Ladies and gentlemen, good afternoon. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Zuora's Fiscal Year 2023 Fourth Quarter Earnings Conference Call. Today's conference is being recorded and all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one once again. Thank you, and I will now turn the conference over to Luana Wolk, Vice President of Investor Relations. You may begin. Thank you. Good afternoon, and welcome to Zuora's Fourth Quarter Fiscal 2023 Earnings Conference Call. On the call today, we have Tien Tzuo, Zuora's Founder and Chief Executive Officer, and Todd McElhatton, Zuora's Chief Financial Officer. Robbie Traube, our President and Chief Revenue Officer, will also be joining us for the Q&A session. During today's call, we will make a statements that represent our expectations and beliefs concerning future events that may be considered forward-looking under federal securities law. These statements reflect our views only as of today and should not be relied upon as representative of our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook. These statements are subject to several risks and uncertainties that could cause actual results to differ materially from expectations. For further discussion of the materials, material risks and other important factors that could affect our financial results, please refer to our filings with the SEC. Finally, unless otherwise noted, all numbers except revenue mentioned today are non-GAAP. You can find a reconciliation from GAAP to non-GAAP results in today's press release. Our results press release and a replay of today's call can be found on Zuora's Investor Relations page at investor.zuora.com. I'll turn the call over to you, Tien. Thank you, Luana. Thank you everyone for joining us. Welcome, welcome to Zuora's Fourth Quarter Fiscal 2023 Earnings Call. I want to start by thanking our ZEOs for delivering another solid quarter. It's another quarter where we came in ahead of guidance across our operating metrics, including revenue, net dollar retention, free cash flow, and non-GAAP operating income. In the fourth quarter, subscription revenue grew by 20% in constant currency and 16% as reported. ARR grew 16% as reported. Net dollar retention ended the year at 108%. We remain bullish on our long-term vision and growth potential. Companies continue to come to Zuora because they see the need for our mission-critical solutions. We continue to execute against the strategy that we laid out at Investor Day back in April 2021. A strategy anchored on moving upmarket, landing and expanding within our accounts, and leveraging our ecosystem of system integrators. Now, while we remain sharply focused on our growth, as we highlighted last quarter, we're also putting more weight on profitability and free cash flow, given the current macroeconomic environment. In the year ahead, we are committing to strong improvement of free cash flow year-over-year, and we will closely manage our stock-based compensation. Todd will discuss this in more detail later in the call, but first, let me start with what we're seeing in the macro environment. Over the past quarter, we started seeing buyer behavior stabilize, especially in our install base. While the uncertainty we saw in buyer behavior at the end of Q3 has not disappeared, it certainly has lessened. Even as companies settle into this extended period of higher interest rates and lower macroeconomic growth, they continue to prioritize digital transformation. They continue to launch and scale recurring revenue businesses. They continue to pursue growth and new revenue streams through these new digital services. As an example, the majority of deals that were pushed at the end of our third quarter ultimately closed in Q4. In addition, we saw our win rates also improve quarter-over-quarter. Let me give you some examples. In Q4, AVEVA, a global leader in industrial software and one of the largest software companies in the U.K. with more than $1 billion in annual revenue, they selected Zuora to help accelerate its AVEVA Flex subscription service with the goal of having more than 80% of its business coming through recurring revenue in just a few years. Donnelley Financial Solutions, otherwise known as DFIN, a leader in risk and compliance solutions, came to us last quarter after outgrowing their homegrown system. After a comprehensive review, they chose Zuora's full order-to-revenue suite of products. Following the implementation of billing, revenue, and the Zuora Platform, DFIN will be able to better manage multiple complex revenue streams from one-time transactions to recurring subscriptions and advanced consumption models. Finally, Scout24, who operates ImmoScout24 in Germany and Austria. This is a residential and commercial real estate online marketplace powering more than 20 million monthly users. They came to Zuora because we were the best option available to handle the fast growth and scale they needed. For these companies and more, we believe that our singular focus here is what gives us a competitive advantage. Now in the past, we've seen large ERP and CRM vendors take multiple runs at copying what we do, only to ultimately retreat. There are signs that this is happening yet again. When uncertainty looms, big players need to focus on their core competencies. In fact, this quarter, we saw a major SaaS company who declared Zuora to be their solution of choice after throwing in the towel on a large multi-year deployment from using a billing system from a large CRM vendor. No matter the macroeconomic