Matt Calkins: Great. I’m going to talk about our 25%. This is the higher tier the new higher tier in our pricing system and all of the new features that we just announced at Appian World, they’re all in the advanced tier. So customers like this, we had a lot of momentum. I think it’s probably the best feature drop we’ve had in a long time. And customers understand that in order to use these features, whether it’s process HQ or case management or they’re going to have to buy the higher tiers 25% more. I think that this is likely to come up in our renewal negotiations. So it’s not all at once. But when customers talk about renewing, we’re going to discuss why they should renew at the higher rate. It is not a mandatory 25% increase.
It’s optional, and we’re trying to lure them up with these new features. I don’t expect a rapid impact from this. But I do think that Appian has a large consumer surplus, which is to say that our customers get more than they pay for. And so by creating a new higher pay rate, we can sort of take some of that back with features, which I hope soon will be considered mandatory, Dreger for any Appian customer because they’re such good features. That’s the plan here.
Tom Blakey: That’s a great answer, Matt. And just as a follow-up to that, was the — is the surplus being shifted to these higher tiers? Or is it just all incremental in terms of these higher tiers and a leading question to consider if you would wager a percentage of revenue that you would expect to take this higher tier, especially given the fact that you have the power to move some of that surplus to those higher tiers.
Matt Calkins: Yes. I’m going to hold back on making a prediction. I mean, look, I love the question. I asked this of myself, but I just don’t want to answer it. I want to just see if we fight this and get back with more knowledge.
Tom Blakey: Okay. And especially with TCO and other benefits, I’m sure if you could push the surplus to the higher tiers and the consideration of a continuing to save the company and customers’ money, maybe we’ll see a considerable move over. Matt, as a follow-up to your budget kind of commentary, Appian still continues to grow double digits and a kind of flattish to up low single-digit IT budget environment. Where do you see the budgets coming? I think it was Steve Enders question in terms of AI budgets. Where do you see come — and in the context, if you could answer, I saw your 1 million plus ARR deals that you — that chart has been phenomenal over the last few years kind of flattened out a little bit. If you could just kind of combine the 2 points in terms of financing, that would be helpful. Thank you very much.
Matt Calkins: Yes. Let me just say, I know some people are watching that chart by the quarter. I wouldn’t watch you too closely. I do think there’s some natural volatility in Q1 is Q1 for us. So don’t get to absorbed in the ticks on $1 million accounts. However, let me say that the real space for us long term in this market is at that high end, right? That’s where our best-of-breed player belongs. And so for us to focus on larger businesses and bigger deals and higher feature sets and elevated prices, this is strategically where we belong. Epic fits right into that, for example, the new elastic scale feature. We — what we’ve done recently — and you could see it in our show and the way we dropped a bunch of great features, and they all have price tags.
The way we’re reorganizing the priorities in the market to focus more on the larger opportunities. It’s all under the understanding that there’s a place that we can live comfortably in this market space, and it’s at the high end.
Tom Blakey: That makes sense, and it could coalesce around maybe Mark’s model producing some profits in the future to coalesce around that. Thank you very much.
Mark Matheos: Yes.
Operator: Thank you. [Operator Instructions] Our next question comes from Raimo Lenschow with Barclays.
Raimo Lenschow: Hey. Thank you. Thanks for squeezing me in. Matt, if you think about the data platform and the AI adoption, does the data have to come first. So if you think about like how the world is going to evolve here? Like you mentioned earlier, there’s not that much on the AI budgeting side. Do you think the bigger move and people don’t talk about is actually that they need to clean up the data first and hence, your data fabric should be or could be and will be the more interesting offering for the time being? Thank you.
Matt Calkins: I think the data conversation is under-pursued in AI generally. As a society, we don’t give data enough credit. As businesses we’re not broadly giving data enough credit for the value it creates inside AI. Now, let me take that point one step further and say, AI will truly be valuable when it’s about you, right? This is true for you personally. If you were to type a question into a public AI algorithm, you would get back a generic answer. But if it knew you, it would give you an answer that was valuable to you. And the way people get around this right now is they try to explain themselves very briefly, like if I care about this or if my priority were XY, then what would you recommend for me, right? They’re basically kind of prompting the AI with a little bit of themselves.
But at that level, when the AI knows little to nothing about you, it’s a novelty. When AI moves from being a toy to being a tool, it’s going to be because it knows you. And that’s true right now when you as a person, interact with public AI and it’s also true for businesses. When they interact with AI, it’s just a toy until the AI understands the business. And that’s the real hurdle because understanding the business means exposure to the data that the business owns the crown jewels of the business, and there’s privacy concerns, there’s regulatory concerns. There’s a lot of fear in that system. For us to get serious as a civilization about AI, we’re going to have to figure out how to make AI about you, in this case, you being the business, and that’s going to mean getting across this, how do we share question, how will we share our information.
And I propose one answer to that question. And that is that the Data Fabric will allow you to filter, select and share only a tiny slice of your data, but the right slice with AI in order that you can get a valuable answer and reply without triggering any privacy or regulatory concerns. That’s one answer to a critical question that constitutes right, the frontier of real business value in AI. We’re going to have to have an answer to that question. We have one proposal. Appian has got a proposal to how we’re going to do it. And Data Fabric is utterly central to our ability to offer that proposal. So I’m a huge believer in the synergy between data and AI between the capability of Data Fabric to facilitate a certain sort of personalization around AI.
