Good day, ladies and gentlemen. Welcome to the WalkMe first quarter earnings call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. John Streppa, Head of Investor Relations. Please go ahead. Hello, and thank you for joining our First Quarter 2022 Earnings Call. I'm John Streppa, Head of Investor Relations at WalkMe. Today, I'm joined by Dan Adika, CEO and Co-founder, Rafi Sweary, President and Co-founder, and Andrew Casey, our Chief Financial Officer. Certain statements we make today may constitute forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that relate to our current expectations and views of future events. These forward-looking statements are subject to risks, uncertainties, and assumptions, some of which are beyond our control. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including those set forth in the section titled Risk Factors in our annual report on Form 20-F, filed with the Securities and Exchange Commission on March 24, 2022, and other documents filed with or furnished to the SEC. See our press release dated May 23, 2022 for additional information. In addition, certain metrics we will discuss today are non-GAAP metrics. The presentation of this financial information is not intended to be considered in isolation or as a substitute for or superior to the information prepared and presented in accordance with GAAP. We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these measures provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. Further, throughout this call, we provide a number of key performance indicators used by our management and often used by competitors in our industry. For information on the non-GAAP financial measures and key performance indicators, including the reconciliation tables, see our press release dated May 23, 2022. With that, I'd like to hand it off to Dan. Thank you, John. Hi, everyone, and thank you for joining us today. I'm pleased to share that in the first quarter of the year, WalkMe grew subscription revenue 34% year-over-year to over $51 million. We continue to work on strategic deals with the leading organizations, utilizing our digital adoption platform to leverage data, to take action, and to simplify user experiences. We saw strength in the growth of DAP customers, adding eight new DAP customers in the first quarter, and the average ARR from DAP customer grew to $650,000. DAP customers are those who have embraced a data and outcome-driven approach to their digital transformations. While growing our revenue, we were also able to show operating efficiency with a non-GAAP operating margin of 33%, besting our initial guidance for the quarter. We are on a mission to fundamentally transform the productivity of humanity by unleashing the power of technology. We pioneered the digital adoption platform to guarantee that every user utilizes enterprise software to the fullest, and that every organization maximizes the success of digital transformation. How do we do it? Through the three key components of our platform, data, action, and experience. With our unique data capabilities, WalkMe provide organizations visibility into all of the digital touchpoints from existing workflows. Our deep proprietary technology understands any user interface like a human would, unlocking every aspect of software and user interaction. Using this data, our customers know what needs to be fixed in the digital journey and can utilize a no-code editor to enhance workflows and build beautiful experiences for the end users, delivering a best-in-class enterprise user experience through our web, desktop, mobile, and a new unified interface called Workstation. Workstation is a central hub for all employees' digital needs. The success of the end users to complete workflows has a direct impact on the business outcomes to drive the bottom line for enterprises, such as workforce improvement, risk reductions, compliance, and productivity, providing a massive ROI. This is the value achieved by WalkMe's platform. The DAP market category continues to receive greater market recognitions with two recent reports from Gartner and Forrester I will discuss later. Our ecosystems continues to grow. This quarter, we had a record attendance at our user conference, Realize. In addition, we signed new partnership, one with HCL and a technological partnership with Celonis that we will review later on. The evolution of the current macroeconomic and geopolitical environment has driven an accelerated mindset for efficiencies across the IT stack. Organizations are looking to drive more value from their existing application and empower users to make the most of these tools instead of putting incremental budget dollars into these problems. WalkMe's DAP is purpose-built to help businesses extract more value from their existing software, driving revenue and reducing costs. Our ongoing focus on Global 2000 enterprise and commercial customers with over 500 employees continues to drive our growth and validates our platform's value. As we deepen our focus on the larger customer segments, we are seeing some variability in timing of these deals materializing in our ARR, which was the case at the end of Q1. Since then, we've seen great momentum in April and May and remain confident in our pipeline for the rest of the year. We believe that we are at the tipping point for our category, ecosystem, and demand, and see multiple levers that will give us the capability to grow more than 30% for the next 3-5 years as we continue to penetrate deeper into enterprise organizations. We intend to drive that growth with prudent investment as we strive to balance growth with scalability as we push towards the Rule of 40. I would like to take this opportunity to invite everyone tomorrow to our first ever investor day in New York, where we'll outline our company vision for the future ahead, our product roadmap, detail our go-to-market focus, and how we believe we can build a scalable, durable business while delivering real ROI and value to our customers. You can join us virtually as well. Now, I'd like to dive deeper into our most important growth driver, which paved the path to scalable growth as highlighted in previous earnings calls. We believe that we're at the tipping point for our category, with greater recognition and rising demand for digital adoption platforms. Digital adoption is increasingly being highlighted as mission-critical for driving employee productivity and adapting to changing work environments. These are crucial elements of success of digital transformation, change management, and operational efficiency. In April, Gartner published the digital workplace innovation impact metrics. Application leaders can use this tool to streamline decision-making according to business value, feasibility, and organizational ambition. Digital adoption solutions rank as the leading technology when classified by business value and feasibility. Digital adoption solutions are listed as a core ambition to digital workplace innovation strategy. Furthermore, last week, WalkMe was recognized in the late-stage vendor maturity segment in Forrester's new tech digital adoption platforms Q2 2022 report, which is the first market landscape of the DAP category. According to the Forrester report, global software decision-makers reported that more than 