Planet Labs PBC (NYSE:PL) Q4 2023 Earnings Call Transcript

Planet Labs PBC (NYSE:PL) Q4 2023 Earnings Call Transcript March 29, 2023

Operator: Good afternoon. Thank you for attending today’s Planet Labs PBC Fiscal Year 2023 Earnings Call. My name is Hanna, and I will be your moderator for today’s call. I would now like to pass the conference over to our host, Chris Genualdi, Vice President of Investor Relations. Please go ahead.

Chris Genualdi: Hello and welcome to Planet’s fourth quarter and full fiscal year 2023 earnings call. Before we begin today’s call, we’d like to remind everyone that we may make forward-looking statements related to future events or our financial outlook. Any forward-looking statements are based on management’s current outlook, plans, estimates, expectations and projections. The inclusion of such forward-looking information should not be regarded as a representation by Planet that future plans, estimates or expectations will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions, as detailed in our SEC filings, which can be found at www.sec.gov. Our actual results or performance may differ materially from those indicated by such forward-looking statements and we undertake no responsibility to update such forward-looking statements to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

During the call, we will also discuss non-GAAP financial measures. 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. For more information on the non-GAAP financial measures, please see the reconciliation tables provided in our press release issued earlier this afternoon. Further, throughout this call, we provide a number of key performance indicators used by management and often used by competitors in our industry.

These and other key performance indicators are discussed in more detail in our press release. Before we jump in, I’d like to encourage everyone to reference the slides we have posted on our Investor Relations website, which are intended to accompany our prepared remarks. At this time, I’d now like to turn the call over to Will Marshall, Planet’s CEO, Chairperson and Co-Founder. Over to you, Will.

Will Marshall: Thanks, Chris, and hi, everyone. I’m excited to share with you our results for the fourth quarter of FY ’23 which capped of an incredible year for Planet. We will also share some recent wins, discuss the progress we are making towards building an earth data platform, including our announced acquisition of Sinergise and provide an outlook for FY ’24. So let’s dive in. During Q4, we generated $53 million in revenue, representing 43% year-over-year growth. For the full year, revenue was $191.3 million, up 46% year-over-year. Our non-GAAP gross margins expanded to 58% for the fourth quarter, an improvement of 16 percentage points year-over-year, demonstrating the positive leverage that we have in our business. For the full year, our non-GAAP gross margins were 53%, an improvement of 15 percentage points year-over-year.

We ended the fourth quarter with over 880 unique customers spanning across government and commercial markets. Before I cover our recent commercial wins, let me first summarize the key takeaways for today’s call. For fiscal ’23, we exceeded the range we laid out at the beginning of the year, nearly tripling our revenue growth rate, as well as expanding gross margins by 15 percentage points. I’m incredibly proud of this growth acceleration as it reflects the execution and dedication from our teams across the entire company. Nearly 2 years ago, as we were going public, we outlined a plan to accelerate growth through systematic investments across product, go-to-market as well as in M&A. And in the last year, we’ve witnessed the positive effects of those investments in our financial results and KPIs. We are carrying that momentum forward into fiscal 2024.

These results tell us three things. First, we believe the market for Planet data remains robust. While the macroeconomic climate remains uncertain, we are fortunate to serve a customer base that is diversified across government and commercial sectors. As shared previously, we’ve seen some caution from our customers in the commercial sector as they navigate the current environment. We’ve also seen strong demand in the government sector. And our expanded product capabilities and go-to-market reach are continuing to generate new opportunities for Planet at pace. Second, our business is on a steady trajectory towards our long-term model. We outlined our long-term targets at our Investor Day, which you can find on our Investor Relations website.

You will see that our business is more aligned with a technology SaaS business, not the traditional space industry models. Third, our strong finish positions us well for FY ’24 despite the challenging macroeconomic environment. As you will hear from Ashley, over 60% of our revenue forecast for the year is already committed before factoring in renewals, new business or revenue through the Sinergise acquisition. We expect the secular tailwinds of digital transformation, sustainability transformation as well as gov peach and security to continue to drive demand in FY ’24. These are monumental transitions that Planet is uniquely positioned to serve. Therefore, as you will hear today, we are forecasting strong growth that balances the macro environment while also becoming more judicious on spending as we chart our path to profitability.

