Hey, guys. Welcome to our next session. Really happy to have you here. What a day! Maybe, like, look, maybe you can recap because, like, look, I was at the conference. I looked at the numbers last night. To me, they look pretty solid, and now I'm seeing share price react. Can you speak a little bit like, you know, how the quarter played out for you and a little bit about the guidance? Yeah, absolutely. I know this is more people in the audience than I've seen in many times. I think people are interested in hearing what we did in terms of that. First, let's talk about Q3, right? Yeah. The Q3 numbers that we reported last night, subscription revenue up 21%, $70 of $18. The full year guide as well, including Q4, pretty solid. Yeah. You know, percent year. And I think where we said, it just felt like there were some one-time things happening that we wanted to address as part of what is going to drive in the FY 25, which is, for us, calendar year 2024. Yeah. I think the big question for us was, consensus right now for next year is 69%, and that seemed a little bit high, and we've been out talking to buy-side accounts, and they were familiar with the fact that it did seem a little bit high. The question really was, How do we bridge from what people think will come out and where I believe we are seeing... I just felt like yesterday was probably as good a time as any to sort of let people on to here's what we see in the business, and to help people bridge to why the 10%, if you will, for next year. Two big things. One is there's a set of one-time, really unique, idiosyncratic situations, companies that are going through fairly fundamental structural changes. That probably accounts for 2%-3% of the downdraft for next year. Yeah. These are not things we could have predicted, so they are really unique situations. And then we are seeing a high level of downsell here in Q4. And again, we've inspected all of these accounts, not really logo term, but I suspect companies that have been going through a restructuring earlier in the year, as their contracts are coming up for renewal here in Q4, they're just renewing for a lower seat. Yeah. Q4 for us happens to be almost 40% of our renewal business, but we didn't see much of it at the beginning of the year. And I suspect they were all waiting for their contracts to come up for renewal, where they would then renew for the lower price. Yeah. So, I think that's what's happening. We of course don't have any more visibility than this, and in order to construct at least an initial look into next year, not the formal guide, our view was let's just look at this point shape growth from Q3 to Q4, not having any further visibility, and let's assume a conservative view that would equate to circa 10.8% for next year. Yeah. Yeah. So I think that's the approach we took. I can understand it probably isn't sitting well with many folks, but there was at least some- Yeah, yeah, yeah. And if you think about it, the like— Oh, yeah, one question I got is like the specific customers that can happen under your control. It's more I think people were slightly more nervous on the renewal commentary. And the one question I got there is like, obviously the you know like we've seen other vendors like more on the front office like for example like Zoom in talking Q3 already about that and then here like why is it going up now for you guys? Yeah. I think that's a fair question. We've been asked that, you know, all morning- Yeah ...... Which is why now compared to Q4 of last year. I think the only thing I can allude to is, while we obviously sell to the marketing CMO- Yeah A lot of what we sell is to a very discerning buyer at a very high price point. It's sort of more stickier than your discretionary marketing plan. Mm. I suspect some of it took a little bit longer to work through the system. The other thing that we are seeing now is, and I think that is easier to explain, is if you look at the marketing and advertising product suite, there is elements of that that is driven by the amount of ad value that goes forth to our network. Yeah. As businesses are trying to squeeze down on discretionary advertising, we're seeing the downdraft of that. Yeah, yeah. We'd obviously seen some of that also at the beginning of the year. Yeah. I think now is the time, as the plan for next year, they are really constraining the budgets further. Yeah, yeah. That's what we are seeing. Okay, okay. And then, Ragy, on the main call, talked a little bit about, like, you know, a big focus on CCaaS, that kind of maybe where you guys took your eye off the ball, off the other part of the business a little bit. Can you talk a little bit about what was going on there? Yeah. And I think that, that is, you know, as we look at things that we could have done differently, this falls squarely in that camp. Yeah. At the beginning of the year, given the success we were having in CCaaS, we were very telling the sales team that this is the new product to go push. We, we did feel there is ample opportunity, and we still do, by the way. Yeah. What that does is because all our comp plans are structured, where it's all driven by it hiring new PR, whether it's selling core products or whether it's selling CCaaS. Yeah. With CCaaS, in particular, we were successful in hiring a group of specialists from the existing vendors on that market. Yeah. The whole idea was that these specialists would work with the generalist sales team and go prosecute CCaaS deals accounts. accounts. I think what you realize over time is, salespeople are largely cooperating. You incent them to go do something, that's what they'll go do. Yeah, yeah. I think in the process, what happened is, they