climate, companies still need to manage their quotes to revenue processes at scale. In fact, during fiscal 2023, our cohort of customers paying us over $1 million a year grew by over 33% compared to the prior year. Against this macroeconomic backdrop, there continues to be clear demand for our technology. Let's talk next about our land and expand strategy. You may recall this strategy laid out at our investor day back in 2021 is based on the fact that billing and revenue recognition are very sticky products. If we keep our customers happy, if we give them a mission-critical service that they can rely on, they stay with us. In fact, last year we had the lowest churn rates in our company history as a percentage of entering ARR. All this gives us an opportunity to deliver more value to our customers, enabling us to upsell and cross-sell them as we roll out new innovations. This strategy is working. Let me give you some examples. Less than six years ago, we acquired the technology that is now Zuora Revenue, this continues to be the leading technology for the revenue recognition space, and it is now an important part of our product portfolio. Zuora Revenue product is growing at a deep double-digit rate. We now have over 170 customers live on Zuora Revenue, including with companies like Salesforce and Ford. As of last quarter, by combining the scale of Azure and Zuora, Microsoft is now using Zuora's Cloud SSP Analyzer, an important component of our Zuora Revenue product. Stellantis, the world's fifth-largest automaker of brands like Fiat, Chrysler, Jeep, Maserati, they are using Zuora Billing and Revenue to monetize their connected services offerings. We are an integral part of our customers' businesses, and that's especially true for Zuora Revenue in today's climate. If companies are not compliant, if their revenue recognition does not work properly, they cannot close their books. As another example, our latest acquisition, Zephr, is also supporting our land and expand strategy. It's another opportunity for our customers to grow with us. In less than 6 months since Zephr joined Zuora, integrated with us, they have beat their targets. Now their ARR is 35% larger than when we signed the deal. In fact, in Q4, a global media leader with readers in more than 80 countries selected Zephr to drive their personalized subscriber experiences, such as enhancing their paywall and newsletter capabilities. Finally, this land and expand strategy is not solely predicated on acquired technologies. We also continue to consistently launch organic innovations that our customers want. This past year was no different. Products released in the last 18 months contributed to over 20% of our deals. Here are just some examples of those innovations. Unified monetization. We are taking our customers beyond simple pay-as-you-go models. In Q4, we added new advanced consumption models to this capability. With our consumption billing and revenue recognition products, our customers can handle the complexity that comes with these more sophisticated pricing and packaging models. Managed services, this is something we're seeing greater adoption for given the current environment. Last quarter, we doubled the number of managed services customers because it saves our customers time and money. Owning everything end-to-end means we can set the bar even higher to create the right customer experience. Finally, another innovation we rolled out was Zuora Secure Data Share for Snowflake, which extends Zuora's data into Snowflake's data cloud without any custom integration. The solution is quickly gaining traction since launching just last July. After years and years of focused product development and continued investment in our innovation engine, it's clear there is no shortcut to achieve what we have achieved today. System integrators partnerships are a big part of our land and expand strategy. In the last fiscal year, our partners consistently brought us into bigger deals. In the last fiscal year, as an example, partner-sourced new business deals were 3x larger than those deals that came without a partner. Those partner-sourced deals have 3x better close rates. In Q4, almost 80% of all new business deals were partner-influenced with the highest average selling price to date. Finally, I'm proud to say we now have over 900 certified consultants helping to bring us into these larger deals. As you may have seen in today's announcements, we do have an update to share about our leadership team. Sri Srinivasan, our Chief Product and Engineering Officer, has made the difficult decision to leave Zuora at the end of this month. Sri has been at the helm, ramping up the incredible innovation engine that you heard about earlier on this call. Sri's decision aligns with his personal goals, which I fully support. He will be transitioning away from an operator role to a different type of leadership role at a private equity firm. We've already started the search for a permanent replacement, I am incredibly confident in the team that Sri is leaving behind, as well as the customer-first culture that now permeates the organization and the innovation machine that continues to evolve our technology and launch new offerings at a rapid pace. Our Chief Customer Officer, Tom Krackeler, will take over as Chief Product Officer in the interim. Tom is an experienced product development leader who's been with us for almost eight years. Thank you, Sri, for your transformative contributions to Zuora over the past two years. To close out, I want to thank our ZEOs for