Great! Well, thanks everyone for joining on this last session of the day before the cocktail reception. Hope we're not keeping any of you from that. Really excited to have Todd McElhatton, CFO of Zuora, with us today. My name is Adam Hotchkiss, and I cover the emerging software space here at Goldman. So really appreciate you being here, Todd. Thanks for the invite. Great. Well, I guess, look, Todd, to get started, you know, for those in the room who are less familiar with Zuora, could you just give us a high-level understanding of what the company does and what you're trying to build as CFO of the business? So, you know, a lot of people in here probably use the Zuora product and don't realize it. If you use connected cars, so think about Ford's EV charging, think about GM's OnStar. If you do the Oura Ring, we do manage the billing and revenue recognition for that. If you think about if you're a New York Times subscriber, that's all powered by Zuora. And so what is Zuora doing? Zuora is helping companies as they transform their business model. So companies have kind of gone from this, "I'm selling a product once, to I want to have this ongoing monetization," and this ongoing monetization has a ton of complexity to it. So maybe I'm doing a consumption bill, maybe I've got a once-a-month bill, maybe I've got a tiered pricing, and I start here, and as I add more volume, my pricing per unit goes down. That then puts in revenue recognition process or revenue recognition challenges. ASC 606, IFRS 15, we're able to manage and automate all of that revenue recognition that has to happen. Whether you're a company like Salesforce, and you have $40 billion worth of revenue that we manage for, or you're a company that's got millions of subscribers that are constantly changing what they're buying, how do you automate that back office from a standpoint of helping out take out teams of accountants that are having to do that? Think about the manualness of that. As a CFO, that scares me to death, thinking that you have all these people behind the scenes that are telling you what your revenue is going to be and making these allocations manually. And then the savings that you get on your audit fees, 'cause revenue is one of the biggest things that is always getting tested, especially in a lot of the typical companies that we work with. Collection, how do we help automate collection? And then, most recently, our Zephr product, which is helping companies to find new ways to monetize in the subscription experience, and we've even been able to take that, property, which was usually always sold into media. Now, we're showing that that technology can be extensible in our extensive B2C business. So that's really what we're doing, is we're helping companies find new ways to monetize and grow their business. Great, no, that's a super helpful overview. And, you know, Zuora's a nearly two-decade-old company. You have a unique situation of having come from some of the ERP companies, right? And having had that inside look at what the traditional ERPs do in the space. You know, so I guess, with that in mind, what brought you to the company about three years ago, and, you know, how do you feel about the opportunity now that you're three years into the job? So wow, three years has been a lot, you know. When I, when I joined, it was in the middle of COVID. I interviewed, at our CEO's house, and our president cooked me, lunch. And so, you know, it was an interesting time to make a switch. But I was at SAP before. I was oversaw all the cloud properties, so think about Concur, Qualtrics, SuccessFactors, Ariba. And one of the things that I certainly saw was the needs that companies had doing these recurring revenue. How do you bill? How do you manage that revenue recognition? There's a ton of complexity, and these are new business models, and these new business models touch a bunch of other systems, and rather than being a one point in time, they're an ongoing ecosystem of changes that have to happen. What really was exciting to me was, here was a company, that's all they did. This was all we focused on. And whether it was my time at SAP or my time at Oracle, you saw there was a constant need for this type of product, but it wasn't on the radar screen of the traditional ERP systems, nor is it on the radar screen, really, for CRM companies. Now, look, there's obviously, you know, if you talk to an ERP company, they're going to say, "Yeah, of course, we have this product." And they do have a product, and I'd like to say it's kind of like, "Hey, it's one of those things I checked the box, so I said, 'Yes, I can manage subscription.'" But if you start really clicking down, "So how many customers do you have that have 1 million, 2 million subscribers? How do you automate revenue recognition, so if somebody has a change every month, does that need to be touched?" When you start really going in and taking a look at that level of agility that companies need, that's where Zuora really stands out. I take a look today and say, "Wow, you know, when I was looking at this, I was like, 'Hey, this is really extensible for tech.'" We've seen media as our fastest-growing business, and you think about that. How different is media today than it was 10 years ago from how we're consuming content, whether it's