Okay. We’ve got a lot to cover, so let’s dive into some of the specific highlights from the quarter. During Q4, we closed another multiyear deal with an international Ministry of Defense customer for more than $10 million per year. We continue to gain share and expand the defense and intelligence market as customers see how our data support fact-based and real-time decision-making. Last week, the National Reconnaissance Office, NRO, awarded Planet a contract for our hyperspectral capabilities. This aligns with Planet’s existing and planned commercial capabilities for Tanager, our hyperspectral constellation designed as part of our partnership with the Carbon Mapper Coalition. The contract will allow us to work directly with the NRO to explore how these capabilities align with the agency’s national space security architecture.

On the civil government side, we won a contract with the Philippines Space Agency. They’re using our data for multiple use cases, including disaster impact assessment, environmental monitoring and scientific research. This is a great example of how countries can save time and money by leveraging Planet’s data instead of building their own observation constellation, enabling them to concentrate on serving their constituents. We are also delighted to share that Norway’s International Climate & Forestry Initiative, NICFI, has been extended for the calendar year 2024. The success of the program has exceeded all expectations. We now have over 18,000 registered users on the platform, representing 158 countries. This program makes data available, covering all of the world’s equatorial, tropical forest to governments, UN agencies, NGOs, scientists and others, enabling the monitoring of tropical deforestation and powerful programs and policies to reverse it.

These four wins point to a larger trend we are seeing with the governments worldwide. Firstly, we are seeing strength in those markets, both civil and defense and intelligence. And second, they’re also increasingly partnering with commercial providers, Live Planet to support their needs rather than building all of their required infrastructure themselves. Turning to the commercial market. Pacific Gas & Electric Company, or PG&E, one of the U.S’s largest utility companies, recently signed a multiyear seven figure contract for our new Planetary Variable product, Vegetation Encroachment. This helps them to determine locations along electric utility right of ways where there’s a high likelihood of tree fall in risk. I’m particularly proud of this win as it’s a direct result of the recent acquisition of Salo Sciences that we announced in our last call.

PG&E plans to use our Vegetation Encroachment product to monitor their entire distribution and transmission grid totaling over 100,000 line miles or 160,000 line kilometers. This also includes assets and grid risk modeling and public safety power shutoff analysis to drive better grid performance and safety. In the financial services industry, we expanded our contract with Manulife Investment Management Timberland and Agriculture, the world’s largest natural capital investment manager. They’re using Planet’s data within their forestry division to monitor their global timber operations. Our wins from the quarter showcase the diversity of customers and use cases we serve. We provide a capability that hasn’t existed previously. In doing so, Planet is creating an entirely new market, bringing the power of geospatial data to customers that have never had it before.

We are particularly excited about the value that artificial intelligence can unlock with our customers. The buzz around AI has clearly become louder in recent months. And data is critical as an ingredient, the essential foundation upon which AI models are built, trained and operate. Let me share two recent examples that highlight this. Firstly, in response to the devastating earthquake in Turkey and Syria, you may recall our partnership with Microsoft and our joint work on developing a building damage assessment, which we deployed over large regions of Ukraine for the United Nations. This solution was developed by training an AI model to assess building damage in satellite imagery. It took a couple of months to develop and deploy. In the wake of the earthquakes in Turkey and Syria, we worked with Microsoft and other partners to quickly deploy the same models in this new region, producing a building damage assessment solution to assist the Turkish government’s emergency response efforts.

This time, it only took a couple of days to deploy and going from months to days this significant progress and critical in situations like this. This solution can be used for many kinds of natural disasters: flood, fires, hurricanes, et cetera, and for every country around the globe, helping to save lives. Secondly, last month, the public watched as a high altitude Chinese balloon traveled across North American airspace. We received intense interest from the defense and intelligence community for our ability to track the origin of that balloon. AI start-up, Synthetaic, was able to quickly train an AI model to search and locate the balloon on our imagery. Once the model was trained, it only took a matter of minutes to find balloon citings. Next, Synthetaic was able to track the balloon back to its original launch point.

Our proprietary archive going back over 7 years with approximately 50 petabytes of Earth data is now a deep treasure trove with immense value that can be unlocked when combined with AI. The archive now contains, on average, 2,400 images of every spot on as well as some key maritime areas. The depth and consistency of this data set makes it uniquely suitable for AI applications. We can enable a totally new type of planetary forensics, searching for objects around the globe and back through time, even searching for objects that our customers didn’t know themselves in advance that they needed to find like this high altitude balloon. The revolution we are experiencing in AI has the potential to increase the value of our data and the speed at which Planet and our partners can turn it into solutions.