their dedication as we wrap up another fiscal year. We continue to feel good about our position in the market. Buyer behavior is starting to normalize as customers settle into this new environment. Companies are still coming to us because our technology gives them the agility and capability they need. Looking to the new fiscal year, we remain committed to our strategy with an increased focus on balancing growth and profitability. I'll turn the call over to Todd to review our financials. Todd. Thank you, Tien. We closed off the year with a solid Q4. As I discussed, going forward, we will focus on a balance of growth and profitability. While we adjusted for the buyer behavior we experienced in Q3, I'm pleased that we accomplished what we said we were going to do. We exceeded our outlook for subscription revenue, total revenue, and non-GAAP operating margin for the quarter. We were also above guidance for both DBRR and ARR growth. While the macro has not improved materially from Q3, customers are adjusting to the new reality. In fact, we saw the level of uncertainty start to normalize in Q4, with several projects that were on hold from the prior quarter reaching completion. We expect there may be some delays in decision-making. However, Zuora's products are critical for companies to launch and grow new revenue streams. They are also bringing additional efficiencies, which are especially relevant in the current environment. Let me give you some more color on our Q4 performance. Subscription revenue was eighty-nine and a half million dollars, growing 20% year-over-year in constant currency and 16% as reported, exceeding the high end of our guidance. We continued to experience FX headwinds during the quarter based on the strength of the U.S. dollar. For the full year, subscription revenue ended at $338.4 million, up 20% year-over-year in constant currency and 18% as reported. Professional services revenue was thirteen and a half million dollars, an increase of 1% year-over-year. This represented 13% of our total revenue. We expect professional services revenue to be around 13% of total revenue going forward as we further strengthen our relationship with system integrators. For the full year, services revenue ended at $57.7 million, down 2% year-over-year, aligned with our strategy to leverage our SI partners for implementation services. For Q4, total revenue ended above the high end of the guide at $103 million, up 17% in constant currency and 14% as reported. Over a third of our revenue is international, which created FX headwinds of approximately $4 million for the quarter. For the full year, total revenue ended at $396.1 million, up 17% in constant currency and 14% as reported. For Q4, non-GAAP subscription gross margin was 80%, remaining flat year-over-year. This was driven by our continued investments in our infrastructure to drive future margin expansion. Non-GAAP professional services gross margin was negative 8%, a 270 basis point improvement year-over-year. This was driven by fewer billable days in the quarter due to the holiday season. Our non-GAAP blended gross margin saw an improvement of 180 basis points year-over-year, ending the quarter at 68%. This illustrates the incremental leverage we've experienced in our model as we benefit from working with our partner channel. Q4 non-GAAP operating income was $2.2 million compared to a non-GAAP operating loss of $0.6 million in the prior year. This resulted in a Q4 non-GAAP operating margin of 2.1%, a 275 basis point improvement over last year. Fiscal 2023 marks our first full year of generating non-GAAP profitability with non-GAAP operating income of $2.5 million. This was driven by continued top-line growth and disciplined investment in the business. We expect to continue generating non-GAAP operating income on a quarterly basis going forward. Our fully diluted share count at the end of the quarter was approximately 162.3 million shares using both the treasury stock and if-converted methods. Now let's dive into some of the key metrics. We ended the year with a dollar-based retention or DBRR of 108%, which includes two points of FX headwinds. The DBRR was one point reduction sequentially and a two-point reduction year-over-year as reported. While the current buying trends and overall market uncertainty had an impact on our DBRR, we continue to see strong retention rates. In Q4, we again improved our retention rate, and for the full year, we had the lowest churn as a percentage of entering ARR in the company's history. This illustrates how mission-critical and sticky our solutions are. At the end of Q4, we had 773 customers that spent at or above $100,000 in average contract value, up three sequentially and up 26 year-over-year. In Q4, the $100,000 cohort continued to represent 95% of our business. This metric is less indicative of our overall execution as the cohort has grown since our IPO to become the vast majority of our business. We plan to provide investors with additional customer metrics on our next earnings call. We continue to close a number of large deals, which illustrates our continued success in the enterprise space. This quarter, we closed six deals with ACV of $500,000 or more, including two deals over $1 million. These customers are growing with us. Our systems processed over $23.8 billion of billing transaction volume in the fourth quarter, representing 13% growth in constant currency and 12% growth as reported year-over-year. We have noted before that billing transaction volume processed alone is not indicative of