40% of their organization's software spending in 2021 went to new software licenses and new custom software solutions. DAPs are emerging as catalysts for managing digital transformation with purpose-built features to enable users to do more with enterprise applications. We are thrilled with the recognition by leading analyst firms of the category that we created, and we expect more recognition to come over time as forward-thinking CIOs and organizations focus on driving ROI with their software investment. As the world becomes increasingly connected, so do business processes and workflows. Digital Adoption Platforms are the way to align organizational goals, digital investments, and improving and enhancing the employee experience. Our customers are the foundation of our business and our top priority. We just concluded Realize, our annual user conference, with record-breaking attendance. I'm excited to share that over 4,000 professionals and global technology leaders registered to attend, up 4x from our last event in 2020. During the event, we had a record number of customers and partners share their journey to digital adoption. We also shared three key product updates on our roadmap for 2022. We highlighted WalkMe Enterprise, our approach to enterprise-level digital adoption, where Adapt is used as an outcome-driven platform through data, action, and experience. WalkMe Enterprise is designed as a solution and methodology for digital adoption. Business processes and digital transformation cannot be viewed in isolation. They must have a platform on which to be deployed, measured, and iterate on. WalkMe Enterprise is that platform for our customers, and we're excited to continue to advance our platform offerings for our customers. We also introduced key enhancements that we're making throughout 2022 to WalkMe Workstation. Workstation amplifies digital transformation through the employee user experience. It enables WalkMe customers to accelerate their digital adoption strategies by enhancing employee productivity. Workstation is where employees can initiate workflows, simplify and personalize information, discovery, communication, and application usage data. Think of it as a search across the enterprise digital experience. This is where you start your journey and potentially get the job done. The new Workstation enhance our existing offering to include capabilities such as enterprise search, new integration with enterprise software, which enables employees to initiate workflows and retrieve information without opening the underlying application. Employees can also complete processes through our natural language chat interface, complete personalized onboarding, and stay in the know through our desktop notification with personalized and segmented announcements. With Workstation, employees know exactly where to go to find the information and starting point for whatever they need to get their job done. Lastly, we introduced Digital Transformation Intelligence, DTI. DTI is designed for organizations to understand, manage, and measure their digital transformation initiatives. Through integration with various data sources and using WalkMe cutting-edge DeepUI technology, DTI unlocks visibility into the organization tech stack, from app discovery through deep usage insight across departments and users. With enhanced visibility and data, organizations can plan a successful digital adoption strategy or directly take action with WalkMe to create experiences that drive users to success. As our category and majority of our customers are early in their life cycle journey to reach a full DAP deployment, we believe that speed to value and value realizations are critical. We invested in our customer-facing teams to support the build-out of a world-class enterprise sales force to better serve our customers and help them realize the value of WalkMe faster. I'd like to take a moment to highlight how we partnered with the Fortune 500 auto parts retailer, achieving tangible business results in just 60 calendar days after the deal was signed. In Q4, this customer was a new customer to WalkMe. We immediately understood the vision and strategic importance of WalkMe and signed as a DAP customer. They've invested millions in digital transformation and are now hyper-focused on accelerating and delivering on their promise of digital transformation investment, including creating a dynamic employee experience, especially important in highly competitive retail labor market. We work with their executive leadership team to identify use cases that are projected to have meaningful impact to revenue and margins, either in time saving, first mover advantage or upsell opportunities. In just 60 calendar days, the customer deployed their first implementation, which focused on solving a top-of-mind challenge, accelerating the time it takes to build, post, and fill a new job listing. Why does this matter? In today's labor market, speed is critical, especially for frontline retail employees, and even more so for this customer, who adds thousands of positions each year. To enable managers to act quickly and meet the increased volume, the customer decentralized hiring to the store level. With this shift, store managers needed to post and fill their own roles, which was something they've never done before. In other words, they needed to learn an entirely new, complicated, and time-consuming process during a mission-critical time. We worked hand in hand with their newly established DAP team to launch WalkMe on their HR system, and they've automated 60% of the steps to create a new job listing and enabled managers to post reqs 85% faster. The benefits of their WalkMe implementations are twofold. Manager can now post roles and fill their hiring needs faster and focus on revenue-generating activities while increasing customer experience. This is just the beginning for our partnership and their expected DAP journey. They are on track for the second release of their HR system within 45 days of their last deployment. Their next platform implementation will focus on driving in-store upsells, which are expected to generate additional higher margin revenue. We believe that we partner on strategic level with our customers. Outcomes like this will continue to multiply as our customers advance in the life cycle of digital adoption and realize value connecting data, action, and drive the employee experience. Let's shift to our growth drivers fueling our go-to-market and revenues. Our journey to add more experienced market leaders to lead our organization to the next level is underway. Today, I'm very excited to share that we have signed a new chief revenue officer who will join us in July. Our new CRO is aligned with our focus on scaling an enterprise plus sales force and will help drive sales execution and higher efficiency as we strive to build deeper and more strategic relationship with our customers. We will continue to invest in our leadership team as we're going forward. As discussed in previous calls, we're focused on international expansion of our business. We continue to monitor and track the event unfolding in Ukraine. As a company, we support our fellow employees who have called Ukraine home. During the first quarter of 2022, we took a swift action to help our coworker based in Kiev