Good afternoon, ladies and gentlemen, and Welcome to The Coupa Software First Quarter Fiscal Year 2022 Earnings Conference Call. Our host for today's call is Steven Horwitz. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. I would now like to turn the call over to your host. Mr. Horwitz, you may begin, sir. Thank you. Good afternoon, and Welcome to Coupa Software's First Quarter Conference Call. Joining me today are Rob Bernshteyn, Coupa CEO, and Tony Tiscornia, CFO. Our remarks today include forward-looking statements about guidance and future results of operations, strategies, market size, products, competitive position, and potential growth opportunities. Our actual results may be materially different. Forward-looking statements involve risks and uncertainties and assumptions that are described in our most recently filed 10-K. These forward-looking statements are based on our beliefs and assumptions today, and we disclaim any obligation to update any forward-looking statements. If this call is replayed after today, the information presented may not contain current or accurate information. We also present both GAAP and non-GAAP financial measures. A reconciliation of certain of these measures is included in today's earnings release, which you can find on our investor relations website. A replay of this call will also be available. Unless otherwise stated, growth comparisons are against the same period of the prior year. With that, I will now turn the call over to Rob. Thanks, Steven. Welcome, everyone, and thank you, everyone, for joining us. I'm excited to share our first quarter business results with you today from our New York offices. It's been amazing getting back in front of customers to collaborate in face-to-face real-time sessions to help them fully understand what we're doing here at Coupa. We're giving them visibility, control, and agility over their business spending, helping them build foundational resilience in their back-office operations for the long term, and empowering them to make strategic, data-driven decisions that yield positive outcomes for their businesses. As we look at our results, let me start by sharing a few financial highlights from the first quarter, this being our 53rd quarter of execution. In Q1, we delivered $196 million of total revenue, including $178 million of Subscription revenue. Calculated billings for the quarter were $188 million. We once again reported strong free cash flow margins coming in at 23% for both the quarter and the trailing 12 months. We're able to deliver strong free cash flows while simultaneously continuing to make thoughtful investments into our business to capitalize on our growth opportunity. Our approach remains dynamic and agile in the context of consistently changing times which we have navigated over the last 13 years of operational execution. We continue to drive meaningful top-line growth while maintaining best-in-class unit economics and sales efficiency, and strong free cash flow metrics as well. As businesses plan for tougher economic times, we believe our model of growth with profitability makes us especially resilient over the long term. Speaking of resiliency, we were overwhelmed with incredible positive energy from the 1000s of our customers and prospects that we connected with live at our Inspire events in Las Vegas and Berlin this quarter. The resiliency they showed with respect to their businesses, leveraging our platform, was nothing short of humbling and inspiring for all of us at Coupa. As well, they are preparing to use our platform to help their businesses navigate the potential uncertainties ahead. Now, as we are all acutely aware, the global business environment is currently highly volatile. We have seen some early signs of potential softening in Europe, especially as the war in Ukraine and inflationary pressures appear to be weighing more on business leaders than they were before. Yet, in this context, we remain agile and pragmatic in how we run our business and make investments. With that backdrop and a strong pulse on our business, we feel confident raising our Subscription revenue guidance for both the second quarter and the full year. Now more than ever, it's undeniable that business leaders recognize the importance of optimizing their business spend. Coupa is empowering companies to build the transformational business architecture they need to forge on into this uncertain future. Through our industry-leading BSM platform, built on our vision areas of being comprehensive, open, user-centric, prescriptive, and accelerated, we are providing our customers with one source of truth to run their businesses. As we look to the coming years, we believe that we're on our way to becoming the de facto business management platform for CPOs, CFOs, and with the support of forward-thinking CIOs. Now, our path to winning the BSM market and unlocking vast amounts of real measurable value for our customers is paved by our Three-Wave Strategy. First, capturing all spend. Secondly, optimizing every dollar spent. Finally, amplifying community value. For the first wave, capturing all spend. Let me share a couple of customer stories that demonstrate how our platform increases operational efficiency by digitizing processes. The first story is that of CBRE, the world's largest commercial real estate services and investment firm. CBRE uses Coupa in 49 countries around the world, including in Japan, where the digital payments processes for more than 700 supply partners were streamlined. They were quickly able to mitigate 80% of the region's spend from manual processes to digital e-invoicing. Not only did they reduce cycle times by more than 50%, they were also able to improve payment fulfillment in Japan by 85%, positively impacting cash flow. I'm appreciative of the comment they shared with us, which was, "Coupa has made material improvements in CBRE's cross-functional collaboration internally and with their business partners. The platform is critical to our ability to execute our business spend management strategy." Another example of transforming business spend from manual to digital is that of Rivian, an electric vehicle automaker. They're a testament to how businesses scale on our platform. By leveraging Coupa's ability to improve processes and drive automation, Rivian has maintained the same procurement operations team size while its overall employee base has grown 20x