probably weren't spending enough time in their accounts trying to figure out cross-sell opportunities or cross-sell opportunities that it would be best. Yeah. Ordinarily, the flywheel that we have for products didn't function the way we wanted it to. It took us a little bit of time to sort of figure that out, because we've seen tremendous success in CCaaS over the last nine months. Yeah. We've been greatly open in talking about it in all the earnings calls. So I think on the one hand, that was a great outcome. On the other hand, maybe it was too much of an over-rotation, as Ajit was calling it, towards just one product line. We should probably have a dedicated CCaaS specialist instead of having the entire sales team go on. Yeah, yeah. But then, I mean, as you, as you heard, it's like it's in a way, it doesn't matter where the money is coming from. So you outperforming, overperform on CCaaS, but it was not enough to offset, like, what kind of was missing from the other side. Is that kind of about it? That is one way to think about it, because let's just be very clear, the sales cycles in the core products are much shorter. Oh, okay. So you're missing, yeah. Yeah. Whereas the sales cycle with CCaaS are much longer. Yeah. While we have the broader sales team closing those deals there, it takes a while for them to convert. Yeah. Whereas had they only focused on the core products, much shorter sales cycle, obviously, smaller price points, but you would keep that flywheel going. So now what has happened is we've taken a little bit our eye off the ball on the core products- Yeah. - and are finding that the flywheel is taking a little bit longer to kick up on CCaaS. So I think what we are concluding is, we need to make any structural changes. We do have an active sales team. There is a bunch of reps that are super comfortable selling the core products. Yeah. All we have to do is really point them back to what they were always comfortable doing. Keep the specialists that we hired for CCaaS- Yeah and have them go after the CCaaS opportunities. Is it like doing the classic, for instance, you would say like, like for typical elephant hunting, in a way? In a way. And I think, look, let's be honest, and we are sort of admitting to things where we fumbled the ball. We aren't the only company. If you think about companies that have gotten to $1 billion in subscription revenue- Yeah It's rarely selling one product. So we're sort of going through the natural evolution of a company that has multiple products and needs to figure out the most elegant go-to-market motion for the entire product suite. Yeah, yeah. We're obviously trying our way through it. This is probably one where we could have done things slightly differently. Mm. But we're sort of... The traction we've received in CCaaS, we wouldn't have gotten otherwise. Yeah. Like, in a way, it should be a temporary thing, because like, if you guys were, you know, the general elephant hunting, that means you need to build a pipeline for the other side. Now that you refocus them, you need to know that by—I guess you said, like, it's a couple of quarters that you need kind of to rebuild this, and it's going to be a couple of quarters coming through, because you need to rebuild pipeline on the other side, and then that should kind of be back to normal. Is that how you think about it? Yeah. It's actually a little bit more nuanced than that, because as we look at the pipeline we are creating, even for the core products- Yeah We have always been creating that, even the last couple of quarters. Okay. What was happening is, the reps weren't closing that pipeline because they were enamored by doing bigger CCaaS deals. Yeah. It's not like we need to go back and start creating pipeline. The pipeline is there. Nobody was actually taking it to fruition. Nobody was working on it. Yeah, yeah, yeah. Okay. That should be fixable, though. Well, I hope so. Yeah. Yeah, yeah. Okay. Okay, then, more like... Looking more bigger at the bigger price, and that's the CCaaS opportunity. Like, talk a little bit about what you're seeing there in the market and why you're so excited about that, on the CCaaS side. Like, there's a reason why you're kind of going after this market now. Well, for one, it's a huge replacement market. Yeah. When I look at that market compared to our core market for core products, it's much, much bigger. Mm. There is a huge technological evolution happening in that market. You know, we've looked at third-party reports that talk about $800 billion spent, where a lot of it is labor cost. Sure. As the software spend increases in that market, we should be a natural beneficiary for that. So I think that's reason number one. Reason number two is, there is a big sort of leap in how a contact center is viewed now. So we no longer is it just a cost center with various teams that are dedicated to different channels. Okay. Somebody answering the phone on 1-800 big brand, then another one on email, another one on social media, another one on live chat. What companies are looking for is one team which can address customers' concerns no matter which channel you call them on. Yeah. And I think that's where we have a unique advantage because there is... Our technology allows them to, as you go from channel to channel, the contact center agent can track you along the process. Yeah. Yeah. So, there is a natural evolution to what's happening here, and then a couple of the accounts that we've spoken about on some earnings calls are really looking at their contact centers really as a revenue generator. So as you're calling that agent for whatever issue you might be running into, there are pre-prescribed steps on