to evacuate the area if they wish to do so. Previously, we operated a small support engineering team out of Kiev. We saw no interruption in our ability to service our customers, and most importantly, all of our coworkers are safe. We'll continue to support them and their families during this time. We have not seen a material impact or slowdown on our business in the Europe region. We do not have, nor do we plan to establish any relationship with organizations based in Russia or any other regions under U.S. sanctions. In the EMEA region in the first quarter, we had new and expansion deals with 59 customers, and our pipeline remained robust. In our last earnings call, we highlighted that we are investing in our global enterprise sales force, and we continue to invest in building out the teams and capabilities to serve a global customer base. In the first quarter, my co-founder, Rafi Sweary, opened our office in Singapore to better serve our customer base in that region. As a global company, we're excited about the opportunity to expand our presence internationally. Another area of focus for us in 2022 is on the federal market. We invested in the teams and technology to be able to sell into the U.S. government. It is a long process and requires some unique investment, such as U.S. engineers and U.S. soil, to serve our technology, as well as containerizing our cloud-based solution in the GovCloud. In the first quarter, we made great progress building out the team, and we're on target with our plan to pursue FedRAMP moderate status in the second half of 2022. We've been working diligently to sign new partnerships with key influencers in the government. Recently, we were vetted for federal by Dcode, a tech accelerator connecting innovative tech companies with federal thought leaders and buyers. We believe that the federal market is vastly underserved and ripe market opportunity for digital adoption. Our approach to driving the employee and user experience is directly in line with President Biden's executive orders on consumer experience and modernization. We're investing in the teams and technologies to be able to advance this market and expect to share more throughout the coming quarters. Expanding on the recognition of the importance from the category by industry research analyst firms, our partners are increasingly coming to us for guidance on how to help drive digital transformation for their customer base and focus on driving employee digital experience, change management, and software utilization at scale. Another sign for our category maturing are our partners who invest in building their businesses and practices centered around digital adoption and WalkMe as their platform. In the last two quarters, we have announced partnership with Accenture and Deloitte. Today, I'm pleased to announce that we expanded our partnership with HCL, a leading IT consulting firm, to create more go-to-market opportunities. We've already had early traction with HCL, and we're looking forward to growing our relationship further as they help their customers reimagine their businesses for the digital age. Our partner program, while still very early, has already seen the pipeline from these channels continue to grow as we expand our combined go-to-market strategy. Our partnership with Accenture is already starting to bear fruit. Now, I'm thrilled to announce an exciting, innovative new partnership with Celonis, the leader in process mining and execution management. Celonis' strength in having deep log-level data of users' process, combined with WalkMe's ability to use this data to drive action and ultimately the employee experience, will help our mutual customers drive deeper engagement from their employees. Customers that deploy WalkMe and Celonis together can identify and prioritize processes that are not being executed under full potential and either fix them automatically or, if needed, guide employees to take action at the precise moment their input is required. Business processes can be automated either via WalkMe's front-end automation capabilities or via Celonis' backend API integrations. Together, WalkMe and Celonis will help customers gain better understanding of how work moves across the enterprise, applies those insights to accelerate digital innovation, and take the right action to reach new levels of business performance. In summary, our momentum continues to accelerate, and I cannot be more proud of our amazing team of individuals around the world driving WalkMe forward to the future of digital adoption. To our customers, partners, DAP enthusiasts, industry analysts, and community for being with us and supporting this grand journey. With the progress we've made in our growth drivers in the first quarter, we continue positive momentum from our category in enterprise-class Salesforce. In growing diversification of ISVs and GSI channels, I'm confident we have a capability to grow 30%+ over the next 3 to 5 years. Now, I'll hand it over to Andrew Casey, our CFO. Thank you, everyone, for listening. Thanks, Dan, and thanks to all our customers, partners, employees, and industry analysts for the continued support of our vision for driving digital adoption forward. As Dan mentioned, we saw strength in our revenue and operating leverage throughout Q1 of 2022. We've seen early strength in April and May and have confidence in our full year 2022 plan, and we're reiterating our full-year revenue guidance. I wanna take this opportunity to remind you that, given our focus on the Global 2000 enterprise and commercial customers with greater than 500 employees, quarter-to-quarter new ARR can shift as we pursue larger deals. Longer term, as we gain scale, we expect these quarter-to-quarter movements will have a decreasing impact on our growth. We continue to see strength in our enterprise segment, where ARR from customers of greater than 500 employees is above 92% of our total ARR, whereas we continue to face short-term headwinds from churn in our less than 500 employee segment. We expect those headwinds to abate in 2023 and beyond as we continue to focus on revenue from customers with greater than 500 employees. As we shift towards the greater than 500 employee segment, we expect to see better unit economics as the customers continue on their life cycle journey from a single application deployment to DAP deployment. We consider DAP customers as those who are deployed on four or more applications or have an enterprise-wide agreement. Our DAP customers count grew by eight customers in the first quarter to 134 in total, up from 88 in the first quarter of 2021. Average ARR from this customer cohort grew to $653,000 in the first quarter of 2022, and total ARR from this cohort is up 56% since the first quarter of 2021. We believe that this cohort highlights the value that we can bring when organizations embrace an outcome-driven approach to their digital transformation strategies and the opportunity that we see for all of our G2K enterprise and non-commercial customers. We are also executing on our strategy to expand our sales channels by building out our existing partner program. I'm thrilled with the progress that we've made partnering with Deloitte, Accenture, and HCL. We believe that these expanded relationships will allow us to grow our footprint with the