in the last 18 months. They have gone from a completely manual approach, having 93% of their purchase orders and 90% of their invoices processed electronically. With Coupa, Rivian has gained visibility into and control over their spend and has benefited greatly from the scalability of our platform. As many of you know, a key component of our first wave is Coupa Pay. Our attach rate on new customer deals in Q1 was again meaningfully above 30%, with mid-market attach rates being well over 50%. Also, we surpassed $10 billion of cumulative total payment volume in Q1 and are now processing payment transactions at a run rate of more than $1 billion per month. Now let's move on to the second wave of our strategy, optimizing every dollar spent through suite synergy. The first example I'll share with you is that of Ally Financial, a financial services and insurance company that is experiencing firsthand the benefits of end-to-end business spend management. Ally greatly simplified its IT landscape by replacing several systems with one integrated Coupa platform. They are using source to pay, contingent workforce, third-party risk, supplier diversity, and T&E. By taking a comprehensive approach, Ally is able to work more strategically and collaboratively across the organization, delivering strong ROI and maintaining the agility to make changes when necessary. Another example is Microsoft, who is a Coupa supply chain design and planning customer. Microsoft joined us at our Inspire conference a couple of months ago to discuss the importance of using data to manage their supply chain. With such a wide range of products for multiple types of customers that get delivered through so many different distribution channels, they clearly have an extremely complex supply chain to manage. Microsoft emphasized that with massive amounts of data coming in every day, digitization is incredibly important to them. The data helps drive the organization to make the correct decisions today, while also considering the necessary planning as far out as three to five years. Each business decision can't just be correct for one part of Microsoft. Collectively, all the decisions need to work in concert with each other. Using Coupa's supply chain design and planning solution, Microsoft is achieving its goals of maximizing the cost benefit equation, minimizing lead times, and working towards being carbon neutral by 2030, all with data as the driving force. Now, it's also data along with community collaboration that makes up the key components of our third wave, amplifying community value. With our cumulative spend under management reaching nearly $3.6 trillion this quarter, our customers are tapping into real-time spend data and prescriptions to better identify ways to reduce risk, increase efficiency, and be more profitable. While the best is yet to come, we continue to unlock value for our customers through Community.ai, and we see an increase in utilization of prescriptions by our customers. Nearly 70% of customers that are live on the platform have used community insights or community connections multiple times per month on average. A common example of one of these prescriptions might be contextually informing the customer that they should move specific unstructured spend to on-contract spend. By linking negotiated contracts, the customer can ensure better pricing and compliance to the company's preferred suppliers. As I mentioned, collaboration is also key to our third wave. Our App Marketplace is a collaborative environment where customers can connect their enterprise systems to Coupa to further break down silos. We offer enterprise apps that are used for connecting to systems both inside and outside of business spend management. We now have nearly a dozen apps that are pre-built and certified. These applications are easy to use and are essentially instantly accessible for our entire growing customer community. Coupa's certification comes from our engineers with a specific focus on reliability, performance, and security. A great example of one of these pre-built apps is a key solution from Interos. Customers using the Interos app can access supplier risk at the time of sourcing. It provides ongoing monitoring of third-party data and instant visibility into supplier risk scores across cyber, ESG, financial, geopolitical, and operations. This is just one example of the value our customers can extract from our platform and how it's expanding through our growing app marketplace. As we continue our pursuit of winning the BSM market, our thought leadership and innovation play an increasing role in the mind activation of our community, especially through ESG. Our customers are establishing key ESG goals that they want to achieve but aren't necessarily sure how to accomplish. To help these customers, we have introduced more than 80 different capabilities in our sustainable BSM toolkit to impact ESG. One example of functionality we deliver to our customers is providing minority-owned and sustainability data on their suppliers, as well as the suppliers of their suppliers. We provide that data at the time a transaction takes place to help our customers make better decisions that will help them achieve their ESG goals. Now, speaking of ESG, we are making an impact on each area. For environmental, we recently introduced price benchmarks for Ocean Freight and Scope 3 carbon emissions tracking. We've also launched a partnership with a Climate Software Platform to help measure and reduce carbon footprint. On the social front, we recently shared our own diversity, equity, and inclusion statistics via blog by our Chief People Officer, Ray Martinelli, and have reinforced our commitment to continued improvement in our own hiring processes. While we are early in the process, in 2021, we increased our global female representation and our underrepresented minorities in our colleague base. We are already doing more in 2022, as we believe that by increasing diversity, we become more creative, empathetic, and productive. Along the lines of governance, we joined the Chief Executives for Corporate Purpose, an organization that advises companies on how to further their corporate purpose strategies and shares actionable insights with its CEO-led coalition to address stakeholder needs. Now, speaking of making an impact, let me share with you Coupa's MVP award winners for Q1, who best exemplify our core values