Now moving to something really exciting. Today, we announced our intent to acquire the business of Sinergise with their leading developer platform for Earth observation data. I’d now like to invite Kevin Weil, our President, to talk about how we expect this acquisition to accelerate our plans. For those who don’t know, Kevin, he has a proven track record in building successful multibillion dollar software platforms, having led product at Twitter for many years as they scale from 0 to over $1 billion of revenue and at Instagram to over $10 billion. He joined Planet 2 years ago to lead the advancement of our software platform. Kevin, over to you to tell us about this exciting acquisition.

Kevin Weil: Thanks, Will, and hello, everyone. As we discussed at our Investor Day, Planet’s agile aerospace capabilities allow us to generate data with a combination of spectral, temporal and optical resolution the world has never seen before. That’s the foundation of the company. And until recently, data generation and distribution was our entire focus. But our strategy has expanded in recent years for the simple reason that making our data easier to work with, allows us to serve more customers and partners enlarging our TAM and the impact that we can make in the world. We’re doing this in 2 ways. First, we are moving up the data pyramid from imagery towards more refined data, which is our planetary variable strategy. We already have a range of offerings, including products from VanderSat and Salo as well as our AI-driven products like road and building change detection.

Our partners, including start ups like Synthetaic also deliver complementary solutions, as Will just highlighted in the balloon example. Across all of these efforts, we are delivering insights to our customers with focused, relevant and easier-to-use data sets tuned to broad customer needs. The second is where Sinergise fits in. We are making our data easier to work with by enabling customers to analyze data and create applications directly on our platform. Sinergise has long been a Planet partner, and I’m excited that we will be joining forces to support their team, their platform and their substantial user base. Over the last 15 years, Sinergise has developed world-class data access and analysis capabilities, leveraging Planet’s data, other commercial data sets, including optical SAR and more and the public data sets from sources like Sentinel and Landsat.

Their technology powers a cloud streaming platform called Sentinel Hub that allows customers to process, analyze and extract insights from Earth data, all without needing to build their own systems. Let me illustrate this from a customer lens. I was speaking recently with one of our large agricultural customers who is doing innovative work using multiple Planet products. They mentioned that they were having to devote significant engineering resources to building their own pipeline to ingest and analyze Planet data. With Sinergise, much of their analysis can be done on the fly through powerful APIs and streamed directly into their platform, saving them time and money. Another example is Sinergise’s area monitoring solution, which combines multiple data sources and algorithms, along with the front end application to allow EU government to monitor sustainable agricultural practices.

European farmers make commitments in exchange for subsidies, and Sinergise’s solution is used by multiple governments to monitor compliance and determine payouts. EU governments don’t need to do their own analysis or build their own processing line. They can use Sinergise’s area monitoring product, leveraging Planet data, AI and Sinergise’s powerful APIs. As we shared at our last Investor Day, we are on a journey from being a satellite company 5 years ago to a data company today to becoming a platform company in the next 5 years. We believe that synergize has the potential to meaningfully accelerate that journey. It’s not that we are leaving behind the satellites and the data. We are augmenting them, moving towards bigger markets and greater impact.

Together, Planet and Sinergise will make integration of our data and other data sources much simpler than it is today. We can enable customers and partners to build more within Planet’s environment rather than outside of it. We plan to sell compute-based services alongside our data subscriptions, which we believe will make our platform stickier for customers. Sinergise powers a large developer ecosystem that will be able to access, analyze and build applications on Planet’s data. Most importantly, this acquisition will make Planet’s data easier to use, which speeds customer time to value and expands our total addressable market. Hopefully, this gives you an idea why we are so excited about the acquisition we signed with Sinergise and how it accelerates our software road map.

They’re a Planet partner today. And already, our go-to-market teams have found that our joint capabilities are resonating with customers. I’m thrilled to welcome the Sinergise team to Planet as well as their ecosystem of partners and customers. Back to you, Will.

Will Marshall: Thanks, Kevin. Before I hand over to Ashley to go through more details on our financial results and guidance for FY ’24, I want to touch on our outlook for the year ahead, especially the core levers that drive sustained top line growth and the priorities we are investing behind. First, our sales force is really focused in on proven use cases in core industries with solutions that can drive the highest ROI for our customers where we can deliver proven economic outcomes. This approach has enhanced our sales teams win ratio, which improved year-over-year in every quarter last year. We also continue to hire top notch sales talent. Second, we are also accelerating our go-to-market strategy with partners that help us to extend our global market reach.