what to sell back to the customer. Yeah. We have also shown, I think we did it at an analyst day, how the AI used for the agent is actually transcribing whatever the customer is saying and is running through a knowledge base to help the agent, both in terms of a response as well as a review. Yeah, yeah. So there's a number of things we are bringing to bear, whether it's the AI aspects of the technology, the ability to switch between various communication mediums, and obviously the increase in software spend in that space, that we believe make it a natural attraction to where we are coming from. And where are we on that? Like, I remember I kind of did a CCaaS, you know, a couple of, like, years back, and I was always agreed, like, yeah, finally, CCaaS will change, and the market will change. And how work will go slow over to some degree. Like, where are we on that, like, inflection point of, like, this is happening now? If I understand your question, why is the CCaaS evolution happening now? Yeah. Yeah, yeah, yeah. Why, why is now the right time? What do you see here? Because I think everybody's evaluating the ROI of their contact center spend. Mm. Now, historically, if you go back, years, it was largely left. Yeah. You and I probably would never call a 1-800, you know, with an issue. We're always looking for, if I have my Xfinity down, I'm always trying to get to them on the app. Yeah. Yeah, yeah. Yeah, yeah. Or on a chat. I think there is a natural evolution of what's going on here, and we believe, given the tools that we've built to cater to the bigger brands, we have a natural entry into this market now because it's not based on a collection. Yeah, yeah. Okay. Okay, what do you see there in terms of, you know, obviously, you're like the, the disruptor in that CCaaS market. Like, what do you see about the competitive dynamics that are playing out there? So we're of course running into your traditional vendors in that market, and they have a formidable presence because this is one of those solutions where it's pretty hard to replace. Right. It requires a lot of integrations into your existing system. There are a lot of processes built around it. I can understand there is a reluctance on behalf of the customer. So we're powering a big contact center solution. Yeah. They're also obviously inventing and adding other layers to it so they can compete in this new realm. As we spoke about for Deutsche Telekom, there are big opportunities that we can take down as long as the customer, on the other hand, are willing to make that technological evolution with us. Yeah, yeah, yeah. Okay. And then the, like, obviously, you know, every time, like, you know, you stress it on, that much conspiracy theories come up of like, oh, there is like, you know, like, renewals are not happening or like, the down renewals are happening, or there might be, like, a competitive issue. What are you seeing in terms of the competitive dynamic on? I asked you that already, but on the- On the core product? Correct. Yeah, and this is what I was saying earlier, that I think we need to get to Q4 to have a much more informed view. Yeah. This is by far our biggest renewal quarter, so 40% of renewals in Q4. As I was saying earlier, there's a couple of these strategic situations. If you leave those aside, as we look at the existing business that's up for renewal, our sort of churn, if I take our down sales, is not very different than what it was in prior years. Sure. But what is happening, though, is bigger accounts are renewing at a lower seat count than what that we would expect them to. Yeah, yeah, yeah. A little bit of that is catching us by surprise. I would agree with you, why now? Why not sooner? I don't know, other than saying Alara probably went through a restructuring in earlier part of the year. Yeah, yeah. Their contracts are up for renewal here in Q4. Yeah, yeah. I mean, and it's surprising, it's like, it's interesting that you see it before the quarter ends already. Like, because, like, if I think back about it, other vendors, it was like, towards the end of the quarter, the renewal came in, it's like, "Oh, shoot! Yeah. Like, you were seeing it now. I mean, that speaks that your sales guys are actually kind of close enough to kind of get that information forward. Correct. And, look, it's not like we're engaging with them at the middle of the time. We have been engaging with them even before. Yeah. I think as we saw this come together, everything happens obviously during the quarter, and you are correct that we have a much better pulse because these are much bigger accounts, so we know exactly where we stand. Yeah. And what is captured in the guide, both for the outlook for next year as well as the guide Q4, is sort of a more conservative view of where I think things will land. Yeah. Now, we're obviously doing diving saves all over the place, so things might be much better than where I think, you know, they'll pan out, but- Yeah. And then what, what does it do if you think about it, talk a little bit about, you know, you mentioned gross renewal and NRR, like, NRR as well, like, what, what's the numbers that we should think about both are coming up here? I think gross renewal is not going to change that much, but, you know, NRR is going to be different. Yeah. So, so I think. Look, I looked at our business with two different metrics. One is new... Yeah. We've said historically, give or take, two-thirds of that goes into existing accounts, third of that comes from global. Okay. And then we have a big focus on renewal rate, so gross renewal. If I have $100 up for renewal, how much of that do I have? Yeah. I know all of that, that then gets combined into