streaming, whether it's newspapers, whether it's things like New York Times? If you thought about New York Times a decade ago, I think everyone was like: "Hey, newspapers, you know, that was a thing of the past." They've now got 10 million subscribers, and they're looking to get to 15, I believe. So there was a company that, you know, everyone thought was, "Hey, they're gone." Now, that is the number one source of people around the world in English language receiving news. I think about manufacturing. You know, connected cars, this is a huge opportunity. You hear Mary Barra, GM, talk about the fact that over the next several years, GM alone thinks they'll grab $30 million a year of revenue coming from IoT or their connected cars. You know, GM and 12 of the 15 largest automobile manufacturers have chosen Zuora. Other companies like Caterpillar, John Deere, ABB, Honeywell, Siemens, all companies that are sitting there saying, "Yes, we're still selling products, but we see these other huge revenue streams," and Zuora is really at the forefront of helping those companies realize the what they want to do there, and being able to put the systems in place so they can sell those products. And when someone says, "Hey, I've got a new SKU, or I've got a new product I want to release," rather than saying, "Hey, we'll be ready to release that in six months," we can do that in the next couple of days. And you saw we did that with Zoom during the pandemic. Here was a company that, you know, started off, we started with them, they were, I think, $30 million of revenue. Today, they're $4 billion worth of revenue, and we absolutely were with them the whole way during COVID and helped them see their business grow at this exponential rate. So that's what's really exciting about Zuora. We're really helping these businesses change and finding new ways for companies to monetize, and we are what is powering that. No, that's great. That's a great overview. And when you take a step back and think, what role is Zuora actually playing, if at all, in talking to these companies about their subscription businesses and actually helping them grow it? Obviously, you mentioned you've got a bunch of products, subscription, billing, revenue recognition in the back office, but is Zuora actually playing a role as well in helping companies grow their subscription businesses and, you know, navigate different business models as well? So we have something called the Subscribed Institute, and, you know, I wouldn't want to think this is as a consulting type of business, 'cause it's not. It's a service that we offer our customers, and really help take them through the journey of what does it mean to run a successful subscription business. And in some ways, I don't even like to use the word subscription. I think it does a good job of explaining what we do, but the other thing is, at times I think it's, it's really limiting, 'cause we're really helping people find new ways to monetize their products and services. And so when I think about what Subscribed Institute does, we collect a ton of data. We have a ton of data with our customers we can share. Here's things you're doing well. Here's things that you're not doing well. Here's how you want to stick to standards. Here's why you don't want to have all of these different customizations. So we have a ton of insights that we share with our customers on a regular basis. You know, our founder, Tien, is definitely the guy that is seen as the industry leader. You know, he brought subscriptions to life. And so we do see a lot of companies, especially, when you're seeing media companies and companies in the industrial space saying, "Look, I want to figure out how to make this work," they will come to us and ask for our advice, and that's one of the things that we're also able to give them insights on. I think we have a lot of insights that none of the other product companies are able to offer. Yep. No, that makes a lot of sense. And, you know, I think just digging into the business a little more and shifting, you know, if you were to rewind three years ago, Zuora was a business running with sub 100% NRR operating losses. And if you look at the way those metrics have advanced, you know, I think there have been points of accelerating growth, and you've certainly improved your margins significantly here over the last year. Could you talk a little bit about what has brought you to where you are today and some of the challenges you faced along the way? Yeah, I think Zuora was an interesting company. It was a company that had developed a great product and kind of, you know, hit an inflection point and needed to make some adjustments. So, you know, starting about 3.5 years ago, Tien really came out and said, "Okay, you know, it's time to bring in, you know, a big overhaul on the, on the leadership team." We brought in a new President and CRO, and when we take a look at one of the things that we did there was we said, "Okay, what do we want to be? We want to focus on the biggest and the best companies." And sometimes when I talk about the biggest and the best companies, people are like, "Well, is that enterprise companies?" Like, yes, it's absolutely enterprise companies, but at the same time, we're able to pick the Zooms, the DocuSigns, the Boxes. I think about new