Our aim is to power our customers with the tools they need to get value from the data as exemplified by Sinergise. Third, we are investing in R&D to develop the solutions that customers need. You’ve heard from Kevin how we continue to build our software platform, enabling customers to reduce time to value and expand TAM. We are also investing behind our next-generation satellite fleets, which will help power our platform for the next decade. With three deals signed last year with over $10 million in ACV anchored by our high-resolution SkySat data, we are feeling the market’s pull. Development for our high resolution Pelican Satellites is ramping up this year, and we are excited to be launching our first tech demos. We will also launch the first of our tech demos of our hyperspectral fleet Tanager, which supports our partnership with Carbon Mapper and NASA’s JPL.

Finally, we are doing all of this while staying focused on driving efficiency and profitability. As you know, since our founding, we’ve always practiced a faster, cheaper, better approach to aerospace. And so efficiency is in our DNA. As an example, we recently became more streamlined with our SuperDove monitoring mission, resulting in greater efficiencies in fleet operations, data downlink to earth and even in data storage without any degradation in global coverage for our customers. Overall, I want to emphasize that efficiency and driving to profitability are critical focus areas for this year, particularly against the current economic backdrop. We remain thoughtful and disciplined with capital allocation as always. Ashley will speak to this in more detail shortly, but I want to underscore that we are fully committed to our path to profitability.

To briefly summarize, we successfully executed against our plan for FY ’23, nearly tripling our revenue growth rate year-over-year. Market demand for our solutions remains robust despite the broader and macroeconomic environment. And our strong finish to FY ’23 as well as the secular tailwinds driving demand sets us up well for the year ahead. I’m excited for the year and confident in the team’s ability to execute. Over to you, Ashley.

Ashley Fieglein Johnson: Thank you, Will, and thanks, everyone, for joining us today. I will start with a quick recap of our most recent results. As Will mentioned, our revenue for the fourth quarter of fiscal ’23 ending January 31 came in at $53 million, which represents 43% year-over-year growth. For the full fiscal year, revenue came in at $191.3 million, representing 46% year-over-year growth. Our end-of-period customer count grew to 882 customers, representing 15% year-over-year growth. Customers representing over $100,000 in ACV was our fastest-growing customer segment last year, growing 31% year-over-year. As you’ve heard today and on prior calls, our sales teams are prioritizing higher value account with the opportunity to expand over time.

We’ve seen the average annual contract value of our customers grow year-over-year during each of the last 4 quarters. As of the end of Q4, over 95% of our book of business consisted of annual or multiyear contracts. Our average contract length continues to be approximately 2 years weighted on an annual contract value basis. This provides us with high visibility to future revenue. Net dollar retention rate at the end of fiscal year ’23 was 131%, and net dollar retention rate with win backs was 134% compared to 108% and 116%, respectively, in fiscal year ’22. We are very proud of the progress we’ve made in our retention rate, which has been directly correlated with high customer satisfaction as reflected in an NPS score of 63 in our last reporting period.

Continued investments in our customer success and product teams have made this improvement possible and will remain a key area of focus for us. Turning to gross margin. We expanded our non-GAAP gross margin to 58% for the fourth quarter of fiscal ’23 compared to 42% in the prior year. We consistently expanded our gross margins quarter-over-quarter and year-over-year throughout the last year. Non-GAAP gross margin for the full fiscal year was 53% compared to 38% in the prior year. The expansion of gross margins continues to be driven by the growth of revenue, the efficiency of our industry-leading agile aerospace approach and our one-to-many data subscription business model. As a reminder, we include the depreciation and amortization of CapEx and our cost of goods sold, marrying the practices of public SaaS businesses.

Adjusted EBITDA loss was $17.7 million for the quarter. For the full year, adjusted EBITDA loss was $56.8 million, better than we had expected at the outset of fiscal ’23 driven by revenue upside and effective cost management. As you have heard from Will, we are increasingly focused on driving efficiency and profitability across all of our teams. During the last year, you’ve seen how upside in our revenue flows through our gross margins and drop to the bottom line. We are approaching a scale where the leverage in our model enables us to consistently drive bottom line improvement, and we are targeting quarterly EBITDA profitability no later than the end of fiscal 2025 or calendar 2024 while continuing to invest to maintain our competitive lead in the market.