world's largest companies in some of the biggest digital transformations underway. We continue to invest in the teams and structure to allow these relationships to scale. Today, they represent less than 10% of our total ARR, but we are beginning to see the early signs of the growth potential, as Dan indicated earlier, regarding our pipeline from these partnerships. We believe these channels will also allow us to build leverage in our business model, as the cost to service these partners' channels is less than it is for our direct sales model. At scale, we believe the partner channels can contribute over 40% of our total ARR. We are also executing our strategy to expand our sales channels by building out our existing partner program. I'm thrilled with the progress that we've made partnering with Deloitte, Accenture, and HCL. We believe these expanded relationships will allow us to grow our footprint with the world's largest companies and in some of the biggest digital transformations underway. We continue to invest in the teams and structures to allow these relationships to scale. Today, they represent less than 10% of our total ARR, but we are beginning to see the early signs of the growth potential, as Dan indicated earlier regarding our pipeline from these partnerships. We believe these channels will also allow us to build leverage in our business model as the cost to service the partner channels is less than it is for our current sales model. We believe these channels will also allow us to build leverage in our business model if the cost to service these partner channels is less than it is for our direct sales model. At scale, we believe these partner channels can contribute over 40% of our total ARR. Lastly, we are managing our business to be able to capture share in the emerging growth of our category with building a scalable model that can push to the Rule of 40. We believe that the investments we're making today can show scale in 2022 and beyond as we show increasing operational efficiency, as evidenced by our decreasing operating loss margin percentage throughout 2022. We do this by managing our investments in the highest ROI areas. Last quarter, we outlined our investment plans to support expanding our reach within the enterprise and large enterprise customers by investing in our international sales force, our emerging federal practice, and to support our partner channels. As we focus on larger enterprise customers, we believe that our business model will become more seasonal in nature with a larger percentage of our net new ARR coming in the back half of the year. With that in mind, we expect Q1 and Q2 to be the slowest in terms of growing ARR. Now let's review the numbers. Total revenue for the quarter was $56.8 million, an increase of 33% year-over-year. Subscription revenue in the first quarter grew 34% year-over-year to $51.4 million. Remaining performance obligations or RPO ended the quarter at $318 million, representing growth of 34% year-over-year. Current RPO, which is contracted subscription revenue expected to be recognized over the next 12 months, grew 3% year-over-year to $185 million. Long-term RPO, which is contracted subscription revenue expected to be recognized after the next twelve months, grew 41% year-over-year to $134 million. Annual recurring revenue at the end of Q1 was $230 million, representing growth of 30% year-over-year compared to 29% growth in the first quarter last year. The momentum in large enterprise continues. ARR growth from customers with more than 500 employees continues to outpace the rest of our business, growing 32% year-over-year. Our dollar-based net retention for customers over 500 employees was 121% for the trailing four quarters. Before turning to gross margins, expenses, and profitability, I would like to note that I will be discussing non-GAAP results going forward. Gross margin was 77.6% in the first quarter, up 242 basis points year-over-year. In the first quarter, gross profit was $44.1 million, up 38% year-over-year. We continue to see improvement in gross margin due to a larger proportion of our revenue coming from subscription revenue, which carries a higher gross margin profile. We expect our overall gross margins will increase over time as we continue to see a positive mix of subscription versus services revenue and optimization of our hosting operations and improved services engagement model, leveraging partners where feasible. Turning now to operating expenses. We remain focused on investing for growth to capture share as recognition of the category we created continues to expand. Sales and marketing for Q1 was $38.3 million, compared to $24.3 million in Q1 last year. This represents 67% of total revenue in the first quarter, compared to 57% in the first quarter of last year. These increased sales and marketing expenses are a result of our investments in sales coverage across all geographies, partner expansion and the burgeoning federal market. As these resources increasingly become more productive, we expect to show operational efficiencies. R&D expense in Q1 of 2022 was $13.9 million, compared to $10 million in Q1 last year. This represents 24% of total revenue versus 23% in the same period last year. We continue to make investments in our platform to drive innovation and plan to continue to invest in R&D as we extend our product and invest in our ecosystem in 2022. G&A expense was $10.5 million for the first quarter of 2022, compared to $7.3 million in the first quarter last year. G&A was 19% of revenue versus 17% in the first quarter last year when we were still operating as a private entity. We are investing in the infrastructure of our business to continue to drive long-term scale in our business. Going forward, the primary areas of investment for us will be R&D and sales and marketing as we look to capture the growing market opportunity. Operating loss in the first quarter of 2022 was $18.6 million, compared to a loss of $9.5 million last year. Operating margin of - 33% compared to a - 22% in the same period last year, and - 35% in the fourth quarter of 2021. We expect to see continued improvement in our operating margin sequentially throughout 2022 as our investments scale and we begin to see leverage in the coming quarters. Net loss per share in Q1 2022 was $0.22, using 84 million weighted average shares outstanding. Free cash flow was - $20.3 million in Q1, compared to a - $4.1 million in Q1 last year. Free cash flow margin was - 36%, down from a - 10% in Q1 last year, a reflection of the tight expense policies we implemented during the pandemic. Turning to the balance sheet, we ended the quarter with $326.8 million in cash equivalents, and short-term deposits. Given our sizable cash balance and expectation of improving margins throughout 2022, we are well capitalized to continue to support our growth goals. Turning now to guidance. First, I want to remind you about the inherent seasonality of our business. Seasonality in our revenue reflects a classic enterprise SaaS model where revenues increase sequentially throughout the year, a reflection of our customers' demand patterns. Meanwhile, our expense structure as a percentage of revenue is typically higher in the first half of the year, and as we invest in headcount early on, with the expectation that