our revenue growth for two reasons. First, our customers gain cost efficiencies as they scale. Second, given the success of our multi-product portfolio, billing alone only accounts for a part of our overall revenue growth. Zuora Revenue and Zuora Collect generate significant volume growth year-over-year, both of which are not reflected in the billing transaction metric. As a result, it's our intention to revisit our metrics and provide you additional visibility into other products during our next call. Looking at ARR and free cash flow. At the end of Q4, ARR was $365 million and grew 16% as reported, with about two points of headwinds due to FX. Free cash flow was negative $20.1 million for the quarter, which included non-recurring severance payments associated with the workforce reduction and acquisition-related costs with Zephr. As a reminder, free cash flow can fluctuate on a quarterly basis due to the timing of cash collections and seasonality. We believe it's best to assess our cash flow performance over a longer term. Total CapEx for the quarter was $2.2 million. Turning to the balance sheet, we ended the quarter with $386 million in cash and cash equivalents, a sequential decrease of $14 million. Now, let's turn to our financial outlook. With the reminder that our Q1 has three fewer days in comparison to the prior quarter. This creates a headwind of approximately $3 million of subscription revenue compared to the prior quarter. Starting with our Q1 guidance. While the demand for our products continues to grow, we remain prudent on our outlook given the buying behavior we've experienced over the past two quarters. That said, we also expect to realize some benefits to our bottom line as a result of our December workforce reduction, as well as some other cost-cutting measures. For Q1, we currently expect subscription revenue of $88 to eighty-nine and a half million dollars, representing year-over-year growth of 13% at the midpoint. Professional services revenue of $13 to thirteen and a half million dollars. Total revenue of $101 million-$103 million, representing year-over-year growth of 9% at the midpoint. non-GAAP operating income of $4 million-$5 million, and non-GAAP net income per share of breakeven to $0.01 per share, assuming a weighted average shares outstanding of approximately 136.2 million. For the full year, we currently expect subscription revenue of $374 million-$384 million, representing year-over-year growth of 12% at the midpoint. Professional services revenue of $54 million-$56 million. Total revenue of $428 million-$440 million, representing year-over-year growth of 10% at the midpoint. Non-GAAP operating income of $26 million-$31 million. A non-GAAP net income per share of $0.07-$0.11, assuming a weighted average shares outstanding of approximately 140 million. Turning to our free cash flow. We are committed to operating in a disciplined manner. For the full year, we currently expect free cash flow to be at least $24 million, a significant improvement of over $55 million from fiscal year 2023. We are committed to delivering a minimum of 6% non-GAAP operating margin for the year, regardless of the macro environment. Turning to Dollar-Based Retention Rate and ARR growth. We expect DBRR of 107%-109%, and ARR growth of 12%-15% for the year. Finally, I would like to provide visibility into stock-based compensation. For fiscal year 2024, we expect to be under 5% in annual share dilution with a midterm target of 4% per year. For this purpose, dilution is calculated as the number of equity awards granted net of forfeitures during the fiscal year.Divided by the total shares outstanding at the end of the fiscal year. To close off, while the current macro environment remains challenging, we continue to see benefits from the areas we are focused on. This includes our Billing, Revenue, Collect, and Zephr products. We will continue to be disciplined and focused in fiscal 2024. Our plan is to balance growth and profitability while significantly improving free cash flow and delivering the most innovative products to our customers. With that, team, Robbie, and I will take your questions, and I'll turn it over to the operator. Thank you. At this time, I would like to remind everyone in order to ask a question, press star and then the number one on your telephone keypad, and we will pause for just a moment to compile the Q&A roster. We will take our first question from Adam Hotchkiss with Goldman Sachs. Your line is open. Great. Thanks for taking my questions. Would be great to start by digging in on a bit more on the customer behavior piece you mentioned with the existing base versus Q3. Todd, I remember you talked quite a bit about volume commitments being the driver of slowing growth on the Q3 call. When you talk about the business stabilizing, are you referring to this volume commitment dynamic, or are there other areas of relative stability that we should be aware of when we think about that? Adam, thanks a lot for the question. We, across the board on upsells, did see a stabilization. Companies got a little more comfortable with how they thought the year was progressing, and we saw folks have a more normal behavior from a standpoint of not only making commitments on volume, but other additional products. That being said, it certainly is muted, and I wouldn't say we were where we were 12 months ago. Okay, great. That's super helpful. Thanks. On the profitability guidance, I know on the last call you had mentioned sort of the 6%+ on operating margins. When you think about