Turning to the balance sheet. We ended the quarter with $409 million of cash, cash equivalents and short-term investments, which we continue to believe provides us with sufficient capital to invest behind our growth accelerating initiatives without needing to raise additional capital. We also continue to have no debt outstanding. Capital expenditures, including capitalized software development, were $2 million for the quarter and $12.8 million for the year or approximately 4% of revenue for the quarter and 7% of revenue for the full year. This is lower than we had anticipated, primarily due to the timing of procurement. At the end of Q4, our remaining performance obligations, or RPOs, were approximately $152 million, of which approximately 75% applied to the next 12 months and 98% to the next 2 years, a $21 million increase versus last quarter driven primarily by large contracts entered into in Q4.

As a reminder, RPOs may fluctuate quarter-to-quarter as multiyear contracts come up for renewal. Please keep in mind that our reported RPOs exclude the value associated with the EOCL contract as well as other contracts that include a termination for convenience costs , which is common in our federal contracts. Our government contracts are often multiyear and provide us with a high degree of visibility to future results. I’d like to echo Will’s and Kevin’s excitement in welcoming the Sinergise team. Sinergise brings to Planet a team of approximately 80, the majority of which are software engineers. We see significant upside potential from revenue synergies over time. We expect to offer Sentinel Hub to our existing Planet customers and to drive the attach rate of high margin processing solutions sold alongside Planet’s data.

We view this deal as financially compelling, neutral to Planet’s EPS in fiscal 2024 and accretive in fiscal ’25. It is subject to closing conditions, and we expect it to close during Q2 of this year. As we turn to guidance, the overall macroeconomic climate remains uncertain. And while our products often help customers boost efficiencies and address critical global issues, we don’t consider ourselves immune to macro pressures. We believe we have factored these considerations into our guidance, including possible impacts on renewals and timing of new business, particularly on the commercial side. As we enter fiscal 2024, our book of business and visibility has improved year-over-year driven primarily by multiple multiyear government contracts that we signed last year.

Our committed revenue represents over 60% of our revenue guidance before factoring in renewals, new business and any revenue from the acquisition of Sinergise. And to underpin our forecast for new business, we have a strong pipeline for fiscal ’24, including 45 qualified deals with annual contract values of over $1 million or greater. For the first quarter of fiscal ’24, we expect revenue of $51 million to $54 million, which represents growth of approximately 31% year-over-year at the midpoint. We expect non-GAAP gross margin for Q1 of 53% to 55%, up from 45% in Q1 of fiscal ’23. Our adjusted EBITDA loss for the first quarter is expected to be between negative $21 million and negative $18 million. We expect capital expenditures of approximately $10 million to $13 million, primarily related to procurements for the Pelican program, some of which were rolled over from the prior quarter.

Our outlook for lower revenue seasonality in Q1 reflects expected caution on the part of commercial customers as they navigate economic uncertainties and the conclusion of a previously significant legacy contract early in the quarter. We are discussing new and evolved opportunities with this customer, and we will share more at the appropriate time. For the full fiscal year ending January 31, 2024, we expect revenue to be between $248 million and $268 million or growth of 30% to 40% year-over-year. As we have discussed in the past, we built our forecast assuming new business signings are back half weighted, which results in revenue weighted toward the second half of the year. The high end of our guidance also assumes we close our acquisition of Sinergise in Q2.

Our non-GAAP gross margin is expected to be between 57% and 61%. Adjusted EBITDA loss is expected to be between negative $47 million and negative $37 million, reflecting continued investment in enhancing and expanding our core products, while also maintaining our path to profitability in fiscal year 2025. We expect CapEx to be approximately $45 million to $55 million or approximately 18% to 21% of revenue. As we discussed at our Investor Day last fall, we have the ability to flex CapEx based on market demand, thanks to our agile aerospace approach. We believe this is a competitive advantage and a significant financial advantage of our business model. As with Q1, the step up in CapEx for the year is driven primarily by investments in our Pelican program.

Given the levels of demand we are seeing for high resolution data, we are continuing to invest behind our Pelican fleet and its related infrastructure. This year, we plan to build and launch our Pelican tech demos, order components for our first lock of operational satellites and upgrade our ground stations. We also anticipate launching our first Tanager demo satellite for the exciting Carbon Mapper program. We continue to focus on capital efficiency and target a payback period of less than 1-year for all of our production satellites. We are confident that the enhanced capabilities of our Pelican fleet as well as the unique data captured by our Tanager fleet will capture market share, grow addressable market and advance our leadership position.