as voted by colleagues. I'll begin with Kate McIntyre, who exemplifies our first core value of ensuring customer success. Kate consistently finds solutions to challenging issues. She quickly earns the trust and respect of our customers. She helps get situations addressed expediently and positively. Kate always puts the customer's success first. Next, Rahul Mehta was recognized for epitomizing our second core value, focusing on results. Rahul makes sure we aren't just delivering functionality, but rather using the feedback of all members of the community to deliver a solution that is highly impactful and adoptable from day one. Regardless of how complex a problem is, Rahul is there to successfully drive towards an elegant solution with a strong bias for action. Finally, Julie Percheson-Restrepo was recognized for our third core value, striving for excellence. Julie played a key role in our journey together. She had and has an amazing focus and attention to detail that enables us to maximize the likelihood of success on each project. Our customers commended her on her tireless work ethic, which resulted in clear value delivery. My congratulations go out to Kate, Rahul, and Julie. As we recognize our colleagues for their contributions, we're also humbled to be recognized for the values and service we're delivering to the market as a company. Forrester recently published its first-ever comprehensive analysis of the business spend management market in their Supplier Value Management Wave analysis. We are proud to have achieved the highest scores in the industry in strategy and technology. This recognition is also a result of the deep relationship we have with our community of customers and partners. As I mentioned earlier, we couldn't have been more thrilled to reunite with these groups at our Inspire event in Las Vegas a couple of months ago, and again, more recently in Europe. We welcomed 1000s of attendees who continue to embrace being united by the power of spend and who appreciate the value of being part of a global community of forward-thinking leaders from supply chain, procurement, finance, treasury, and IT. There was incredible excitement and energy at both events, with customers sharing their transformation success stories and learning from each other. We're thankful to the dozens of customers who shared their stories at our events. They include ADM, AstraZeneca, BMW, DHL, General Mills, General Motors, Jabil, Lowe's, Mastercard, Maersk, Microsoft, Staples, Unilever, UPS, Walmart, and so many more. Now, before I turn it over to Tony, let me restate the obvious, that the global market environment remains uncertain, yet we are well-positioned to navigate and thrive. We continue to deliver solid top-line growth. Best-in-class unit economics and strong free cash flows. Keep in mind that we built the foundation for this business during the heart of the financial crisis over a decade ago, and the discipline forged during those years is in our DNA. We are the leader in business management, which has a huge total addressable market. We couldn't be more excited about our journey towards becoming one of the world's best enterprise cloud software companies by delivering unprecedented value to our customers. With that, let me now hand the call over to our CFO, Tony Tiscornia. Tony. Thanks, Rob, and good afternoon, everyone. As Rob highlighted, we delivered strong top-line growth, margins, and cash flows for Q1. Let's dive right into the numbers. Total revenue for the quarter was $196 million, including Subscription revenue of $178 million, up 27% year-over-year. Total calculated billings for Q1 was $188 million, up 26% year-over-year. Subscription calculated billings for Q1 was $170 million, up 37% year-over-year. In Q1, we benefited from some renewals that closed earlier than we anticipated, contributing approximately $10 million to calculated billings. If you make this adjustment, our reported Subscription billings growth would have been 29%. Also in Q1, due to the strength of the U.S. dollar, particularly against the euro, both Subscription and total calculated billings were impacted by approximately 200 basis points on a constant currency basis. Non-GAAP gross margin for the quarter was 74%. Non-GAAP operating income was $14 million or 7% of total revenue. Non-GAAP net income was $5.5 million or $0.08 per share on approximately 86 million diluted shares. Q1 operating cash flows were $50 million. Q1 adjusted free cash flows were $46 million or 23% of total revenue. For the trailing 12-month period, adjusted free cash flows were $171 million or 23% of total revenue. As we head into Q2, we continue to make thoughtful investments into our business to drive growth. However, along with growth and on the backs of best-in-class unit economics, we also prioritize sales and marketing efficiency and free cash flow margins as key pillars of our financial performance. Over the past five years, we've delivered adjusted free cash flow margins that have scaled from 8%- 23%. While we are focused on growth, we will continue to make investments thoughtfully as we continue on our path towards our long-term target of 30%-35% adjusted free cash flow margin. Cash at quarter end was $786 million, an increase of $57 million from last quarter. Our Rule of 40 for Q1 was 41% as we continue to demonstrate our ability to deliver meaningful growth with strong cash flows and margins. As a reminder, we define Rule of 40 as the total revenue growth rate plus the adjusted free cash flow margin for the period. Here are a few other key data points for Q1. This quarter, we reported $18 million of Professional Services and other revenue. In Q1 of last year, we reported $27 million. As we've highlighted in the past, the decrease is due to our planned migration of supply chain implementation work to Coupa partners and conversion of legacy term license contracts to Subscription. In Q1 of this year, we had $3.6 million in supply chain Professional Services and license revenue. That's compared to $8.6 million in Q1 of last year. The impact of this decrease in year-over-year Professional Services revenue from supply chain was approximately 400 basis points on our total revenue growth rate. As I'll discuss in a few moments, we will be providing additional details on Subscription billings, which is more reflective of the underlying health of our business. Also in Q1, our gross renewal rate