this net dollar retention rate or NRR that people focus on. Yeah, yeah. For Q3, it was 118%. It's not bad. Yeah. But I have been pretty clear on all earnings calls, saying, "Hey, this is not a metric we track. It's just a byproduct or an output of what happens in the end." But we also do expect it to come down in Q4, partly because, as I said, down sales are going up. Yeah. I expect the 118 to come down... I'm not sure exactly where it's gonna land, but it might be circa in the 110%, give or take. Yeah, yeah, yeah. Okay. Okay, that helps. And then, like, how backwards looking is that? How do you- Twelve months. Twelve months? Yeah. So it's that cohort of customers 12 months ago. Yeah. If they were paying us $100 12 months ago, they're paying us $180 now. Yeah, yeah. So it has the full churn and downswing, as well as the upselling cost. So for that cohort of customers. Yeah. So you're doing the quarter last year to the quarter this year? Yes. Yeah. Okay. Yeah. It's not four quarters rolling. So but like, but part of the problem could be for you going forward is like, if, if it's in the, if it's in the, if it's four quarters rolling, then it's in the mix forever, like, for four quarters, so then it mix-- it won't be okay. Mm-hmm. But that's not the problem with it. No. Okay, good. If you, if you have these situations play out for you, like, how do you think about investments? Like, or like, how do you think about, like, spending money? Like, you, you've been on a very good track, but profit margins and cash flow, that's really good. Might have a little bit of headwind. Like, how do you think about investments in such a scenario? Yeah, that's a great question, because we did point out in the prepared remarks yesterday that our 11% non-GAAP operating margin for the Q1 month forward- Mm. We expect it to keep growing next year. Mm. Said differently, we're not really looking to increase the OpEx by a lot next year. Yeah. We've made all the investments we need to make, and both in terms of the go-to-market reallocation, it's largely a reallocation of existing resources, less to do with hiring a whole new sales team. Yeah. Our R&D, as you know, are pretty much in line with sort of 11% for R&D, and don't really expect it to grow by very much. G&A is around 12%, give or take. I think over time, it should probably keep trending down as we get more and more efficient. Yeah, yeah. And then going back to the sales setup. So at the moment, you have the CCaaS specialists that you hired, and they are kind of an overlay to your generalist guys. Mm-hmm. So they're kind of splitting their deals likely between each other, and now going forward, they're separate, so you actually, you know, have a lot more deals. Is that too simplistic? No, I think you're on to something. Today, what happens is, for CCaaS lead, you take two events. Yeah, exactly. Yeah, yeah. Going forward, it's only going to be one, because either you're gonna be a rep covering the core set of products- Yeah. or a rep selling. So the specialist, by definition, will become CCaaS reps. Mm. There might be reps that this year have been quite successful selling CCaaS, and they might choose focus on that going forward. Then there might be others who probably found it a little bit tough leading, selling a whole new product set, who might want to be more comfortable selling our core products. Yeah, yeah. And then, do you, how do you do it in terms of territory management then? Because the is the CCaaS opportunity in different accounts than where the core guys are? Or could you have a situation where you have like a, you know, one part of the organization gets hit by the CCaaS guy, and the other part of the organization gets hit by the other guy. How is that going to play out for you? Yeah. Did you spend some time in sales operations? No, not yet. Okay. But I could. Yeah. No, I think that's a lovely question. So the way we have designed territories, we have something called a Right to Win account. Okay. And so when we do our territory planning, we look at accounts that we believe have a propensity to buy CCaaS. And there's a number of criteria we use- Sure ... including external factors that we take in from, in terms of how are these accounts structured, how big are they, how big is their contact center, as an example. Are they in that zip order, I mean, sweet spot, where we could be one of their preferred vendors. And then same for the core set of products. Yeah. These Right to Win accounts will get assigned to reps, depending on which bucket you're in. Yeah. If you're selling core products, you get the right set of accounts that are right to win for that bucket. Yeah. If you're a CCaaS rep, you get a Right to Win account. Yes. Okay. Now, the question you would ask is: What if the same account has two reps? Yeah. This is where you want to avoid any confrontation in the field. There will always be one account owner. We will, of course, make it easier by figuring out a way to increase the size of the pool, if you will, within the team account. Okay. Okay, makes sense. The last few minutes, I wanted to shift gear a little bit on AI, because, like, that's coming up a lot at the conference. You guys, especially on CCaaS, there's going to be a lot of opportunity with AI. Like, where are you guys on that journey? I think we've been talking about how we've had generative AI collaborations with Sprinklr AI+. Yeah. There's been other innovations we've done, and I think we gave several demos during analyst day. Yeah. So there's lots of innovations we are doing there for sure. It's obviously become top of mind for investors. Anyway, connected, there is tremendous opportunity in CCaaS in particular. We've