To close, I’d just like to say that it was a strong year for Planet in a tough economic landscape. I’m proud of Planetiers around the globe and the contributions they make towards building an amazing mission-aligned and high-margin company. We are executing on our path to profitability, thanks to their focus and dedication. We remain confident in the demand for our market defining data sets, feel the effects of the market tailwinds across peace and security, sustainability and digitization of end markets and believe we are well-positioned to continue capturing the vast opportunity ahead of us. Operator, that concludes our comments. We can now take questions.

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Q&A Session

Operator: The first question of Michael Latimore with Northland. You may proceed.

Michael Latimore: Thank you and congrats on the strong year. In terms of the Sinergise acquisitions, I guess did you say that the upper end of guidance assumes — closes on time? And maybe can you talk a little bit about how much revenue you would expect from Sinergise, any guidance?

Ashley Fieglein Johnson: Yes. Great. Thanks for the question. And in terms of the guidance, basically, we have given ourselves flexibility in terms of how much revenue once we have a chance for getting to the closing balance sheet on the day of actual close and understanding the deferred revenue balance is remaining as well as the timing of that revenue recognition. So we can achieve the midpoint of our guidance assuming no close. Obviously, the amount of upside from there really depends on a lot of different factors, including timing of new business outside of Sinergise as well as the timing of closing that transaction.

Michael Latimore: Okay, great. Makes sense. And then in the past, you talked a little bit about fully ramped sales headcount. Kind of where does that stand now? And where might you expect that to be — by year-end?

Ashley Fieglein Johnson: We are obviously very pleased with the hiring that the team has been doing across the board. We are above the numbers that we had set for ourselves as the goal of the year and continue to bring, so we are over 50% and continue to bring new team members on because we continue to see strong market opportunity that we want to set the teams out to capture.

Will Marshall: Yes, if I can just add. I mean the strong execution of the go-to-market team has been fantastic. You’re seeing that in the NPS Score that Ashley mentioned, win rates increasing. It’s really great to see the execution. It’s not just obviously about the number of across the board.

Michael Latimore: Great. Thanks. Thanks so much.

Will Marshall: .

Ashley Fieglein Johnson: Thank you.

Operator: Thank you, Mr. Latimore. The next question is from the line of Ryan Koontz with Needham. You may proceed.

Ryan Koontz: Hi. Thanks for the question. Yes, congrats on a great year, particularly on the gross margin expansion. It’s really great to see that the one that many really working out. On the guidance, it looks like Q1 is a little light in terms of the linearity there in the year. And actually, I think you mentioned there was a renewal there that was kind of hanging the balance. Can you give me more color on that? Or I might have missed some of the detail that you shared there in your prepared comments.

Ashley Fieglein Johnson: Yes. Thanks for the question, Ryan. And yes, Q1 seasonality is impacted, in particular, by legacy contracts for many years back that reached its completion in early Q1. So just to provide a little bit of color, this contract contributed approximately $3 million per quarter in fiscal ’23. We remain engaged in continued conversations with them and still have a very positive relationship. But given that we have not renewed that contract and really I’m not anticipating it renewing at that same magnitude, we’ve only included the tail of the contract in our guidance for the year, which was relatively small.

Ryan Koontz: Right. Okay. Thank you. And on the net dollar retention rate, really great to see that popping up. So any color you can share there and what’s driving the inflection up the sides, the major customer belongs there. In terms of sales execution, your customer success team contribution to the NRR.

Ashley Fieglein Johnson: Yes, so we’ve obviously factored that customer into the NDDR. And it’s a combination of what we talked about of investing in the customer success team and investments in the product, really driving stronger gross renewal rates. And then our focus on landing those customers, we receive strong opportunity to expand and see significant expansions in some of the larger contracts that Will referenced in his prepared remarks were expansion contracts. So that obviously has a tremendous effect on our NDRR. So it’s across the board, both the sourcing that we are doing upfront and focusing our sales team around customers where we know we can drive value and then the execution of the teams on the back end on delivering that value.

Will Marshall: And if I could just add to the very first point you brought up about the gross margin expansion. We’re very, very pleased with that as well. 15 percentage points year-on-year is really meaningful. And we sell a long-term sort of ideal financial profile, which looks like a SaaS company or the space company, and we’re really getting meaningfully towards that, and I hope people can see that progress as being real positive.

Ryan Koontz: Absolutely. That’s really great. That’s all I have. Thank you.

Ashley Fieglein Johnson: Great. Thank you.

Will Marshall: Yes.