was in our consistent historical range of 94%-96%. Dollar-based expansion was in the 110%-112% range. The number of customers with annualized Subscription revenue greater than $100,000 was 1,441 at the end of the quarter, up 27% from a year ago. We ended the quarter with $1.3 billion in total RPO, a 35% year-over-year increase. With that, let's now turn to guidance. Before sharing guidance, as Rob noted, toward the end of Q1, we began seeing signs of some potential softening in the European demand environment, driven by the Russia-Ukraine conflict, pressure on European currencies, and inflation. Though we have not yet seen a meaningful impact on our business, we have factored this uncertainty into our guidance. For Q2, we expect Subscription revenue of between $185 million and $188 million, and P rofessional Services and other revenue of approximately $17 million, yielding total revenue of between $202 million and $205 million. With respect to calculated billings, given the impact of the year-over-year decline in Professional Services and license revenue, we are also providing guidance on Subscription calculated billings, which is more reflective of the health and heart of our business. Also factored into our guidance is the assumption that FX rates will remain similar to today's rates, which would result in a 100-300 basis point impact to our Subscription revenue and billings results for Q2 and for the rest of the year. Given the timing of the $10 million in earlier than anticipated renewals in Q1 that will not benefit Q2, let me normalize our Subscription billings guidance by first sharing guidance for the first half of fiscal 2023. For the first half of fiscal 2023, we expect year-over-year Subscription calculated billings growth of approximately 25% on an as-reported basis and between 26%-28% on a constant currency basis. Since we haven't shared this data in the past, I'll now share our historical Subscription billings figures going back to the beginning of last year. For fiscal 2022, Subscription billings were $124 million for Q1, $173 million for Q2, $172 million for Q3, and $298 million for Q4. For Q1 of this year, subs billings were $170 million, and we expect approximately $202 million for Q2. Also, for the first half of this year, we expect year-over-year total calculated billings growth of approximately 19% on an as-reported basis and between 20% and 22% on a constant currency basis. Incorporated in these figures is our expectation of total calculated billings of approximately $220 million for Q2. Moving down the income statement, we expect a Q2 non-GAAP gross margin of approximately 72.5%. We expect Q2 non-GAAP operating income of $9 million-$12 million and non-GAAP net income of $6 million-$9 million, resulting in non-GAAP net income per share of $0.07-$0.10 on approximately 87.5 million diluted shares for the quarter. We expect Q2 adjusted free cash flows of approximately $20 million coming off the strong collections finish we had in Q1. Now let's move on to the full fiscal 2023 guidance. We expect Subscription revenue of $762 million-$767 million. We expect Professional Services and other revenue of approximately $76 million or 9% of total revenue. This would result in total revenue between $838 million and $843 million for fiscal 2023. We expect non-GAAP gross margin for the year of between 72% and 73% and non-GAAP operating income for the year of $36 million-$41 million, resulting in non-GAAP net income per share of $0.21-$0.27 on approximately 88.5 million weighted average diluted shares for the year. That concludes our prepared remarks. We will now take your questions. Operator? If you'd like to ask a question, please press star one on your touch tone keypad now. Please be prepared to answer your question when prompted, and limit yourself to one question per person. Once again, if you have a question, please press star one on your phone now. Our first question comes from Matt VanVliet. Your line is open. Yeah, good afternoon. Thanks for taking the question, guys. Nice job in the quarter. Just wanted to touch on kind of what are some of the factors that you're seeing driving the weakness that you talked about in Europe? Are you seeing any even early signs of similar trends in other regions? Or maybe conversely, what gives you the confidence to raise the Subscription guidance revenue here, given that you are starting to see a little bit of weakness in one of the bigger markets? Thanks. Sure. Thanks for the question. I would say that weakness in Europe was something we saw late in the quarter. It's sort of early signs of a weakness due to obvious macro, you know, obvious conditions with the Ukraine conflict. We're not seeing that in other parts of the world. I would also say in Europe, that weakness feels much more of a lagging indicator than a leading indicator. As I mentioned, we just came back from Berlin, I think about two weeks ago, where we had just an incredible Inspire conference with nearly 2,000 people, many, many customers, 100s of prospects, incredible energy, lots of conversations about transformational projects getting back on the rails, that have been sort of arguably postponed for a number of years. We're feeling pretty bullish all around. But we did wanna call that out because we saw it to the kinda tail end of last quarter in Europe. Great. Thank you. Thank you. Our next question comes from Keith Weiss. Your line is open. Excellent. Thank you guys for taking the question and, nice quarter. Carrying on that last question a little bit, maybe one for Tony and one for Rob. For Tony, how do you reflect that softness, if you did at all, that you saw in Europe in the guide? Was there any extra layers of conservatism that you added or sort of like changes in your assumptions around close rates when it came to that European business? Or was it, like, small enough that you just didn't really reflect it mechanically in the forecast on a go-forward basis? The question for Rob, you guys have been through cycles before. Can you remind us, like, intuitively, what you guys do should become even more value add when people are dealing with what they're dealing with right now, like inflationary pressures and trying to sustain operating margins and the like. At what point does sort of the softening demand, like, get counterbalanced or sort of outweighed by, "Hey, listen, this is just what you need to do in these types of times to