the guidance that you put out today, what are some of the levers that you think you're still able to pull over the next six to 12 months and your willingness to do so to outperform there? I think we've been very prudent on how we've been spending and how we're thinking about dollars that we're holding back and that we might put in investments if we see things move forward, or if we see the economy continue to be in a challenged way, we will put those dollars to the bottom line. We've also got opportunities to make further reductions. I think you probably saw this last quarter that we closed down our Atlanta office, we've shrunk the Boston office. There's other opportunities within the sales and marketing areas to do better. You're also seeing the on the COGS side, on the subscription piece, we're certainly rationalizing what our hyperscaler spend looks like. There's opportunities there. We're getting more efficient on the support. Last but not least, we've also committed to be profitable, on a non-GAAP basis on the professional services. I think we've still got several levers that we have that we can use during the year. This is Tien here. I'll just add, one of the things I wanna make sure doesn't get lost is because of what we do, because of the product that we have, because the customer base that we have, that we have the fortune of having a solid customer base in a very sticky product. I think that gives us a level of certainty even in these unpredictable times of being able to manage the business, which, you know, which is fortunate for us. Okay. Really helpful. Thanks, Tien. Thanks, Todd. We will take our next question from Chad Bennett with Craig-Hallum. Your line is open. Great. Thanks for taking my questions. Just trying to kinda reconcile and get a sense for, you know, the stableness, I guess, you would call it in the fourth quarter. You know, you talked about the majority of deals that pushed from Q3 into Q4 closed, win rates improved, and I think I heard record low churn for the year, which I assume means Q4. You just kinda reconciling with the net new add number over 100K of three deals. Just kinda how relative to, you know, whether you look at it in year-over-year basis or whatnot. How should we view that net new number in the quarter? I think what we're trying to say is, you all see the data out there, you talk to lots of companies. There's certainly a macro level slowdown in tech. What we're trying to highlight is if you look at what happened for us in Q3, and specifically in the month of October, which is end of Q3, it felt like what we sensed from our buyers, that there was a lot more uncertainty in Q3, in October, right? They weren't sure whether, you know, the economy was gonna slow down. They weren't sure what the Feds were gonna do. While, you know, I wouldn't say that the tech industry is back to a growth mode, right, at least the level of uncertainty of what the Fed is gonna do and other factors are soon to be lower. The uncertainty we saw in the pipe has lessened. I think that's what we're trying to communicate, because I know you all have a lot of questions about what's going on at the macro. Hey, Chad. I'd like to maybe emphasize a couple other things. One is remember, we have a land and an expand strategy. On the expand strategy, I think it's really important. Team talked earlier in the call. We saw an increase of customers spending over $1 million with us. That number of customers increased by 33% this year. That's been a huge component. Remember, going back a couple years ago, I think we absolutely made the right decision to focus on enterprise customers. We've talked about those customers that we're landing are landing much larger and with a much larger ASP. That's one of the things that's also driving growth. We're certainly focused on new business. I would say, you know, the environment still remains cautious. People are being very thoughtful before they make incremental purchasing decisions. We have a two-prong strategy here. We're certainly bringing on new customers. You saw this quarter, we had six deals that were over a half a million dollars. Two of those deals were over $1 million. The lands that we're getting, especially with the SI strategy, has moved to larger deals. Okay. And then maybe a follow-up just on the dollar-based net expansion expectation or range for the year. I think that's 107%-109%, you know, of effectively stable with where you ended this year. Todd, how are you thinking about that this year as it relates, you know, from the past year in terms of volume growth versus cross-sell, upsell? Any material mix change there in terms of how you're thinking about net expansion? Thanks a lot, Chad. Yeah, I think you are certainly looking at that range being stable, and I think that also hits the fact that we wanna have balance. We wanna be bringing on new business along with expanding our install base. That being said, we're certainly being, I would say very prudent on how we're thinking about the volume. A big chunk of our business does come from technology. We've seen that slowing down, so we plan for that accordingly. The other thing I would point you out to is, another comment that we made earlier in the call is, 20% of our incremental billings last year came from products that has been developed in the last 18 months. I'm gonna expect to see things that have come out of the innovation engine this year and things that will be coming out next year, also driving that dollar-based retention. Maybe the last thing I would just say is, you