those investments being increasingly productive throughout the year. As we focus on large enterprises, we expect this seasonality to be more pronounced. With that said, for the second quarter in 2022, we expect revenue in the range of $59 million-$60 million, representing growth of 26%-28% year-over-year. Non-GAAP operating loss in the range of $19 million-$20 million. For the full year 2022, we are reiterating our top line revenue guidance and lowering our expected operating loss range. We expect revenue in the range of $251 million-$255 million, representing growth of 30%-32% year-over-year. Non-GAAP operating loss in the range of $78 million-$74 million, reflecting a gradual improvement in operating leverage in the second half of 2022 as we see continued returns from our investments. With that, Dan, Rafi, and I will take your questions. Thank you. Ladies and gentlemen, if you'd like to ask a question, you may do so by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, please press star one to ask a question. We'll pause just a moment to assemble the phone queue. We'll take our first question from Scott Berg with Needham. Please go ahead. Hi, everyone. Thanks for taking my questions here. I guess a couple, Dan, let's start with your comments on larger deals taking longer to close. I guess a couple questions here. First, it sounds like you had some of your larger deals in the quarter slip into the second quarter. I guess, first of all, can you confirm that? And then secondly, have those deals that you expected to close in Q1, have they already closed here in either April or early May? Hey, Scott, thanks for the question. Yes, confirm that. As I said, we had a great April and May. I would say few of the deals that pushed, majority of them already closed, and we're looking forward to close all of the deals that pushed. This is why we're reiterating our guidance. Yeah, you are correct. Got it. Helpful. From a follow-up perspective, you all mentioned new CRO starting in July. You know, I know the organization's went through a lot of changes on the sales side over the last year. Obviously, new partner ecosystem seems to be doing well, as part of that. What does this new CRO bring maybe in a background or qualities, qualification standpoint that we should look for that, you know, may make some changes to your sales organization going forward? First, Scott, this is Andrew. I'd tell you we're very thrilled with our new CRO. I think he brings enterprise-level focus and rigor to our sales processes that, as we transition to focus on more enterprise, large enterprise clients, he brings the capability and the know-how and frankly, the rigor in sales process that we really need as we scale and grow up. We're very thrilled about that and we're looking forward to the capability he'll bring to the executive team. That's all I have. Thank you for taking my questions. We'll take our next question from Michael Turrin with Wells Fargo Securities. Please go ahead. Hey, great. Thanks for taking the questions. I mean, you referenced some impacts on the timing of deals, but it did sound pretty clear not seeing any signs in the demand environment overall changing. Can you just spend some time on the data you're looking at that informs that perspective, and maybe also just if there's a view around WalkMe's approach to just getting better efficiency around software spend, and if that could at all help buffer any macro headwinds in an environment where we could see some degree of spend rationalization? Sure. What we're seeing actually as we going up market and we're selling Digital Adoption Platform as a platform, some of the deals are becoming larger and bigger, and they're a little bit more complex. We're all about a fair exchange of value between us and our customers, and that sometimes requires some education from our side. As you know, it's a new category, and we moved from selling point solution to selling a wide platform that impacts their digital transformation strategies. Yes, sometimes some of those bigger deals can slip and move towards, obviously, a different quarter or a different week. The metrics that we're looking that give us the confidence is the pipeline. The pipeline is growing. We're getting more G2K pipeline. We're getting bigger deals. The average deal size is growing. Overall, our pipeline for the rest of the year actually grew compared to what we expected. That give us a lot of confidence. It's not just that the pipeline is growing, the quality of the pipeline is growing, and the deals and the people that we're talking with are meaningful conversations and meaningful deals that actually impact the bottom line of our customers. We're actually very, very excited about that. In addition, we're seeing huge momentum with our partners, and obviously, our partners that drive digital transformation with the largest companies in the world. When they're bringing WalkMe in, obviously that's something that our customers are happy about, and obviously it leads to very good deals and bigger deals. Regarding the software spend that WalkMe is saving, yeah, you're absolutely right. I think in economy like that and with the fear of recession, having a digital adoption platform is key. Companies are spending so much money on digital transformation, and without real adoption, they're basically not just getting the ROI, they're wasting money and wasting resources. Actually companies are coming to us and asking us how we can help. We're actually seeing it as a great opportunity for us. That's all really helpful color. Andrew, we know you pressed pause on some sales investments during COVID and saw some impacts both on the growth profile and just quicker profitability improvements. Are there any lessons learned from that exercise you can point us towards? What's the current mindset from the team around investing into things like sales capacity currently as we head towards the back half of the year? A couple things, Michael. Thanks for the question. I think that first and foremost, you know, given the macroeconomic backdrop, I mean, we're laser focused as an executive team here at WalkMe to make sure that as we're investing our dollars, we're getting the right levels of the return that we expect. We're taking the approach, call it an S-curve approach, if you will, to the ways in which we're investing in that we're starting to see, you know, the early returns on some small levels of investment we're making, and we're holding back, if you will, on the larger investments till we really see the efficiencies and the returns from them. That's the way I'm approaching our investments as we go forward in 2022. I think we've done a really good job in advance of, you know, of this year to really position our sellers in the right places with the right clients. That gives us confidence that we don't need to do a whole lot of investment the second half of the year. In fact, most of our investments have occurred, you know, during the first half of 2022, like any other major enterprise software company who tries to make sure their sellers have a full year of ramp capability, at least enterprise SaaS companies do. That's the way we think about it as well, Michael, that we've done some major investments in our sales team. We've started to support them with key