support your operating margins." Can the environment ever become a tailwind in that sense? Yeah, sure, Keith. Let me touch on both a little bit and then before I turn it over to Tony, he'll tell you more about Europe. Generally speaking, you know, some of the softness we saw late in the quarter in Europe, you know, drives kind of a wider range of potential outcomes, and that's what you're seeing in some of the- Okay ... some of our projections. You'll hear more about that from Tony. In terms of the climate, I appreciate you calling out that we did see this before. If you think about 2009, 2010, 2011, you know, some of the wind in the sails of the value proposition we offer were there and are here today. The focus on tightening expenditures, the focus on getting more spend on contract, the desire to have greater visibility to business spending. I would tell you, we, you know, we're a very small company in 2009, 2010, 2011. Viability was a concern. Our platform wasn't yet scalable. We weren't able to support multilingual, multicurrency deployments. Today, we're incredibly viable. We have 1000s of 1000s of customer references and proof points in virtually every industry, and we think that really bodes well for us as we enter, you know, these uncertain times with a value proposition that can deliver. The last component I think worth calling out as well, you know, what we saw during COVID is that people became more and more aware of just how their back office information technology capabilities were lagging those of front office capabilities, particularly in the cloud. That gives us an opportunity to really take folks in a much more modern, agile, resilient world, with, as I mentioned, 1000s of proof points to get them comfortable. Let me turn over to Tony on Europe. Sure. Thanks, Rob. I think you covered most of it, Rob, but. Thanks for the question, Keith. You know, overall, I would say our guidance methodology has not changed from last quarter. You know, there's always a range of outcomes, and now there's a broader range of outcomes given this uncertainty in European demand. You also have to consider the constant currency impact of between 100 and 300 basis points for billings in Q2 and for the rest of the year, and this is factored into our guidance. But definitely we feel excited about our pipeline, and you know, we're excited about Q2. Got it. Thank you, guys. Thank you. We have a question from Raimo Lenschow. Your line is open. Thank you. Can I follow on there a little bit? Rob, if you think about the opportunity to revisit clients and upsell across, can you speak a little bit about the recently acquired assets like Aquiire? Also, you talked about the payment attached there, like what sort of payment are they taking? Is it the virtual card? Is it a prepay? One for Tony. Last quarter, you talked about sales capacity increases. Is that still on the card, or are you changing your tone there? Thank you. Sure, Raimo. We're seeing really nice attach rate across the board. As you know, our average Subscription value per deal has grown virtually every quarter now for 53 quarters. Specifically to pay, the largest attach rate ever in this quarter, meaningfully greater than 30%. Mid-market, I mentioned well over 50%. The total payment volume cumulatively has exceeded $10 billion with $1 billion a month now happening. We're seeing a whole host of adoption across the board. Mid-market is very strong, and we're seeing strong uptake of virtual card in the enterprise, and we continue to push upmarket with our digital payments capability. The beauty of pay is that it's part of our first wave strategy. All of that has been built organically and continues to improve three times a year with our releases. Raimo, thanks for the question. As I noted in my prepared remarks, we're definitely still investing for growth, but we're doing so thoughtfully. You saw this quarter that we delivered 27% Subscription revenue growth, and we had meaningfully higher sales and marketing OpEx as well as other areas. but we're doing so thoughtfully, and we delivered 23% free cash flow margins for the quarter and for the trailing 12 months. You know, part of our calculation, of course, is we meet every quarter and discuss our investments very carefully. You know, one of the things informing our decisions is the momentum of our business. You know, new business consisting of new logos and add-on business was up nearly 40% year-over-year in Q1. All those things are factored into our investments, but the key point here is that we're continuing to invest for growth, but doing so thoughtfully, with respect to sales and marketing efficiency and free cash flow margin. Perfect. Very clear. Congrats. Thank you. Thank you. We have a question from Alexander Zukin. Your line is open. Hey, guys. Thanks for taking the question. I guess maybe just the first one is with respect. I know you're gonna get this question five times on macro, but are we or is it longer sales cycles? Is it, you know, more signatures required on deals? And the confidence, Rob, that you have that this was a Europe-only issue given the war and the factors and not something you're seeing in the U.S., but are you being prudent in the sense that, you know, some of your outcomes do incorporate degradation of, you know, those same factors domestically? For Tony, you know, I appreciate you guys talking about efficiency and cash flow a lot more in the script, and that makes total sense given what we're seeing, you know, both in the demand environment, but also with valuations. I guess you talked about the Rule of 40 this quarter. You talked about it on a trailing 12-month basis. Is there more also of a commitment to try to hit that Rule of 40 either next quarter or for the current year? Kind of and in general, how are you positioning for that? Sure, Alex. Well, look, I would tell you, obviously, we're looking at every segment of our business, both geographically as well as, you know, mid-market, upper mid-market, enterprise, strategic, and we look at a whole host of operational metrics to make sure we have not only a really strong portfolio effect, but that we're properly investing against opportunities in front of us quarter in, quarter out. With the exception of some of the late quarter softness we saw in Europe, I can tell you that all of our other segments are just really executing beautifully, and we're scaling them accordingly