know, as I think about that for the year, remember, especially I think in Q1 of last year, we've got a pretty strong compare that we're lapping. I think, you know, that's why I'm given the range of 107%-109% for the full year. Got it. Maybe one last one if I could, sorry. Just in terms of the partner traction you're seeing and, you know, it seems like it's been very strong even in a challenging environment and deal sizes are you know, enormous, and win rates are higher, which is all good stuff. Do we have enough time or duration in those partner-led deals to see kinda what net expansion is of those deals when they annualize and how that looks relative to the current net expansion rate? I'll hop off. Thanks. Yeah. I think the only color that I would give you is when we take a look at some of our cohorts that we've landed over the last couple years, they've actually had a better rate of dollar-based DBRR than what we've seen on maybe some of the older cohorts going back several years. Got it. Good to hear. Thank you. Thanks, Chad. We will take our next question from Brent Thill with Jefferies. Your line is open. Hi, this is Luv Sodha on for Brent Thill. Thank you, Tien and Todd, for taking my questions, and Robbie too. Maybe, you know, one on, you know, I guess unearned revenue was a little bit lighter than expected. Did you see, I know you mentioned stabilization in the base, but did you see any new deals push from Q4 into future quarters? Luv, thanks for the question. We absolutely, you know, as we've talked about it is a slower environment out there. People are being very thoughtful and deliberate as they're making decisions. We felt good about some of the things that had slipped into Q3. We closed the majority of those. We closed deals that were in the pipeline for Q4. As we had planned, and, you know, I think we landed right about where we said we were going to, it was a slower quarter for things coming through the pipeline. We expected that, and we put that into our guidance as we move forward for next year. I don't expect there to be a material change in that dynamic as we go through the next several quarters. Got it. You know, Todd, for you, I guess, you know, how would you position this guidance? Is it incorporating macro getting worse, stabilizing or improving? You know, any color on dollar-based net retention? When should it bottom during the year? Thank you. Luv, I'd say this about the guidance. We exited the year with $365 million worth of ARR. That's in the bank. The low end of the guidance is $374 million. That means we've got $9 million of net incremental revenue that we've gotta add. If you take a look at what we've added over, you know, the last six to eight quarters, I feel that is a very achievable goal to get, even if things worsen, to get at the low end. I feel that we've got a very reasonable guidance that we've given. From a Dollar-Based Retention Rate, you know, the things I would say is, you know, going back several years, we invested really big in our customer success programs. We've invested in innovation, making sure that our customers are getting the most out of the platform and our revenue and billing products, that's absolutely showing results. I think that shows up in the fact that every quarter, I believe this year, we improved our retention. We had the lowest level of churn since we've been a public company. Then, you know, I'll hit you know, we talked about one of the big SaaS companies that had made a decision several years ago, should they consolidate on a big CRM platform and move over. After going through this for multiple years, they took a $5 million write-off and said, "We're all in on Zuora." They had been using Zuora, and you know, it's the right solution. This other solution can't do what we're gonna do. I think that's been consistent what we've seen. Remember, we have got the, our install base is these large enterprise customers. They're getting bigger and bigger, more and more all in on Zuora, and they're dependent on us for recognizing their revenue, for doing their billings, and their collections. Those are mission-critical type things, and they're SOX compliant. Those are things that you don't make changes lightly on, and we feel really good about our position from a retention standpoint. Hey, Luv, this is Tien. I know you've been following us for some time. You know, we're a very different company than a few years ago, where the vast majority of our upsells were based on volume. Today, we have a much more balanced ability to grow within our accounts. That's why we share the data. About 20% of our deals, right, in the past 12 months were based on products that were only recently developed in the last 18 months. You're seeing we have a much more balanced approach now to growth within our install base. Got it. Perfect. Thank you. We'll take our next question from Jacob Stephan with Lake Street Capital Markets. Your line is open. Yeah. Hey, thanks for taking my questions. Maybe just focusing on the European market, I know you said 33% of your revenue comes from the European market, but, I mean, what trends are you seeing over there that are kind of similar to the U.S.? I'll let Robbie take that, but real quick, Jacob, about a third of our business is international, so that's not all, Europe. We've got other presence in Japan and Asia Pacific. Robbie, maybe if you wanna give some color on what we're seeing in Europe. Yeah, I mean, there's been, as you can see it in other places and out there's been some softness in them there due to the