companies in media that are coming out. We want to have that flexibility to say not only who is the biggest and best today, but more importantly, who's gonna be the biggest in three years from now? Let's make sure that we're powering their businesses. So it was really, let's make sure we're going after the right companies. We're not going after SMBs. That's not where we think the money is. We think, you know, this is companies that are really gonna grow at scale. That's where we want to be. The second thing is, we really invested in customer success. It was an area that we had really underinvested in, working to make sure that our customers were successful and that they could grow with us. The third thing is, we really worked to partner with the SIs. Again, these are people that are helping these big companies make the right technology choices, make sure they understood what Zuora's tech stack could do, and now you're seeing they're out there front and center, recommending us oftentimes as, you know, this is the choice that you want to make. And so that was one of the big things we did. From a product standpoint, we made a lot of changes. We've done a huge investment in product. We've more than doubled our capacity and our product engineering, and we didn't double the R&D expense. We got really thoughtful about taking things out, having a right location strategy, making sure we really started bringing innovation back. And, you know, you've seen more and more products come out. If you take a look at, you know, for example, last year, I think one of the things that we said was, we had a huge portion of our new bookings last year came from products that had been released in the last 18 months. So you're seeing not only are we innovating, I'm, as a CFO, it's like, hey, it's great when someone shows me something new and shiny - but I'm like: Can I sell this, and can I monetize it? And we're absolutely doing that. The second thing that we wanted to make sure that we could do on the product side is not only could we continue to innovate, but were we more than a one-product company. And so initially, we were a billing company, and we had this revenue recognition product, and that really gave us a lot of differentiation. But we really doubled down on saying, "We're gonna have multiple ways we can land with customers." And so one of the things that I've seen is billing is a little bit of a harder sale, and the reason it's a harder sale is it's a mission-critical sale. It's in the guts of the company. It's something that when you make a decision to make a change on billing, that's a once in a generation. You're, you made that decision for the next 10 or 20 years, and that's really great for us 'cause when people decide to come our way, we're just not losing those customers, and you're seeing that with our dollar-based retention from the Standpack. Gross retention is great. You know, we continue to have the best retention that we've had as a public company. We keep over and over showing that, that, you know, we've picked the right customers, but more importantly, we've got a product portfolio now. We have a revenue product, we have a Zuora Collect product, we have the new Zephr product, so we've got multiple places we can land. We're happy to land when a company says, "I'm gonna do a big order to revenue transformation," and they bring- may bring on multiple of our products. But we're just as happy to land with other products. Zephr, I think, is a great example. The acquisition, we're really pleased with how that's played out for us. You know, it's just a year in. I take a look at the deals that we did over $500K, seven of those deals we did this last quarter, two of those were Zephr and billing. So Zephr was a way for us to go into media companies and absolutely differentiate ourself, have a conversation, but then also cross-sell the billing product. So that's given us a lot of lift there. The other thing about the Zephr technology is we saw, hey, this is extensible and something beyond just the media market, and we sold it to 24 Hour Fitness, and we think there's a lot of runway for us to sell that to our other B2C customers. Collections. New York Times, we talked about that. It's a company that we're really proud of, that to be a customer. They came to us and said, "Hey, we're having this huge problem with collections. Yeah, billing's interesting. That's really a big lift. We're not ready to do that yet, but, man, I've got, you know, almost 10 million subscribers, and we're trying to figure out, you know, what are collections, what do we need to write off? Where are we with these? Can you solve that?" And we were able to solve that really quickly for them. And they said, "You know what? We're now gonna take the revenue product." And now we're, you know, a year and a half into the relationship, and we're seeing they're moving to our billing product. And Chegg is an example where we initially landed with them, the textbook company. They had a revenue recognition challenge. We landed with revenue. We've now taken them to billing. So what we've seen is there's multiple ways for us to grow the business. Traditionally, we only landed with billing. Now we're saying, "Hey, we're happy to land with billing. We're happy to do a big transformation, but we're also happy