you could unpack that a little bit more between the direct and the indirect side. On the direct side, do you hope that you'll start to see lower sales cycles, better close rates? Are you starting to see that with the productive reps? If you could just unpack a little bit more, that'd be great. Yeah, you bet. Remember, I think we weren't naturally a partner-led organization last year. I think the pressure that we've got from large tier 1 GSIs like Accenture, what we announced this quarter, KPMG, as well as the relationship with HCL and PwC. We're teaching our people how to work with these partners and drive these big transformation projects. I think the productivity is going to be a function of elevating the enablement across the board of the team and really getting the leverage from these partners in these bigger deals. Great. Thank you. Yep. Thanks, Derrick. Our next question is from Kamil Mielczarek with William Blair. Please proceed with your question. Hi. Thanks for taking my question. In your full year guidance, you're baking in strong year-over-year growth and net new ARR in the fourth quarter. Can you talk about your level of visibility to the back half of the year relative to prior years, and how much of this growth is currently in contract, and how much is dependent on factors like improving macro or improving sales productivity? Yeah. Thank you for the question. As I mentioned, we are expecting and continuing to see continued improvement in the macro, which is encouraging. We've seen continued improvement in productivity that is a direct result of the changes we made in the go-to market and how Paula is now driving that team. All of that, combined with what we see from a pipeline perspective, is certainly informing our view. I would remind you that seasonally, Q4 is our strongest quarter of the year. We have the largest concentration of renewals in Q4, which is a great opportunity and a strong opportunity for us to expand with accounts. It is pretty seasonally consistent with what we've seen in prior years, so I don't see anything that's out of trend. Okay. That's good to hear and nice to see the improving retention rates. If I could just quickly follow up, can you give us an update on the competitive environment? Have you seen any changes in win rates or changes in who you're seeing on deals? Yeah, Kamil. There's no story there, really. I think the competitive landscape, there's a lot of companies out there, 400+ companies in this space, I think more coming on and getting funded every month. We're pretty pleased with where we sit in the competitive stack with such an avid followership with our community, as well as the volume of customers that we have. We're really focused on making the very most of that, for their benefit, by the way, because I keep hearing from customers they want fewer vendors, less complexity, more automation. That's what we're focused on innovating and building. Mark, if I can add, our customers are solving a broad array of problems in the analytics landscape. They're working against cloud data warehouses. They're investing in AI and ML. They're doing lots of work around data management. We have a bird's-eye view of all the use cases our customers want to solve, and we're excited about the opportunity. That's great to hear. Thanks again. Thank you. Yep. Thanks, Kamil. Our next question is from Calvin Patel with Morgan Stanley. Please proceed with your question. Hi, all. This is Calvin on for Sanjit. Thanks again for taking my question. I just have one for you guys. With durations coming down, I was wondering, how confident are you in the gross retention rates maintaining such high levels next year, given that the renewal cycles will shorten a bit? Are the new use cases that you're seeing similarly sticky to prior years? Are you expecting maybe some edge cases where renewal rates or churn could increase? Yeah, it's a great question. I'll start and others can jump in. We've enjoyed very strong both net retention and gross retention for quite some time. I think the question you're asking around stickiness is important. When you think about a customer environment deploying hundreds or thousands of workflows, automating through server, we become the analytic fabric of that organization. The ability for those customers to find competitive replacements is incredibly difficult. I think if you look at how strategically important we are for these customers that have taken advantage specifically around automation, and operationalizing analytics, I don't have a concern that we're going to see a dislocation as a result of duration pulling in. I would add to that, if maybe in previous years you were looking for the one or two use cases to validate our value proposition, it's really flipped with customers' conversations where, especially with putting chief data officers in place, it's about how do we see hundreds of use cases across our organization. It's really about how we drive access to analytics and bring in the full wherewithal of the employee base into that culture of analytics. Customers are seeing a multitude of use cases. Awesome. Thank you very much. Thanks, Calvin. Our next question is from Mark Murphy with JP Morgan. Please proceed with your question. Oh, hey guys, this is Pinjalim sitting in for Mark. One question for consideration, the Cloud Designer. I was thinking back, and I think I remember Alteryx's secret sauce, as I think about it, as the engine that kind of rapidly ingest and analyze huge swath of data within a very small memory framework. With that context, when you have the Cloud Designer, what are you seeing with respect to performance? Is there any telemetry that you're getting with the Cloud Designer performance versus the Desktop product? The second question for Kevin, if I understand the math correctly, I think you're saying that because of less discounting, ACV is about 30% higher. If you think about the annual ARR, what kind of a benefit do you think that particular dynamic will result in terms of the growth rate this year? Maybe I'll take the product question first, and then Kevin can take the growth question. On the performance of Cloud Designer versus Desktop Cloud, we're actually getting really strong feedback on the ability of the engines to scale. Naturally, cloud gives us that additional flexibility of bringing, standing up compute when we need it for those workflows. We're getting lots of strong feedback on the interactivity of the browser-based interface, on some of the innovation we've added into the core product that allows our users to kind of map the workload before it happens. Lots of great opportunity to innovate in cloud, which is primarily why we wanted to go there and really take advantage of all the capabilities cloud gives us. Really strong feedback on the product. Really strong feedback on the performance. Really, I'm bullish about Alteryx Designer Cloud as being built for these cloud-scale workloads. That's what we're going after, and the product's kind of fulfilling that need right now. Yeah, let me answer, I guess, the ACV ARR question. It's hard to quantify specifically what the impact of the three-year to one-year is other than to say our ARR guide for the year implies 29% year-over-year growth, which is an acceleration from what we've seen in the first half. It certainly is a catalyst in helping our growth rate as we get into the back half of the year. It also is just, I think, a function of better aligning the cost of Alteryx and the value that customers receive. Understood. Thank you. Thanks, Pinjalim. Thanks, Pinjalim. Again, as a quick reminder, if you have any questions, you may press star one to join the queue. Our next question is from Steve Koenig with SMBC. Please proceed with your question. Hi there. Thank you. It's SMBC. Hi, Alteryx. I appreciate the chance to ask a question. If I could just proceed with the clarification, Kevin, when you quantified that impact from the decline in duration, is that a $10 million forward 12-month impact? I'll just put my question out there as well, which is also about the math. I know you don't guide to cash flow, but how should we think about the cash flow impact of the declining duration? Are most of the multi-year contracts paid up front so the cash flow impact should be proportional to the revenue impact? That's all I have. Thanks very much. Yeah, thanks, Steve. Let me go ahead and wrap up these two. With respect to the duration, the one-tenth and $10 million was for the annual period of this year. Obviously, depending on size and scale and the uniqueness of a particular quarter, it could be a little bit different, but I wanted to quantify for what we're seeing this year, so that's for 2021. Finally, with respect to cash flow, as a reminder, our multi-year contracts are generally paid one year in advance, similar to an annual subscription. The pull-in of duration should not have any impact on cash flow. Thank you. Great. Thanks a lot, Kevin. Thanks for the call. We have reached the end of the question and answer session. I'll now turn the call over to Mark Anderson for closing remarks. Thank you, operator. Thank you all very much again for joining us on the call today. I'm very confident in our team, our partners, and the massive opportunity that we have ahead of us. I'm looking forward to seeing some of you on the upcoming conferences in which we'll participate, and I look forward to speaking to you all again next quarter. Take care. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.