macro. Look, we had good execution actually in our Q4 in that region. You know, bottom line, we're seeing that impact overall, but we're still seeing continued interest in the products. We're still selling products that really provide true value base. Team mentions, you know, Scout24 as an example in a particular space too. You know, again, some of that softness has been there, but we continue to see growth there. Maybe just focusing on gross margin. You had mentioned there'd be some levers that you could pull to increase the subscription revenue margin, but what could you give any more color on what some of those levers might be? Yeah. I would give you maybe three things that we're thinking about. First of all, we are now multi-cloud. We've got our revenue products spun up on Azure. We then are also using AWS. I believe that gives us opportunity for further leverage. Our engineering team has done a fantastic job of working from a standpoint of how to get much better optimizations out of the usage, and we're seeing those spend dollars get more control. The last thing is, I think there's opportunity as we've spent investments on our support area to again get more efficient there, not only and provide better customer satisfaction, but also to bring down costs in that area. Okay. Got it. Thank you. We will take our next question from Andrew DeGasperi with Berenberg. Your line is open. Thanks for taking my question. I guess just as a follow-up to that kind of competitive win with the nameless I guess large implementation that was canceled. Can you maybe explain a little more like? I did hear. Yeah. Sorry. Can you hear me? Yeah. Yeah, I can hear you now. I was gonna just say, like, can you maybe elaborate a little more, like, what I mean, it seems pretty drastic to take a kinda charge of that size after so many years investing into a platform? Can you maybe explain, like, maybe do you get any feedback as to what made him do that? Yeah. So Andrew, that was a customer actually I knew, and we've had an ongoing dialogue. Basically, we had a situation where the CIO had come in, who was no longer at that organization, came in and said, "Hey, I think it makes sense to centralize all on one platform." What they realized, the complexities of their business from not only their CPQ product, but the difference from a complexity of the different types of billing that they were going to have, could not just get it to work. It was something they had worked on for multiple years. It was truly a case of, hey, here was a product that had very basic functionality that was not matched at all with what that company needed. After trying for several years and putting a lot into it, they finally came back to us and said, "Hey, we're gonna go upgrade to your most recent CPQ." We worked with them doing that through our Q3 and Q4. They went live on it, and at that point then made the decision that, you know, they weren't gonna continue this futile effort to try to move to a platform that didn't meet their business needs. Yeah, I mean, it's Andrew, this is Tien. I think people just continue to underestimate how complicated billing can be. You know, we've seen a company like NetSuite before they were acquired by Oracle, take three runs at trying to build suite billing, and the customers aren't happy. So we think really in this environment where, you know, you kinda have to focus on your core, the good news for us is our core is Subscription management, it is billing, it is revenue recognition, it is supporting all these different types of charge models, and taxes, and rev rec rules. We feel really good about our position, and we feel really good that if there's any complexity in your business, and if you're growing, there certainly will be, that ultimately our technology is very differentiated, and people eventually figure that out. It puts us in a really good position. I mean, Andrew, I just use the analogy. I think anybody can go out and play basketball and shoot the hoops. Not everybody can play like a world championship team. When you start looking at some of the companies that we're working with, they need that world championship team. We have spent, you know, 14 years in approaching $1 billion of R&D and delivery to optimize our products for billing and revenue. That's just really where we're differentiated and why we are the best of breed and why we are the leader in this space. Thanks, that's a good analogy. I guess as a follow-up on Sri's departure, just wondering, you know, what that means for integrating, for example, Zephr within the platform. Do you foresee any challenges on that front or on the kind of incubation of the new products for 2024? Yeah, I would say this, Tien, here. I would say, we don't anticipate any challenges. I mean, Sri came in, he's been fantastic. He came in for a mission. He accomplished that mission. We got our innovation machine going. He created a world-class team with, you know, fantastic modern processes. He leaves behind a great infrastructure, great set technology platform, a great team. I have every confidence in the team and, you know, fully support his decision. I'll miss him, but I think, he leaves us in a really good place. Hey, Andrew, one more thing on Zephr is we're really pleased at with how that's done. That has overperformed on the top line. We've kept over 90% of the employees. Product roadmap is absolutely on target. If you take a look at our bottom line from a standpoint of the non-GAAP operating margin, we've absolutely overachieved in Q3 and Q4. I think we're