Frank Patchel : We are previously saying that our — before that our gross margin was going to be the mid 70% range, and now we’re very comfortable to say it’s going to be in the upper 70% range non-GAAP. So we we’re seeing that as about approximately a 4 percentage point improvement and about half of that is attributed to the price increase.
Eric Martinuzzi : And then I did see a decline in the computer backup customers as of year end, you we’re down to 431,745 versus 436,080. So what is the explanation there?
Gleb Budman : This is Gleb. First of all, as Frank, mentioned or think we saw a 1% to 2% licensed usage decline in quarter. So, the number that you’re talking about is the customer number, which stayed consistent at that high gross customer retention rate. What I will say is that, that number in general is something that we’re looking at whether it’s a relevant metric going forward into the future because it’s so heavily influenced by the number of consumer customers on that product line. Whereas, we are increasingly focused on going into — servicing businesses in particular more up market businesses. And so you can imagine one that number is driven by one consumer customer is treated the same as one customer that pays us six figures and so that’s —
Eric Martinuzzi : That’s where I — it sounds like just especially given the guide, it’s not all customers are created equal.
Gleb Budman : Exactly. And as we mentioned that we just launched enterprise control, which is a functionality to help the larger customers manage all of their licenses and computers. Again, not relevant for an individual consumer customer and the individual consumers are what drives the pure number of customers metric.
Operator: The next question comes from Zach Cummins with B Riley Securities.
Zach Cummins : Congrats on the quarter on the guide. Just a few questions for me. Gleb, you were talking about initiatives of moving up market and potentially changing some of the commission structure for some of your salespeople. So, can you talk about maybe potential changes as you move up market in any sort of incremental investments you need to make outside of the leadership change that’s ongoing right now?
Gleb Budman : So we’ve been taking steps down this path. So you probably remember when we went public, we were 80% of all of our business was from self-serve. And we had talked about how the sales assisted customers were larger and it was a somewhat nascent motion for us, but we were seeing larger deals and customers liking that service that we provide. And so we said we were going to be using some of the proceeds to stand up a sales team and start putting more focus behind the sales effort. And so some of the things that we’ve done over that time was we stood up an SDR team, which is an outbound team. We staffed up some of the sales team in terms of SDRs, BDRs, account executives, solutions engineers and built out that team We’ve also divided the groups up into territories.
We’ve changed some of the ways that we structure and guide leads through the funnel to them. And some of the sales operations aspects of it introducing B2 reserve and the ability to sell committed contracts were two important steps that allowed us to actually have the sales team sell as opposed to only assist in a self-serve type motion. And then adding the channel motion helped the sales team as well. So those are a number of changes we’ve been making over the last two years to help enable the sales team to sell to organizations and sell to larger organizations. We’re looking for the, new Head of Sales. In addition to that we have a number of open recs on the sales team for senior account execs to sell to those larger organizations. We have the commission program that we talked about.
These are just some of the things that we have done and some of the things that we are doing as part of continuing to move up market. There are things around the other organizations, marketing customer support cloud operations and others are also being supportive in that kind of entire company focus of moving up market.
Zach Cummins : And final question for me is just around cash usage. Nice to see the reaffirmed $20 million target at the end of this upcoming year. Frank, aside from the improved profitability in the business, I mean, can you walk me through just some of the other key inputs in terms of expectations for CapEx and some of your principal payments for capital lease obligations?
Frank Patchel : On the CapEx side for example, we’re expecting to incur about $16 million to $18 million of new equipment there. And if you recall, that is slightly less than what I had been saying previously at the $18 million to $20 million range. And the reason for — and actually is very similar to what we spent at the midpoint this year. And the reason that is flat and or slightly declining is that we’re still using up the pandemic buffer when we built up additional equipment during the pandemic time. We’re still using that in our data centers, which will be largely done after quarter one. And then on the innovation side, where our engineers are continuously improving the platform, one of the areas that we expect to get a benefit in this year especially is in faster deletes.
So anytime you can delete data quicker, you could store new data on the same hard drive. So that’s driving some of that. The other — so that’s on the CapEx side. And then you had also asked on the leasing side, and what’s really driving that part is if you look at our total leases, you would notice that the total amount of leases, long and short-term together is actually declining. So what’s basically happening is that we have a larger fall off in leases that we have new leases being added. And it’s for the same two reasons the pandemic leases are falling off. Because they’re a lot of them came on three years ago, and they continue to fall off very quickly now. And the new leases that were adding for the new CapEx are just not as great as what’s falling off.
So that’s why we’re getting a kind of again a flat to slightly declining payment pace on those leases.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mimi Kong.