to land in any of these other areas," and it gives us plenty of runway to cross-sell over the life of a deal. Yeah. No, that, that's great to hear, and I think it's a good segue when you talk about that, diversification and landing points to just the postmortem on the quarter. I just wanted to give you some time to address it now that you've gone through it. You know, the subscription business continued to grow nicely, and I think the services business moved a little bit quicker to your partners than you had anticipated, but just any high-level comments on the quarter now that we're through it? Yeah, I think it was an interesting quarter. We've talked about for quite some time, as it's a challenging market out there. I think it's stabilized. We've seen pretty much consistency over the last few quarters. We're not seeing acceleration. It's certainly not where the business was 18 months ago. We're seeing people be really thoughtful on what they're doing. You're absolutely right. When we took a look at the quarter, we said, first of all, subscription revenue is gonna be better than what we thought it was gonna be. And I make 81% gross margin on that business. That's where I make my money, and that's where I wanna be focused. I also have a services part of my business, as in a company with the type of product I have, I'm always gonna have a services business. We have some companies that want the manufacturer of the software, the, you know, who produces it, to do the delivery. We have to train partners. We know our customers and products better than anyone else, so we have to have some investment in that area, and our people in that area are fantastic. But that being said, I run that at break even to a slight loss. And so, you know, it's an area that I know I need to have that part of the business, an important part, but it's not an area that we're like, we're focused on driving value. And when we've seen things slow down, what we've seen is our SI partners. There was a bar here, like, "Hey, we don't want to take projects, you know, that are below this value." And as things have tightened up, we saw during this most recent quarter, a lot of the SIs have sat there, and they've lowered the bar. They're saying, "We're willing to take these smaller projects." And I'm like, "I'm a partner-first organization, and you wanna take stuff that I have no margin to a slightly negative, and you're bringing me new opportunities? That seems to me to be a really no-brainer." And then, like you said, on the bottom line, we both accelerated for the second quarter in a row, where we thought we'd be on profit, and we accelerated what our free cash flow would look like. I felt like, you know, feels pretty good. We feel like we're still gonna land where we said from a growth perspective at the beginning of the year. So I think things are kind of playing out as we expected, with the exception of we've accelerated bottom line. Yep. No, that makes a lot of sense. And, you know, you touched on each of the different products. Obviously, subscription billing is your masthead, right? But, you know, when you look at the other products, is there any one or two in particular that particularly excites you? I know you have great things to say about all of them, but in terms of contributing to the financials, you know, how do you think about whether that's, you know, Zephr going outside of media or revenue recognition, sort of how do you rank order when you're thinking about R&D and different expense structures, what to prioritize? Yeah, I think one of the things that we're seeing right now is, you know, Zephr tends to have our quickest land. Yeah. That's super exciting to me. It's also exciting that I can go have a conversation with something new to our B2C customers, and it gives me an opportunity not only to focus on and feature Zephr, but other innovations that we've done, so it's a great conversation starter. Our collection product uses AI, and, you know, not that it uses AI, but what's really important is we've seen in some instances where we've improved payment acceptance rates by up to 20 points. Think about if you're running any B2C any B2C subscription business at scale, what that means to be able to improve your collection rate by 20 points. That's a huge difference on what your churn looks like and a huge impact on collections, and I think in this environment, it's something that people are interested in. Our our revenue product, again, continues to be something that's interesting. You're seeing a little bit as maybe companies on the tech side are starting to think about, okay, you know, there is gonna be a future, there are gonna be some public offerings. You guys are certainly hoping so in the next couple of years, and, you know, they need to prepare and put the infrastructure in. So we're seeing, you know, signs that there's some demand that's maybe starting to pick up there over time. But you're also seeing the fact that there's a really great ROI on the revenue product. Being able to take out groups of accountants who are doing this in a back office, just from a standpoint of that's a cost savings. One of our customers that put in recently had a really significant savings in what their third-party audit fees were, because now all of a sudden, you had everything in one source