resources around them, like our partner managers and our sales engineers and a host of others. The way I think about it right now is that we've got the capacity in place. Now it's upon us to execute and drive the efficiencies associated with those investments. Thanks very much. We'll take our next question from Kevin Kumar with Goldman Sachs. Please go ahead. Hi. Thanks for taking my question. I wanted to ask about your DAP customers. You added eight in the quarter, and now DAP customers represent about 28% of your 100K+ ARR customer base. But my question is, can all of your 100K+ customers become DAP customers over time? I guess said another way, what needs to happen for customers who are already spending six figures to go all in and become a DAP customer? Great question. We believe that every company above 500 employees can be a DAP customer. To your answer, to your question, yes, we believe that we can get most of our customers today to that level, and that's what excites us the most. The potential that we have with just our existing install base is massive. Now, what it takes in order to get to be a DAP customer, one is value. Again, we're a new category. Usually, when company is coming to us, they're coming to us with one project. For example, they have a Workday deployment or a Success Factors deployment or Salesforce deployment, you name it. Then from there, they're seeing how much value WalkMe can bring to the table, so they're starting to expand with us. As I mentioned in the call, in Q4, we actually saw a customer landing a DAP customer, and now even expanding with us. Obviously there is a lot of market education that we need to do, going upper market, talking with obviously the CIOs, the CDOs of an organization. This is why the partners is such a key component for us because they are the GSIs the one that drive the digital transformation with those enterprises, and bringing WalkMe in gets us faster to that deal. I would say the number one for us is to bring value to our customers. Once they see the value, they're expanding. Yeah. That's helpful. Last year, you had some elevated churn, I think, coming from the SMB customer base. Has that started to stabilize at all? Just curious, is the overall churn of the business where you would like it to be at this point? Thank you. Thanks for that last one. I would tell you that we've still got 8% of our total annual recurring revenue that's in that less than 500-employee category. As you indicated, as we continue to focus our coverage and our sales efforts around marketing to G2Ks, enterprises and commercial clients who have greater than 500 employees, that the amount just will drop. It's gonna, over a period of time, become less and less. The fact of the matter remains that in that class, we do see a much higher churn rate than other targeted customer classes. I think we're gonna continue to deal with it for throughout 2022, even to a lesser degree. As we move into 2023, I see that that percentage becoming one that's almost immaterial. It comes from, you know, multiple customers to, you know, the power of, in that we continue to migrate those customers to adopt the value proposition or, you know, we'll just move away from that category itself. It'll become a less and less drag. Great. Thanks for taking my questions. We'll take our next question from Michael Turits with KeyBanc. Please go ahead. Hey, guys. Congrats on the add-ons on DAP customers and on the install growth. It's understandable that as you move up market, things get lumpy. It's the nature of the business. Maybe you could drill down, if you would, into what was behind some of the push outs. Was it longer sales cycles in general because the deals are getting larger? Was it anything to do with, you know, with macro in terms of tighter budgets? Anything you can give us there would be helpful. Sure. Let me explain how it works. When we actually get into the enterprise license agreement and the DAP deals, as we call it, the organization basically moves WalkMe to a centralized budget, right? If we sell to the sales department or to the HR department, now when we're doing an enterprise license agreement, they actually need to pay for it from a centralized budget. As DAP is a new category, they don't have DAP as a line item budget. This is usually where it's becoming a little bit more challenging for us because they want WalkMe, they already use WalkMe because usually DAP deals are an extension deal. Then when we're talking with their procurement, it's like, okay, so who's paying for it? Which budget it's coming from? Then they're going and allocating budgets from the different departments in order to get to that bigger deal. That usually takes us a little bit longer because we need to educate them, they need to educate themselves, and they see exactly how to execute the deal. Because we're bringing tremendous value to those customers, we're not willing to cut our pricing just to close the deal. Because of that, if it will take 3-5 weeks longer to close the deal, we will wait that time. Because at the end of the day, and what excites us is how we're building the category and the signs that we're seeing that the category is growing. Because in order for us to grow at that scale for the next 5 years and even more, we need DAP to be a category. We need DAP to actually be something that is a line item budget for every CIO, CDO, and that's what we're pushing, and this is why we're very excited for this quarter, because of the partnerships that we made, the technological partnership that we made, obviously new GSIs that we're signing. But I would say budget owner would be what's slowing us down today. I can add, this is Rafi. In some of the deals that were pushed, we see early indicators for the conviction they have, and it is a budgetary thing inside. For example, assigning the team that's gonna work on the cross-DAP collaboration. Those are things that are really encouraging for us. Great. Thanks. That's helpful. Then, Andrew, obviously you, it sounds like this is the peak of investment in the first half. Obviously you're not giving long-term guidance at this point, but can you talk about something that would give us some sense of beyond 2022 in terms of whether or not we'll actually see a dollar reduction in losses, both EBIT and cash flow? Yeah. Let's talk about a couple of areas, Michael, because I certainly will encourage everybody who's listening to attend our Analyst Day tomorrow, where we're gonna go through some of these things. You know, from a gross margin perspective, we talk about the increasing percentage of our subscription revenue, which has a much higher revenue margin profile than the services revenue component. As that happens, you'll see a natural progression of a higher gross margin. We're also increasingly better managing our support and hosting costs. That'll drive higher subscription gross margins. Finally, as we shift more and more of our services to our partners who are more efficient delivering those services, we'll be able to drive towards a much more optimized services profile that results in a lower drag on the overall gross margin. That's at the gross margin line. On the OpEx side, the sales and marketing efficiency is probably at its low point for us as we continue to progress towards driving greater