with how they're progressing along the way, making thoughtful investments as we've done for, you know, obviously dozens of quarters now. Yeah, Alex, on your second question, look, I mean, we've definitely are investing in growth to take advantage of a large market opportunity and the momentum we have with our new business. We're doing so thoughtfully, though, right? With respect to both sales and marketing efficiency, unit economics, free cash flow margins. We don't look at them independently. We look at them all in conjunction with each other, and we have strong controls of our investments and data to support them. You know, we're both we're focused on both top line growth, but also thoughtful about free cash flow margin. Okay, understood. Thank you, guys. We have a question from Siti Panigrahi. Your line is open. Thank you. Thanks for taking my question. Just wondering, as you're looking into the remaining quarter in this macro environment, are you now trying to focus going back to the base or any kind of changes you are doing in the incentive structure? Anything would be helpful. Yeah, sure. Sure. It's a great question. You know, our primary vehicle for growth has been and continues to be via what we call hunting, right? We have a strong desire to win this market within a huge total addressable market. Our primary vehicle is, has and continues to be hunting. As we continue to grow the scope, the scale of our business, we obviously see opportunity in harvesting. To date, investments that we've made in harvesting have been very measured. The opportunity to unlock value there is real. I would tell you that as with all elements of our business, we continue to make, as Tony mentioned, thoughtful investments quarter in, quarter out, to make sure we maximize the opportunity, for many years to come. Thank you. Thank you. We have a question from Brad Sills. Your line is open. Oh, great. Thanks, guys. Wanted to ask about mid-market. You called out, Rob, some mid-market strength. We're certainly hearing that in the channel as well. What are your observations there? Is this a potential leading indicator for perhaps the enterprise segment coming back? On the net revenue retention, if you could help us unpack a little bit where the incremental add-ons expansion kinda deals are happening within the power user stack. There's just so much in there, and there's a lot of moving parts right now with the macro and supply chain. I would imagine that there's quite a difference today in terms of the mix of business you're seeing vs, say, a year ago. Well, look, first of all, in the mid-market, and thanks to incredible leadership and just an amazing growing team in mid-market, we just have a business that is, you know, frankly, on fire. It's very, very scalable. You know, our approach to customer acquisition is measured and the deal sizes are fair, and so we continue to just push into that market, you know, quarter in, quarter out. We feel like it's very predictable as well, which is a wonderful thing to have, from a portfolio effect perspective and just the continued growth for the continued growth of our business. You know, from net retention and add-on, it's across the board. It really looks like a pizza pie. I mean, you obviously have add-on business in terms of users, that's across the board. But in terms of modules, it's everything from supplier risk to supply chain design and planning, to contingent workforce, we're seeing utilization, we're seeing more and more inventory management, treasury, strategic sourcing. So it's really across the board. I think that's because our customer base really is in a state of vision lock with us in terms of what it takes to orchestrate comprehensive business spend management. It's simply a question of where to begin and how to navigate that transformation. So that's what we're seeing there. Sort of the last part of your question was in the middle there in terms of, you know, is what we're seeing in mid-market indicative of the enterprise. I don't know if I would say that specifically, but I will tell you as I look at the enterprise business, particularly what we saw in the U.S. and other regions around the world, the larger scale, more transformational projects are coming back online, and we're engaging in the flesh physically with prospects, and we're navigating these sales cycles from, you know, early awareness as we've always done all the way through to close. It certainly feels promising, and that's seen in how we're thinking about the business and how we're investing into the business. Great to hear. Thanks, Rob. Sure. As a reminder, if you do have a question, please press star one on your touch tone keypad. We have a question from Brian Peterson. Your line is open. Hi, gentlemen. Thanks for taking the question. Rob, I was actually in that Microsoft session out at Inspire, and it was interesting to hear kind of the value proposition for them. You know, I'd be curious to get an update on how the supply chain business is looking, both from like a pipeline and deal cycle perspective. There's obviously a lot of news there, in terms of challenges there across, you know, across the globe. You know, I'm curious, what you're seeing and how should we be thinking about the growth of that business going forward. Thanks, guys. Sure. I appreciate the question. You know, I would say at the core, you know, this is sort of the negative element is that most companies are still in a very acute phase as it pertains to dealing with this supply chain disruption. So engaging more broad transformational supply chain design and planning engagements hasn't been as fast as we would like. Having said that, we're seeing incredible buildup in the pipeline of that area. We're seeing the deal sizes within supply chain design and planning grow even from a lagging indicator perspective. And we feel really bullish about what's possible there in this kind of multi-year journey to get to one comprehensive suite that we have this vision lock with our customers around. Boding very well for us, if when you look at this in a kinda mid- to long-term arc rather than a short-term kinda add-on, quick growth kind of arc. We have a question from Peter Levine. Your line is open. Great. Thanks, and, congrats on a good quarter. Rob, I mean, obviously the climate talked about, you know, fundamentals and the environment are playing in your favor, obviously, with the tech