of truth. It was in systematic way. It was very easy for their outside auditor to audit, and that gave them a huge savings and a way to justify the project.... So I think, you know, we're seeing multiple things today that excite us, and, you know, we're adjusting to, you know, making sure that we've got a message that resonates with what people are looking to invest in and get, you know, quicker returns. Yeah. No, that makes a lot of sense. And then when you think about the sales motion and your employees, how nimble have they been, and how much of a challenge has it been to, you know, go to them and say, "Hey, we need to land smaller and faster. We've got all these new products. It's not going to be the same motion as we had three years ago." Have they been relatively resilient? How do you describe that, how that's gone? I think our folks are extremely resilient. You know, at the end of the day, everyone wants to be successful. You know, what we've done is shown, hey, there's multiple ways that we can be successful this year. Yes, there are still companies that have an existential issue and need to do a major transformation. We can sell that. We can sell an entire suite, and we can help them, whether those be companies like in the IoT area or whether those be companies in media, where just have to do this. It doesn't matter what's happening in the current economic situation. If I don't do this, I'm either gonna miss a generation of technology or I'm not gonna be here. So we're able to do that. But we're also able to show people is, Look, we can land lighter, and when you land lighter, maybe that's one product, maybe that's one division. Maybe when someone implements billing, we say, "Why don't we go ahead and do the use case of just doing your new business on it? And then over time, as people renew, we'll go ahead, and we'll move that over there." Our people are very resilient to do that. And one of the things we've also shown is, if I think of my top five customers, I believe almost all of them started around $100-$150,000 land. And, you know, some of those companies have been around with us for, you know, six years or so, and quite a few of those are over $5 million a year of ARR. It's not where you land them from a size, it's did you pick the right company, and does it have the ability to grow? When our salespeople see that, that's obviously very exciting for them to see that can happen. On top of that, if you can land a deal much quicker, it gives you the opportunity to go on to the next deal and make money. Yep. Yep, I wanted to talk a little bit about Subscribe Live. I'd be remiss if I didn't. Mm-hmm. Lots of new announcements from the team. You know, you have Zephr expansion, you have the data warehouse, you have the consumption billing model. You know, when you look over a multi-year time frame, how do you think about internally, you know, what kind of financial impact those could have on the business? I can envision a world where, you know, a business has 50% subscription and 50% consumption, and, you know, you get a lot of new business in the door over the next couple of years. You know, how do you think about that, what that opportunity looks like? Obviously, I think consumption is a huge opportunity in front of us. Yeah. We're seeing today more and more companies are experimenting with it, especially in a challenging environment. The opportunity to say, "Hey, try it. Only pay for what you're gonna use, you know, really low risk. If you're not using it, you don't pay for it." That's been a great way for companies to go out and get their product, get some traction on it, and then as they start getting traction, you know, the guy like me sits and says, "You know, I don't really like this consumption because it's all over the board, and, you know, we're using this product. You're getting value for it. Why don't we commit for at least part of it?" And so, you know, those give us opportunities because when people think about consumption, sometimes you think about, oh, it's just, you know, a P times Q. I, you know, used X number of units, and here's the price, and that's what it is. But if you really think about it, it becomes much more complicated than that. When I think about our AWS is one of my biggest spend items, and, you know, that's consumption, right? But at the end of the day, I have reserved instances. I made certain commitments. I made certain commitments, for different products, and so I, I fixed into those, and then I have the ability to go up and down and flex up and down. Those are different billing models. You see some people saying, "You know, look, maybe if I do a prepay and, you know, give me a better discount for paying up front, and I draw that down." Again, a different model of consumption, which is a different thing, form of billing, which we're able to support. I think about people saying, "I'm doing metering. Maybe I charge more for certain functions at certain times than other times." It's another opportunity for us. Even where you're having AI, where people are finding new ways to monetize, that's another opportunity for us to provide billing services for other companies. So I think, you know, consumption is a huge opportunity for us, so I feel really good about that. You know, everybody's looking for analytics, what's