built our own knowledge base, we've built our own IVR. So enough room for us to start innovating in that space, particularly as—I don't know if you saw the demo that Ragy was showing, and maybe you did it before the earnings call. We were able to use our AI to generate Ragy's earnings script and really fine-tune it. So of course, we didn't play it on the call, but suffice it to say, there is enough application for what we are doing internally- Yeah -that we in the broader CCaaS market. Yeah, yeah, yeah. No, that's amazing. Yeah. And then where are we on that? Because CCaaS in a way will put even, like AI will, generative AI will put them in the CCaaS market. Basically, there's so much more that can be done there as a first line of defense. First line of, like, in dealing with customers coming in. How like, who has the better start, like, in terms of like, everyone will claim, like, if I talk with the 500, like, oh, I have like 20 years of data, and so I can train my better. What's the better starting point? How do you view your starting point in that one? Yeah, but let's be clear. This is where and look, we all think our mousetrap is better than anybody else's. But think about the journey that we've been on, right? So we've been working with big brands for the last 14 years, and you talk about either publishing on the- on social media platforms or trying to do Insights, which is our product that we use to really ingest the entire Internet and figure out ways for brands to connect with their end customers. Like, we have lots and lots of data on how do you make the models much better. Mm. You would remember from your conversation with Ragy, that we've been on this AI much before ChatGPT came out. Now, that's obviously much more helpful for us because we can supercharge our existing models, but it's obviously take our own AI to a level where people have a better appreciation for what we've built. And then the, like, if you think about, you know, the innovation cycle around AI is, like, crazy. I mean, we just had Microsoft here on stage as well, before you, and all the stuff they are doing and want to do with partners. How do you see your positioning in that respect, like, in terms of resources, who do you want to partner with, how you want to partner with to try and drive that further and be on top of that innovation that's going on there at the moment? It's like, so is that going to be like a— Let me ask the question: Is it going to be a Sprinklr effect or, like, is this going to be like a Sprinklr step with Microsoft, with Google, plus, plus, Amazon? How are you going to kind of ensure that you stay on top, on top of the rate? Yeah, I, I think, look, there's no denying that the big cloud vendors are going to make a huge presence. Yeah. I think that's a good thing, because we're looking to partner with each and everyone. What is probably going to happen, and I'm not the AI expert, is there's gonna be more domain-specific models that will start to come out. Yeah. So there'll be one for the auto industry, one for financial services, because they need to get trained on data and problems that their customers have. Yeah. I think that's gonna be the next stage up here. Nothing that we've introduced into the market yet, so that's probably, I would suspect, next, next thing that's gonna come out. Yes. Okay. We've only got a couple of minutes left, and I've got one big question I got from clients quite a bit today, and it's like, if the company is in a situation like today, like where you were after hearing yesterday, like, your conviction sounds really high and, like, your, your market position sounds really good. Is it time to kind of say, "Okay, you don't believe me, but I believe myself. Let's kind of put money to work?" Like, how do you think about, like, share buyback- Mm-hmm. In this kind of context where we are to after today? Yeah, that's a great question. So last year when we were asked this question, my view always was we didn't have enough float in the stomach, so trying to do a buyback would actually make it a bigger problem. Yeah, that's true. Yeah. So we didn't do any buyback then. Since then, of course, some of our earlier investors have sold some shares in the market. Float is not much of an issue. We've obviously seen a ton of volume today, so I don't think it's a bigger problem. Yeah. This might be the time for us to go evaluate it. We haven't had any discussions internally. Let things settle down, but it's something that we can take under the... Yeah, yeah. Can you maybe remind us, like, what's the situation on net debt cash for you guys? Yeah, we have no debt. Cash is $650 million- Yeah, yeah. give or take, and we are obviously generating free cash, so. Yeah. And like, maybe as part of that capital allocation discussion, like, with a lot of changes in the industry, you obviously want to keep, you know, some powder dry in terms of, you know, there's a new AI innovation, kind of want to do some M&A around that, et cetera. How are you thinking about M&A, like, you know, that context? Yeah, that's a great question. Many companies choose to pursue M&A because they're looking for more product. Yeah. That is not the problem we have. Yeah. We have a lot of products. For us, M&A has been less of it. We have done it in the past more as a tech platform to get teams of people that we believe would be additive to the existing resources we have. Our industry is also very fragmented, so there might be the right opportunity at some time. We haven't obviously run into it yet. Yeah, yeah. Okay, perfect. Hey, Manish, 23 seconds. I'm German, so we can do it right on time. Thank you. Thanks for the time. Thank you. Thank you.