you provide. Is there a change in tone on your longer-term outlook of sustaining organic 25% growth? Like, can we see that long-term growth target perhaps come down near term but offset, with higher margins, cash flow? If I could squeeze in a second, what are your hiring plans for the year, specifically within sales? Thanks. Well, look, as Tony mentioned, when we think about hiring and then we think about not just sales, when we think about hiring sales headcount, we think about an investment in sales training and enabling, we think about discretionary marketing investments and how to place those, that is a quarterly planning process for us. We always wanna be not too far ahead and not too far behind. We wanna make sure we're very thoughtful in the way we manage our own business spending, Peter. As you could tell from, you know, the tone of both our comments, what we're seeing in the market is one that bodes well for us in terms of wanting to be a little bit ahead of the curve because it's returning, you know, results for us. Having said that, it's dynamic out there and we're prudent executives. We're gonna be very, very thoughtful with the money that we have to spend against the opportunity, and we'll make those calls each and every quarter. Thank you. We have a question from Gabriela Borges. Your line is open. Good afternoon. Thanks for taking the question. Tony, I'm hoping you can give us a little more detail on what you're seeing in the business with the return to office and particularly travel and expense volumes coming back. I think in the past you've given us a little bit of commentary around the portion of the business that is tied directly to T&E expense management. Maybe just a little more detail there. Are you seeing a recovery in that business? How much could it contribute to your growth in the year? Thank you. Gabriela, this is Rob. Maybe I'll start. You know, interestingly, when we look at our business spend index and look at the data there, it's showing a pretty steady increase in travel. Obviously we've seen it ourselves, which is a wonderful thing to see in our own company. We talk to agencies that we have as partners. They expect to see a return to, you know, pre-pandemic levels by 2024. Obviously, they're not fortune tellers, but that's kind of the consensus of what we're hearing out there. That is incredibly good timing for us to have released our own travel booking solution, which we've been working on now for roughly a year or so, and that is just an incredibly usable product that is in its early stages. It'll begin its journey in the mid-market, primarily in the U.S., and we think it could be a really promising growth vector for us as you know, travels continues to emerge. Yeah. Thanks, Gabriela, for the question. As Rob noted, we're very excited about our positioning as travel begins to reemerge from COVID. I'd also point out with respect to our spend under management figures, which are roughly $1 trillion, running through our core on a trailing 12-month basis, that the large majority of that is from POs and invoices. There's a small% in there, very, very small, that's directly related to T&E. We have hundreds of customers using our T&E solution, and we're excited about the go forward. Thank you. We have a question from Terry Tillman. Your line is open. Yeah, thanks for taking my question. It's a two-part question. First, for Rob, it's gonna be about vendor consolidation. We're hearing a lot from our enterprise software companies where because of their platform capabilities, they're seeing bigger deals though as they can displace point solutions. So I'm curious on these larger enterprise deals, is the ticket size actually increasing still? And then, for Tony, last quarter, you did, I think, give some perspective on current RPO at about 33% growth. I know the total RPO was similar to last quarter, 35%, but anything on the current RPO? Thank you. Thanks, Terry. Well, look, I mean, the beauty of our deal size, the positive around our deal size is that, you know, virtually every quarter, as I've shared in the past, they've continued to grow, and it's 53 quarters of growth in deal size. The negative side of that is given the incredible value we're delivering to our customers that's measurable, that's visible, we'd like to see that grow even faster, right? So, there's two sides to that, but generally quite healthy. In many cases, yes, displacing, you know, smaller point solutions along the way. It's all about getting that vision lock with the prospect around comprehensive business spend management, showcasing for them references in their industry, in which in cases where we have, you know, literally hundreds in every industry, being the platform and the partner that's highest likelihood to help them succeed and lowest likelihood of failure. In all those areas, we feel really good. That's how it's faring for us. Thanks, Terry. As you pointed out, our total RPO growth year-over-year was 35%. Our CRPO growth year-over-year was similar. It was around 35%. You know, we don't manage our business by CRPO. It's more of a metric that is driven by the results. We actually manage our business for Subscription billing. Going forward, that's what we're gonna focus on. CRPO was around 35% for Q1. All right. Thank you. We have a question from Michael Turrin. Your line is open. Hey there. Thanks. Good afternoon. Appreciate you taking the question. Tony, you mentioned the move to emphasizing Subscription billings. Makes sense given some of the moving pieces of the model. You mentioned FX. How should we think about the impacts of the conversion of supply chain revenue from license to Subscription on that metric? I know you mentioned $5 million less on Professional Services. But is there anything you can add to help us, like for like, compare license vs Subscription pricing? Would you expect the seasonal profile of Subscription billings to play through similar to prior years, just with a much heavier Q4 weighting? Thank you. Sure. You know, Michael, we definitely benefited in fiscal 2022 from being very successful with the conversion of legacy supply chain licenses to Subscription, and also from rebilling customers at 100% for the deferred revenue components that came over at a 50% haircut. However, as we look forward, you know, we're confident in mid-20s% Subscription calculated billings and mid-20s% Subscription revenue growth. Thank you. We