And we would have to use our team, our CSM team, in particular, to go in and secure interest within those particular business units of those decentralized organizations. And if you recall, part of what Paul mentioned was our net revenue retention rate, that’s 157% this last quarter. So we generate most of our revenue from those enterprises. And I would anticipate that, that would remain the case going forward.
Operator: Next question comes from the line of Aaron Wukmir with Lake Street Capital Markets.
Aaron Wukmir: This is Aaron on the line for Brooks. Again, congrats on the great quarter. I guess to start, I’d love to hear your assessment on the competitive environment. Have you been seeing anything new especially from Microsoft and Nuance? And do you sort of expect any significant new competition to enter your markets in the near future, I guess, especially in relation to the ER with Go since that’s been the topic of discussion here?
Manny Krakaris: Good question. Yes. Obviously, the market is very, very large and it’s starting to grow quite rapidly. And so those conditions would conspire to stimulate competition and new entrants coming into the market and we’re seeing that today. With respect to Nuance I think they’re — it’s Microsoft and it’s a huge company and they’re very aggressive. But one thing to note about every company that we’ve encountered in the market, they are focused on the medical Note itself. The flat file that is the outcome of the Note creation process. There are no creation processes. We do much more than that. We not only do we deliver a medical not to flat file but we deliver traditional databases of structured data that is mineable so that our customers can perform like kinds of analytics they need to, to better their operations.
That is not something that our competitors do today. They may tried to do that down the road, I don’t know. But we also have the advantage of having this bidirectional communication channel that we spoke of which is central to our long-term strategic vision, as well as the broadest portfolio of products. We have a synchronous product and we have asynchronous products in both the ambulatory and acute care and our products are fungible for our customers. So there’s a lot of things that we do differently from competition that I think sets us up really well going forward.
Paul Ginocchio: Aaron, I’d just add to that, that we’re also HITRUST-compliant and have 7 of the top 20 health systems. So we really like our position. We feel like we’re already a strong leader in the space. So everything that — all those competitive advantages that Manny just talked about just make us feel very comfortable, not resting on our laurels but very comfortable with where we are currently.
Aaron Wukmir: Great. Yes, that’s super helpful. And then I guess a quick follow-up. You might have mentioned this a little bit in your prepared remarks but I’m just curious on how the interest from either the existing clients or prospects has sort of changed since you announced the HCA project?
Manny Krakaris: Good question. So since we announced the partnership with HCA, we received several inbound inquiries. This started right away from some high-level executives, from some major health care enterprises. I think, if I’m going to speculate here, that the partnership announcement serves as validation that Augmedix can deliver on these complex problems. And — so we’ve been fielding those inquiries since the announcement. So yes, it is definitely a help for sure.
Operator: Next question comes from the line of Bill Sutherland with The Benchmark Company.
Bill Sutherland: Paul, 1 or 2 for you. The move up in gross margin quarter-on-quarter was pretty impressive. Was the main factor there just more resources moving offshore? Or was it a mix with Notes?
Paul Ginocchio: Good question, Bill. Thanks. Yes, we’ve been really pleased with the gross margin development over the last few quarters. A lot of the hard work the operations team has been doing to continue to gain efficiencies, it’s starting to pay off. Obviously, we are being helped by the shift in revenue from servicing some clinicians onshore to offshore that gives us a nice lift. There’s still more to come. Not that much more but there is more to come. So we’re excited about that. And I think just for getting Notes is becoming more efficient with all the AI and automation we’re adding to that product and with the product growing larger. And we continue to gain scale and efficiencies, our overall delivery of Augment Live. So it’s a number of factors. A big — a good factor is the U.S. to OUS but there’s more to it than that.
Manny Krakaris: Okay. That’s helpful. I noted that revenue per average clinician was up quarter-on-quarter — or sorry, up year-over-year. And I thought the mix of Notes was going to be a little bit of a weight on that number. Is there — can you give us just color on that move this quarter?
Paul Ginocchio: Sure. We’ve had a couple — a handful of clients who have historically been really pleased and happy with Augmedix Live which is obviously great when you’re some of your biggest clients love your premium product. They’ve made some significant investments over the last year in that product. We worked with them to use Notes to penetrate deeply but they’re still going deeper with Live. And so we just had a little bit of a positive mix shift from Notes to Live in this quarter. I think also our ARPU for Notes went up and I think that was also a contributing factor.
Bill Sutherland: Okay. And you guys were — you guys are kind of happy with the direction of operating cash flow as well in the quarter?
Paul Ginocchio: Yes. We’re making good progress there. We had a little collections in the second quarter that came through in the third. I think we’re making good progress on keeping cost control tight and collections. We’re doing some additional work in collections. We’re trying to reduce our DSO. So all of that, I think, is you’re starting to see good progress on change in cash.
Operator: Next question comes from the line of Pat Walravens with JMP.
Pat Walravens: Great Paul, starting with you. I mean, obviously, you guys haven’t guided for 2024 but are there any points that you would want investors to keep in mind as we think about next year?
Paul Ginocchio: Pat, thanks for joining. We continue to — I think if you look at our longer-term plan and our long-term guidance, we talked about revenue growth in the 30% to 45% range and continued improvement in gross margins. And we would expect 2024 to fall within that sort of those large parameters. We’ve talked about continuing to reduce cash burn also.
Pat Walravens: All right. Great. And Manny, you got a lot going on. What are sort of the 1 or 2 most important things for you to make sure that get done over the next 12 months?