working, what's not working. We had an offering with Snowflake, now it's any warehouse. Yep. So, you know, really, again, you know, we want to be agnostic. We want to meet our customers where they are and to be able to provide them the data that they need to make the right decisions. What drove the investment in consumption specifically? You know, you obviously spent time at SAP. Was there something about what the ERPs weren't doing on the consumption side that made you say, you know, "Hey, my customers are asking us for this"? How do you view what the competitive landscape in consumption looks like? I think it's obviously, you know, super dynamic. There's a lot of changes that are happening. A lot of what our product roadmap is being developed on now is we call it the ZAG, the Zuora Advisory Group, and so those are some of our biggest customers throughout the world. We meet with them on a regular basis and really listening to what are their needs. And so not only do we hear what our prospects, you know, what are they interested in, what are we seeing in the market, but what are our customers asking for? What are their customers asking for? And you saw more and more people are asking for consumption. And quite frankly, you know, one of the things is, hey, is consumption new to us? And the answer is no. Actually, the team will tell you, I think our first customer was a consumption customer. What we've just learned today, though, is there's so many different ways that you can think about consumption and the complexities of that. It's just becoming more and more innovation that's needed to support the different business models that people need. And the other thing is, once you start getting the consumption, then that actually feeds into our revenue product because, again, like I talked about, I think, you know, you mentioned you had the Oura Ring, so that becomes an issue. Yes, you're buying something there, but not only are you buying something there, but there's a way to sit there and say, "Oh, well, then I've got to segment out what's the revenue that needs to go for the product and what's the ring that... or what's the revenue that goes out for the service?"... Well, same thing happens with consumption. When I have these different consumption models, again, I've got to figure out: Well, how do I segment the revenue? How do I recognize that revenue over time? And so then that adds on to the unique linkage we have between Zuora Billing and Zuora Revenue. That gives us another differentiation, where we can help companies automate and run their businesses more efficiently. What role, if at all, are your strategic SI partners playing in pushing some of those newer products into both your existing base and new customers? I imagine for the sales force, it's a heavy lift, having, you know, three new products announced right away. So how does that go-to-market motion on those new products look, and what kind of success have you been seeing to date? It's certainly early, and we expect that those products are going to build over time. But the SIs are really an important part- Okay ... of not only bringing us pipeline, but when I take a look at the opportunities they bring us, they're significantly larger, and they have a much better close rate, and they close faster than stuff that we source ourselves. So it's really important that we stay lockstep with our SI partners as we help grow as we grow, and then we help them grow their practices. Great. You know, I guess taking a step back to the sort of higher level macro situation, I know you commented on it a little bit, but, you know, how do you think about Zuora's position in the current macro? Obviously, there's scrutiny everywhere on the larger deals, but you've been nimble in this smaller landing type strategy that's evolved. But more broadly, for folks in the audience who don't know, sort of where are you in the current macro? So when I think about the current macro, it's been steady. We're not where we were. I talked about, you know, go back 18 months ago, much better environment there. But that being said, one of the things that we said was, "Look, we didn't want to kind of swing and go from one side to another." We still know that companies are doing transformation deals. We still know that companies have big changes that are happening, and regardless of the macro, there's always investments. And so it was important that we stayed there, but we also knew we probably needed to do some things and have some more agility. And so we wanted to say, "Hey, we can walk and, you know, we can walk and chew gum at the same time." And so I think we've done a really nice job of being able to execute that in this year, and that's also consistent with our strategy. Let's pick these biggest and best companies. They're more enterprise-like. Their companies are going to have big growth. Their companies are going to have hundreds of thousands or millions of dollars a year of ARR with us. You know, it's not going to be a $100,000-type customer over the life. And so that's one of the things that we've really wanted to make sure that we are focused on. We are seeing people be really thoughtful about what they spend. It does take longer. I take a look at some of the bigger deals that we closed during the last quarter. Some