have a question from Joseph Vruwink. Your line is open. Hey, guys. Good afternoon. Thanks for taking my question. I thought I'd just follow up a little bit on some of the previous questions on enterprise vs mid-market, and also then drill down on some of your comments on the pay module. I know the attach rate in mid-market was quite a bit higher than enterprise, and sometimes those are more transformational. But are you seeing more kind of entrenched AP players or you know, AP players that have where the enterprises have already embraced them and perhaps the mid-market is still a little bit more greenfield? Or you know, what you're seeing exactly on the pay module in those two markets? Thanks. Thanks, Joe. Well, certainly the mid-market is generally more greenfield as it pertains to every one of our modules. We continue to push upmarket with pay capabilities, not only in virtual cards, but in digital payments. And we're, you know, getting more and more functionality built into the offering that makes it something that larger and larger enterprises can leverage. I will tell you, Joe, you know, early enterprise adopters should be using the platform in the coming two to three quarters, which should drive much more transaction volume and should really bode well for us in terms of building up a reference base rather, and being able to go wider and wider with the solution. We're feeling really good about the progress we're making there. It's not a one, two, or three-quarter kind of story, obviously. It's a multi-year journey. We're, you know, we're really into that journey now. As we shared, I think it, I guess it was Analyst Day a year and a half ago or so, we're in this accelerate phase now where we're making it happen. We have a question from Ryan MacDonald. Your line is open. Thanks. Congrats on nice quarter. Rob, you know, you talked about the attendance at Inspire events in the US and internationally. Just curious, as you're, you know, two months beyond the, you know, the event and, you know, how sort of pipeline reach and flow or conversion of that pipeline is flowing through from an in-person event, you know, as opposed to some of the virtual events from prior years. Thanks. Sure, Ryan. You're breaking up a little bit there, but I think, you know, at the core of your question was how we feel about pipeline, particularly coming out of these in-person events. Look, I can tell you proudly, we again have the largest pipeline we've ever had as a company. For certain, the movement of that pipeline from early stage through to close is something we're strongly focused on. We've continued to scale our sales capacity to be able to move that pipeline from early stages through to close. My instinct, if I could be so bold, is that the pipeline that is touched physically, particularly in the enterprise, tends to move a bit quicker than purely through, you know, Zoom or virtually. That, of course, remains to be seen, and we wanna be very prudent with how we, you know, manage our expectations for everyone involved, especially how we make our investments, you know, quarter in, quarter out. We have a question from Taylor McGinnis. Your line is open. Yeah, hi. Thanks for taking my question. Just looking at 1Q. If we adjust total billings growth for the early renewal, it looks like the upside was a little bit softer than what we've seen in the past. I appreciate the shift to Subscription billings. Just, you know, in that quarter, was there anything else aside from some of the Professional Services headwinds that you'd call out? Then as a second part to this question, just when we look into 2Q, the guide for Subscription revenue and billings looks pretty strong, just given that it looks like 2Q has the toughest comp and some of the macro commentary you called out. Is there like, you know, one or two drivers, whether that's large deal activity returning or, you know, some upsells returning that you would point to help us bridge some of those comments? Thanks. Thanks, Taylor. With respect to total calculated billings, you know, first of all, as everyone knows, the U.S. dollar has been strengthening meaningfully against some of the foreign currencies, including the euro, and a lot of that occurred very acutely in April, which was the very end of our quarter. The first thing you have to do is add back a couple points for constant currency that we didn't necessarily anticipate. The second thing is on the services and license transition for supply chain. You know, honestly, it's going faster than we even originally expected. Really this is to the benefit of our customers and our Subscription business. We have more trained partners that are ready. If you add back those two things, you get closer to mid-20s for total calculated billings. Thank you. Our last question comes from Robert Simmons. Your line is open. Hey, thanks for taking the question. Robert, if you're speaking, we can't hear you. Operator? Sorry, can you hear me now? Mr. Simmons? Go ahead, please. Sorry about that. Thanks for taking the question. I was wondering if you could update us on the progress that you're making on getting more involved on the direct side of the equation. I know that can be a gray area at times, but just any kind of help there, we appreciate it. Sure. You're referring to direct spend that our customers process through the platform, right? Yes, exactly. Yeah, sure. Well, so look, first of all, it should be noted that of the $3.6 trillion or so that's run through our platform cumulatively, a significant portion of that is in fact direct spend and has been growing in proportionality for years. We've made significant strides in helping our customers manage inventory for direct spend, help them manage complex strategic sourcing as it pertains to direct spend. Now, over the last few quarters, helped them in the supply chain design and planning for direct spend. For us, we're quite agnostic in terms of you know how we engage with our customers. We start from the indirect, the longest of the long tail to the most complex, supply chain, and direct, spend requirements that they have and find ways to bring them into a modern cloud platform that drives value for them. It's boding quite well for us. We have no further questions in queue at this time. Thank you, everyone, and we look forward to speaking to you next quarter. Thanks. This concludes today's conference call. Thank you for attending.