operational efficiencies. Once again, I will tell you, as we invest and expand more with our partners, we'll be able to drive a much more efficient go-to-market model, which will result in a much higher sales efficiency and a better LTV to CAC ratio, which I'll talk about in detail tomorrow. Andrew, thanks very much. Oh, I'm sorry. Go ahead. I was just saying that, and these are some of the examples of the levers pulling and the specs we think that we have in our model that we can drive towards increasing operational efficiency. Great, Andrew. Thanks, everybody. We'll take our next question from Vinod with Barclays. Please go ahead. Hi. Thanks for taking my question. I wanted to touch on the, U.S. government opportunity you brought up on the call. Now you mentioned the FedRAMP certification moderate status could be coming in the second half of 2022, and in the past have talked about kind of having the right sales teams and partners in place. Can you maybe just talk about where you are with each of these factors versus where you need to be to start driving more incremental revenue contributions? And kind of when do you expect this to happen on each of the items I mentioned? Sure. On the FedRAMP moderate status, we're aiming to Q3, Q4 this year. Obviously it's a long and complex process, but we're on track, FedRAMP. As you know, that's a must in order to do business with the government. One of the things that we did, and Rafi mentioned it in the previous earnings call, is that we already have the team in place. We have a full team operating, building opportunities, working with the government agencies. The demand that the government needs for employee experience and digital transformation is exactly like the private market. This is why we see good opportunities. Those agencies are anxious to start working with us. We're getting the demand from them. Overall, it's looking really, really well. I would say that we're already signing deals with authorities and states, which is not federal, but obviously we're seeing the same theme and the same demand. Obviously this year probably it's not gonna be huge for us on that because we'll start in Q3, but the pipeline is stacking up and we're really happy that we made those early investments. This is where we are there. Dan maybe let me add to that, Vinod, there's when you go through in advance of getting the certification itself, when the agencies recognize that you're actually going through the process and that you've been approved to enter that process, it starts the phase of where you start getting included in the RFP discussions. I will tell you that the good positive momentum that we're seeing in the space is we're getting the acknowledgments of the agencies. We're starting to get included in the RFPs, and we did recently get a validation from a key partner in the federal space that we're validated for federal business. All those things are just, you know, little milestones that says, you know, our investments in there are going to pay off, and it's just about being diligent and focused on our execution. Thanks, t hat's helpful. I just also wanted to touch on Deloitte and Accenture and can you just talk about where they are in terms of building out their practices and you know how long does that take for them to kinda really build out full-fledged practices where you know you'll really start to see momentum and kinda move towards that longer term 40% target you know coming from partners? Thank you. We're really happy with the progress there. I will tell you. You'll have to ask them what they consider practice, you know, in terms of trained consultants or dollar value, but we're very happy with the pipelines they're starting to create. Frankly, some of the wins, we actually had a couple of wins scored there. You know, our key partnerships with each of them were cited as the reasons that customers chose WalkMe, that they had confidence in the delivery capabilities and the vision that our partners have for WalkMe in their environment. We're starting to see, I think, obviously, I think it's one of the most important investments we're making for our long-term growth, and frankly for our future sales efficiency. It's one of those areas when you're trying to do a major design win and change the way in which people are delivering their digital transformation services, that you've got to do it in a very methodical and thought-out way. The pipelines are growing, the wins are accruing, and we're increasingly appealing to more and more GSI partners as evidenced by our agreement with HCL this quarter. We're happy with the progress. Great. Thank you. We'll take our next question from Patrick Walravens with JMP Securities. Please go ahead. Hi, team. This is Joe on for Pat. Thank you for the question. I'd love more color on the strategic partnership with Celonis. You know, what was the genesis for it, and what do you think it provides WalkMe? Thank you so much. Thank you so much for this question. I waited for it. That's super exciting partnership. This partnership is a game changer of what the combined solution can do for digital transformation. Let me explain what we did there. Obviously, Celonis is an amazing company, and they have the ability to get and extract the backend data, from logs, from all the transactions, if it's CRM, ERPs and so on, and discover inefficiencies in processes. What they're lacking is the ability to actually create action. You figure out that something is not working, great. How you fix it? The integration between us is that once an inefficiency is identified in a process, we can activate a WalkMe action that will pop up on the employee computer, and we show them exactly what to do, even automate it in real time. Everything is happening without any configuration. They're actually identifying the problem, activating an API, and then WalkMe takes over, and the action pops up and shows the user exactly what to do. That's actually pushing real results with our joint customers. Actually, the way this partnership was born was from our customers. Our customers are like, "Hey, why you're not connecting? Why you're not connecting?" One of our customers introduced me and Alex. In a super fast session, we were able to create a very complex technology integration that is in production now, and happy to obviously announce it. As we started to talk with more and more customers, every CIO we presented a solution were blown away and said, "This is exactly what we need." We're looking forward to this partnership and see more and more of our joint customers using that. Thank you so much. That's super helpful. On the hiring front, I just wanted to clarify, have you made any changes to your hiring plans for the year or any updates just with all the uncertainty going on? I'd love to get your thoughts there. Thank you, guys. The only thing I would say is that our hiring plans remain consistent with what we stated was that most of our hiring happens in the first half of the year. Now, having said that, I will tell you that we are watching every dollar we spend, and we're making sure that we're achieving the ROIs that we expect from those investments. That may cause us to look at individual hires and delay, pause, or reallocate based upon where we see investments between a higher level versus