of the bigger ones, they had a little bit of a longer sales cycle. But again, came down to people like, they needed to make decisions, they made those decisions, and I think, you know, we're on the right side of the secular shift that you're seeing to how people want to do business. And so that's one of the things that gives me a lot of confidence about where we are as Zuora today, is, you know, we're, you know, we're skating to where the puck is going, not to where it's been. Yeah. We're definitely on the leading edge of this, so I think that's a really good place for us to be. Yep, that's great. And I know you talked a lot about margins, but from a headcount perspective, how do you feel about where you are? You know, what sort of demand signals or productivity signals do you need to see to sort of re-up the ante on more hiring into 2024? And then how does that inform your view of re-acceleration in top line? So obviously, we're a growing company. We're going to continue to add heads, but we're going to be really disciplined about it. It's not going to be at the rates that we've done in previous years. The second thing that I would say is, when I start thinking about what are the demand signals, you know, I think one of the first demand signals that we'll see is, hey, pipeline is starting to pick up, leads are starting to pick up. You're starting to see that the SIs are hiring more people. What is their level of engagement? And as you start seeing those deals accelerate on the close and the pipeline is, you know, converting, to me, those will be the early signs that it's time to, you know, to continue to maybe accelerate investment. But we're going to be cautious about it. You know, we're going to take our time. I don't want to get ourselves ahead of ourselves where we are. I think, you know, it's always an interesting between art and science on how the economy is evolving. And, you know, right now it feels like, you know, every month or so you get a new signal. Is there a recession? Is there not a recession? Are interest rates done, or are they going to continue going up? And, you know, as I talk to other CFOs, you know, across the board, I think, you know, I'm hearing it pretty consistent, that people are being disciplined and thoughtful about how they add cost to their cost structures. Yep. No, that's great. And, you know, like from a capital allocation perspective, M&A has been more challenging in the space over the last 12 months with where rates are, but you're in a unique position with $400 million plus in cash on the balance sheet, strategic investments from investors. How, how do you think about capital allocation here, whether that's M&A, a buyback, continued OpEx and CapEx, just high level? So maybe I'll start from the back on the OpEx and CapEx. We feel really good about where the cost structure is. You know, at this particular point, I'm not feeling that I need to invest more in either go-to-market or R&D significantly, to get the overall objectives that we want to get to. You're right, we did take a $400 million investment from Silver Lake last year. We'll probably, we will probably, we will, close in the second tranche to that later this month. So it'll be another $150 million that will come in. And when we did that, we said we were going to use those dollars, you know, primarily for M&A dollars. We did the first transaction with Zephr. I think that was a really good framework for how we think about things in the future. We took a company, we grew it significantly. We grew it 40% in the first five months that we had it. It's now fully integrated in. You're seeing that adding Zephr plus Zuora is better than one plus one. Yep. You're seeing it's giving us the ability to accelerate into the media market. You're seeing we're able to take that technology and use it in our B2C consumer, or our B2C segment. So that's goodness. You saw that we did it in a disciplined manner financially.... We'll continue to look for other opportunities like that. I think in the current environment, we're seeing that people are getting much more realistic about valuations of what their companies are looking like. And I think in a tough environment, too, is people say, "You know, do I want to go out and invest what it's going to take for a go-to-market organization? I've already got a really significant go-to-market organization. I've got a marketing team, I've got a business development rep, I've got partners, I've got quota carriers on the street, we've got customer success." And you're sitting there looking and saying: "Wow, you know, that's a lot of investment that I need to do to get to that next level." There's a lot of companies saying, "Probably the right thing for me to do is take a look for, you know, who's the right strategic partner to take my vision to the next level." And so those are the types of opportunities we're looking at. We'll look at things that are in adjacencies that will help us accelerate our roadmap or accelerate our growth. They'll be very obvious on why we're doing them, and we'll also be really disciplined on what the purchase price will be. That's great. We have time for a few questions from the audience, if we have any. Could you talk a little bit about international and does M&A fit into the... You talked about looking at bigger