showing that here was a great tuck-in type of acquisition that fit really well, and it supports our expand strategy, and we did it in a very disciplined way. That's helpful. Thank you. We'll take our next question from Joshua Reilly with Needham. Your line is open. Yeah, hi there. If you look at customers that are more willing to buy, would you say that they're in more of the media and manufacturing verticals, or would you also say that, like, tech is thawing out a bit as well? I think one thing I would say, Joshua, thanks for the question, it's the mix, right? It's the mix across all of these. We have great wins if you think about it from a manufacturing standpoint. There's some large pharma, top-tier automotive like Stellantis, but also in tech, right? Some great wins there as well. Even in sort of going into transportation, and in information services. It's the mix across all of these, and we're just proving that out and seeing that more and more. I think it's only the mix. We've got a good geographic mix, Josh, along with the fact that we're working with enterprise companies. Many of these companies, regardless of where they are, they're needing to make transformations. Even though there's a tough environment, there are still companies that are looking forward to, "What do I need to do to grow my business? What do I need to do to support in, you know, the year, next year and the year after?" Just that whole base of customers and where we're focused gives us a lot of opportunity, even in a challenging environment. Got it. That's helpful. Can you just give us a sense of, you know, maybe how much are RFPs or, you know, deals that you see in the market down year-over-year entering this year versus last year, even just qualitatively, you know, not quantitatively? How would you characterize your market share position at this point in the year versus a year ago as well? Do you believe that you've gained market share relative to the broader market? Yeah, I'll take that one. Look, overall, our pipeline is up, right? We're looking at it in terms of, you know, good pipeline as we move forward into as we progress Q1. I think overall, you know, we're seeing more traction, and also from a partner perspective, the amount of momentum that we're seeing there and the increase in the source pipeline and influence pipeline we get there is also proving out that momentum too. Okay, got it. Then maybe just one last quick one for Todd. If you look at the guidance for 2024, I didn't see a comment in there about how much of the FX headwind assumes in subscription revenue and ARR. Yeah. I think what we've done is we've put it in an as-recorded basis, and we're gonna assume that the rates are relatively constant from where they are today from a planning perspective. Got it. Thanks, guys. Thanks, Josh. We have time for one final question, and that will come from Joseph Vafi with Canaccord. Your line is open. Hey, guys. nice execution here this quarter. A lot of questions already. Just wanted to follow up, I think, Tien, on your comment relative to Microsoft and Azure. I mean, obviously they're a partner, but it also sounds like they're moving to be a customer. Any extra color you can add there on that? Yeah. We're pretty excited about that. Microsoft is a customer in several cases, but we have committed and delivered on our revenue product on Azure, and that's what Microsoft is using. We are now a multi-cloud environment. We're gonna continue to move in that direction, and we're pretty happy to have Microsoft on as a customer and as the first customer of our Azure stack. That's great. I mean, any more color you can add there on... I mean, obviously Azure is a, is a huge platform, and the ability to, for them to, you know, to be a customer and to integrate that solution is pretty wide. Is it, is it still small, kinda pilot size or, you know, what's that roadmap look like in that opportunity to the extent you can talk about it? Yeah. Microsoft, obviously, a large company, we're talking to them in multiple places. maybe what the more exciting, you know, the question really is, "Hey, what does being on Azure open up?" It does open up for us the entire Microsoft reseller base. If you're a Microsoft customer and you have an Azure contract and you buy Azure revenue on Azure, you can actually use your Azure credits as part of that transaction. It's pretty exciting for us now to be in a position where we can actually talk to Microsoft's reseller channel and co-sell with them into those accounts, you know, perhaps into the Microsoft Dynamics space, as an example. Sure. That's great. Then just one other question. It sounds like, you know, the Zephr deal is going really nicely. To what extent are kinda your, some of your systems integration partners aware of Zephr at this point? Is it ready for them to be included in kind of their sell of your products? Thanks a lot, guys. Yeah, Jay. I mean, there's definitely interest. I mean, we've been very, very focused, you know, around the media and publishing area specifically there. That interest is definitely growing across them. We had actually a large number from across, you know, Deloitte, PwC, EY, RSM. Right away, Accenture actually had our sales kickoff and actually came on, you know, in person for two days, and they were extremely interested in what the Zephr solution has to offer. Great. Sounds like we'll be hearing more about that. Thanks, guys. ladies and gentlemen, this concludes today's conference call, and we thank you for your participation. You may now disconnect.