a lower level. I wouldn't want you to take away that we're changing our expectations on where we're investing, but I will tell you that the scrutiny with which we're applying our expectations for return are at a heightened level. Thank you both. We'll take our next question from Keith Bachman with Bank of Montreal. Please go ahead. Yeah. Thank you. I had a couple. Andrew, just to start with you, I wanted to come back to an earlier question. And trying not to steal from the event tomorrow, but could you talk about when you think you would realize cash flow breakeven? Is that gonna be during a quarter in CY 2023? We're not giving that long-term guidance, Keith, but I think that what we will do is we'll show you the pattern through which, you know, when we talk about growing our ability to grow 30%+ over the next 3-5 years, and the way we're actually driving towards our long-term operating profitability, that you'll be able to come up with a model structure that will best facilitate that answer. But right now, we're not giving that long-term guidance. You know, frankly, it's the situation of how will the second half of this year really profile out, you know. Although we certainly are mindful of the backdrop and the macroeconomic issues, I wanna reiterate something Dan mentioned earlier, and that is, we're not seeing any substantive change in our demand pattern. Frankly, if we position WalkMe the right way, we could actually take advantage of some of those more macroeconomic situations as well. You know, the takeaway, it's a little uncertainty associated with that, but the reality is that, we're not giving that long-term guidance yet, and, we're gonna try to map out a way for you to understand that in the key levers tomorrow. Okay. Well, you did say that the operating income loss was at the low watermark. Can I assume that the free cash flow loss was also at a low watermark? The predominance of our free cash flow is generated from our operating loss. You're not gonna see big capital expenditures or other items that would negatively impact free cash flow from us. We're just not that type of business. As operating income loss goes, so does free cash flow profitability. Given that we bill annually in advance, you'll see that happen as a precursor to operating profitability. The other thing you can take away, we're laser focused on driving operational efficiencies sequentially as we go forward. Okay. My second question is, I wanna talk a little bit about the threats of competition and pricing. I was gonna break it into a few pieces. A, when you're trying to procure new logos in particular, is that still mostly sole source or the competitive bids? B, when you're in those type of situations, how is the pricing environment? And C, then just more broadly, you did mention that as you're trying to move upmarket, that you indicated the unit economics get better. I just wanna make sure I understood that correctly because I assume the pricing is a bit more, shall we say, scrutinized at the larger enterprise. I just wanted to hear you flesh out those kind of components on competition and pricing. Thank you. Sure. I'll start. The way we're seeing it, there is Digital Adoption Platform when we're selling the solution, for organizations that we're helping them drive their digital transformation. There is the point solution, like when you buy guidance website or you have a specific use case on onboarding or something like that. This is usually where we'll see the competition, and obviously they're coming in a lower price. That's not the promise of WalkMe, and that's not what we're selling. At the end of the day, we're helping companies realize the value of their digital initiative, and we're helping them with their bottom line and revenue. Yes, there is competition. There was always be competition. For us, what we're doing, we're focusing on the category and the value that we're creating to our customers. Right now, we believe that we're by far the most advanced platform. This is on that. Regarding the scrutiny on the pricing, I wouldn't say there is a scrutiny on the pricing. I think it's more understanding how they're budgeting it. At the end of the day, we think we're still leaving some money on the table. We don't think that WalkMe is expensive at all. I don't think our customers think that as well. I do think that as they plan their budget and now they need to pay for it as an enterprise license, they need to figure out how they're budgeting it and how they're allocating it. That's what's slowing us down. I don't think the pricing is too high. I hope it answered the question. Yeah. Maybe just to add to that a little. You know, when you refer to pricing, I'm assuming you mean deal sizes and value. The issue that we often see is that we're rationalizing the value of the platform across to a whole new set of stakeholders at a whole new level. That in itself is, you know, where we are showing the capabilities that our clients can really gain from an investment in WalkMe platform. It's one where Dan was referring to earlier, as we go into some of these larger deals, we want our fair value exchange. If we're generating $5 million in business savings, that we expect that we can have, you know, a lower multiple on that as part of our fair value exchange. In some cases, that's an education process. Then in some cases, you know, the, if you're dealing with procurement, they'll push you down as much as you can. If we're not willing to go there because we think we create greater value, then, you know, that's the rub. Yeah. You know, I often talk to our sellers about the differences between a taxi and a rideshare service. No one will compare the two to each other because the rideshare service gives you a much higher value. It gives you information, it provides you destination. WalkMe is no taxi. We offer greater value to our clients, and we should expect to be paid for it. I think that also, if you look in the most recent comparison coming out of the Everest Group PEAK Matrix, you see that there are 18 vendors. WalkMe is more than 45% of the market, so we're definitely seeing that we maintain this leadership. From our perspective, the more competitors coming in would just benefit us. The last one, Keith, real quick, and I'm happy to get into this in more detail tomorrow on the LTV to CAC ratios. The thing that in terms of we're paying the same price for a direct sales model for a customer with that is less than 500 employees, which has a much higher churn rate and a lower LTV than the enterprise clients who sign longer term contracts, have a much higher renewal rate. That's the major difference. When we add partners into that mix, we change sales expense into a partner discount line item. Ladies and gentlemen, this will conclude today's question and answer session. At this time, I'd like to turn the conference back to Dan Adika for any additional or closing remarks. Thank you, everyone, for joining the call, and appreciate the questions. As Andrew said, just a reminder, we have our Analyst and Investor Day tomorrow, and we'll go deeper to our product vision and go to market. We will be thrilled to see you there. Thank you so much for the time. Ladies and gentlemen, this concludes today's conference. We appreciate your participation. You may now disconnect.