enterprises than those that can scale, but an opportunity to address mid-market and down by going through partners like MSPs? So we had the questions were on international and mid-market. Go ahead, Todd. So international is an important part of our business. You know, for a company our size, we've got 35% of our revenue is international. The bulk of that is in Europe, and we've got maybe 5-6% of that is in Japan and in Asia. So we've actually got a decent size business in Japan. That being said, you know, my thought is, I don't know that I always think about the business as being... When I think about the domestic versus international piece, to me that becomes more distribution. I think the products we're building and that we would be looking to buy can be, you know, they should be interchangeable anywhere. You think about the Zephr acquisition we did, that was based out of the UK, but that technology is extensible anywhere in the world. So really, you know, I, I don't know that I would sit there and say, "I think I'm going to buy something just for distribution." I'm probably going to buy it for product. Then I think the second question, I believe it was on mid-market. Mid-market. Yeah. Our preference is we want to be in the enterprise space. We think that's where the money is. My experience working, I think, on the mid-market, especially with the product, like with billing and revenue, when you get with those mid-market companies, you see a ton of churn, and there's a significant investment to bring the customers on, to get them to go live, and we still see the opportunity to make the money there. And so if I take a look at the fact that, you know, my average ACV of my customers over $100K is about $450K. My average ACV is just under $400K for all my customers. If I look at some of the people that are doing those small and mid-market, they've got an ACV of between $12K-$25K. I like my position a whole lot better, and I've got a whole lot better opportunity to drive those companies to million-dollar companies than I do 12K companies. MSP is a partner? And MSP partnership would potentially make some sense, or? Probably not at this time. It's not one of our focus areas. Great, Todd. I think we have just about a minute left here. I... You know, to close it out, I think we look a couple of years ago, and there, you know, you talked about long-term ambitions to be a Rule of 40 business. I believe the algorithm there was 25% growth, 15% margin. You know, realize that macro has come in and shifted many companies' long-term visions around margins and growth, et cetera. But, you know, has that long-term growth and profitability algorithm changed for you at all? There's no reason we won't be a Rule of 40 company over the next couple of years. You're right. The question is, you know, we've got the ability to adjust it either on the top line or the bottom line. Yeah. What I really like about Zuora is the fact is, you take a look at where is the industry going, and people are moving to saying: "We're on the right side of where the cycle is going." There's huge opportunities. When I take a look at what's happening with connected cars, when I take a look at what's happening in media, when you see what's happening in technology, and you're seeing all the different ways people want to consume, we're in a space that we're in the right space. We've got a product that is extremely differentiated from any of our competitors. It can come out of the box. It can deliver on day one. It gives companies the agility that they're looking for. So when I think about it, one of the things we've really structured the company over the last year is, we'll continue to be profitable. We're going to continue to grow our profitability. We have a great long-term outlook. The question is, you know, is that outlook going to, you know, significantly improve next year, or is it going to be more reserved next year and I, you know, grow profit faster? I think the way you think about it is, the profit curve's always going to be going up. The question is, if we feel like we can make those investments and get better returns on the go-to-market and the driving the top line, you'll just see that not be as steep on the profit, and you'll see a steeper curve on the revenue. We'll be really disciplined on that, and we'll get ourselves to a Rule of 40, and we'll be able to create a lot of value for shareholders. And I think the other thing that, you know, maybe people don't always appreciate about Zuora is we do have these 1,000 customers, and, you know, these customers, like I said, on average, the customers that are 100K are spending 450K with us. They're really sticky. This is a once-in-a-generation decision. When you decide to put in a new billing, revenue recognition, and collection system, if that's working and you're getting, you're putting volume through it, it's something you don't change. And we've got a $500 million opportunity if I don't sell another customer to grow my business. And so, if I keep on adding the types of customers that you saw that we added this most recent quarter, and I keep growing my install base, and I have that retention rate I have, we have a tremendous opportunity in front of us with what we have now. Fantastic. All right. Todd, thanks for joining us. Thanks, Adam.