Scott Berg: Sorry, I was on mute. Apologies there. Congrats on the nice quarter and thanks for taking my questions. I guess I got two. Customer adds in the SimplePractice business have kind of bounced around that 5,000 level all year, nice, healthy level, especially with the pricing increase. But we’re seeing a number of software companies with exposure to smaller customers find a slightly more challenging environment in fourth quarter. I guess as you think about your 2023 guidance, are you expecting that environment to be that new customer environment to be similar to what you’ve seen recently, or are you anticipating any change in the macro?
Cassandra Hudson: I mean, we’re expecting similar trends in terms of gross customer adds for 2023. I think the demand environment, especially around mental health, still remains very strong. I think at least in terms of the customer that we’re targeting, they behave a little bit differently than a typical SMB customer. So, I think in some ways that benefits us, but as of now, the demand environment remains strong and we’re expecting consistent contribution in terms of growth adds.
Scott Berg : Got it. And then from a follow-up perspective, the way we calculate kind of transactional ARPU for your SMB customers has been trending down a little bit consistently the last couple quarters here. Any reason why transactions might be, or that transaction kind of dollar amount from your customers might be trending down? Just to know if there is something seasonally in the business that’s a little bit better in the first half of the year than the second half of the year? Thank you.
Cassandra Hudson: Yes, there is a bit of seasonality to be aware of on the transactional side and just with the SMB business overall. Q1 tends to be the strongest both in terms of the appointments that our practitioners have, which obviously drives our payments revenue or our transaction revenue. And also just in terms of even new customer adds. So Q1 is the strongest, and then it kind of slowly steps down through the year as people take more and more vacation. And I think in 2022 in particular, we certainly saw people return to a more normal way of life, taking more vacations, et cetera. And so I think that is a typical seasonal pattern for us. The other thing just to be aware of is we did make a lot of changes to pricing and packaging in 2022, and that did shift some revenue kind of between the buckets. So, we’re maximizing for total ARPU expansion and as a result you can see shifts in growth between the categories there.
Scott Berg : Great. That’s all I have. Thanks for taking the questions.
Cassandra Hudson: Thanks Scott.
Operator: Thank you. Our next question comes from Josh Beck with KeyBanc.
Josh Beck: Thank you so much for taking the question. I wanted to ask a little bit about the group pricing. Certainly as you get into even four, five clinicians per office, it’s a really meaningful ARPU lift and certainly as you get into 10, it’s certainly a really large difference versus your kind of average ARPU. So I’m curious on just with respect to the CAC associated with these group clinicians, are you finding that the channels that resonate for these large offices maybe different than the one to two type of offices and just how you are kind of modifying your go-to-market as group becomes a, it seems like a bigger theme.
Cassandra Hudson: I mean, today our go-to-market is still pretty simple and very focused on targeted digital marketing in an e-commerce driven flow. We do have some onboarding assistance that we provide, but that still remains our primary go-to-market motion with groups. And I would say like even in those smaller customer segments like of the four to five practitioners that you were highlighting, we found that go-to-market motion to be working and effective. You certainly could see in longer term if we continue to move up into larger and larger group practices that we might need to augment our go-to-market in some way. But I think that’s a ways off from where we are today,
Bob Bennett: Just to add a little bit of color with the breadth and depth of our solution for these solo practitioners that come on, we also do see them migrating fairly quickly as they fill up their books to add others, add more clinicians to their practice. So there’s a natural growth within, not just going after group practices, but we see a lot of natural growth within the customer base for them attaching other clinicians.
Josh Beck: Okay, that’s great color. And maybe just a bit of a follow-up to the prior question about kind of transactions per customer or TPV per customer, within SimplePractice, if you look at your penetration levels, obviously you offer a solution through Stripe and good, quite attractive, I think, value in economics to your customers that way. I think there is other options if somebody wants to use maybe another provider, but just when you look at the penetration of your offering within SimplePractice, is that something that could be a needle mover in the years ahead where just greater attach, even though maybe the business itself isn’t really necessarily your customers’ business isn’t accelerating, but just your penetration within their business is perhaps expanding.
Cassandra Hudson: Yes, I do think that will be a contributor to growth as though our customers continue to process more payments on our platform today, we’re at about 75% penetration. So we’re processing 75% of our customers’ payments directly. So, that is pretty high. I think we can still see that kick up a little bit, but more modest contribution going forward.
Josh Beck: Super helpful. Thanks Cassandra and Bob.
Cassandra Hudson: You’re welcome.
Bob Bennett: Thank you.
Operator: Thank you. Our next question comes from Raquel Betesh with JPMorgan.
Raquel Betesh: Good morning Bob and Cassandra. And thanks for taking my question. I know you guys did highlight having your strongest bookings quarter on the Enterprise side, but just given the macro, are you seeing any changes in the sales cycle or any delays?
Bob Bennett: I would say that it’s been steady, Raquel, we’ve got €“ we have large deals, as we frequently talk about there is an ebb and flow and different €“ longer sales cycles for some of the larger deals. But I would say it’s €“ we’ve got a very strong sales engine across Enterprise that drives pretty reliable results in terms of number of counts. Now the larger deals come in various quarters, and as we mentioned, we had two of the four largest coming in the fourth quarter of 2022. So anyway, I think that haven’t seen a huge, we deliver for InvoiceCloud as an example, we don’t charge an upfront fee. We remove pretty much all of the friction from the sale, because we are an enhancement to their user experience that they want and there is no €“ they don’t have to come up with funds.
And frequently we have the consumer paying the service fee that’s associated with our revenue stream. So not really a big change for any of the customers for their citizens and for their rate payers that are paying a utility bill, for example. So I don’t think that €“ yes, I think, we’re very steady and continue to see good retraction.
Raquel Betesh: Got it. Thanks Bob. And just to follow-up for me, given your comments around seeing more mid-market traction with InvoiceCloud, are there any difference in that sale to a more mid-market customer versus the larger enterprise guys?
Bob Bennett: Sales cycle is shorter for the mid-market, than a larger deal that might be an RFP, a request for proposal oriented, so there is a longer process, a more complex decision making unit frequently involved. So more drawn out if you will. I mean, I’d say our results are similar, but we only €“ I would say out of €“ I’m estimating out of 20 new customers, only one of them actually comes as an RFP. So we rely heavily on the mid-market and we’re seeing a really strong top of funnel, better than ever a top of funnel for mid-market and Enterprise, frankly. So I think that we’re very bullish in terms of our ability to continue to drive strong bookings this year and in the future.
Raquel Betesh: Thank you. And congrats on the quarter.
Bob Bennett: Thank you.
Cassandra Hudson: Thank you.
Operator: Thank you. Our next question comes from John Davis with Raymond James.
John Davis: Hey, good morning, Bob and Cassandra. Cassandra on gross margins, those were quite a bit better than, I think, we expected. I think they expanded about 160 basis points year-over-year, which is a nice acceleration from 3Q. So obviously pricing is having some impact, but that would also have been in 3Q. So anything else going on the gross margin line and how should we think about that going into 2023?
Cassandra Hudson: I mean, I think you are thinking about it exactly right, J.D., the biggest contributors really pricing and packaging. I do think we’re getting just continued focus on driving efficiency of the cost that we incur to directly support our product and customer support delivery. So, those are leveraged for us as we continue to expand our margins going forward. But those were kind of the big three if you will.
John Davis: Okay. And then net rev retention was really strong at 117%. Any reason why that should be materially different in 2023? Obviously you had pricing last year, you have some pricing, probably a little bit less this year. How should we think about churn, your churn assumptions versus, versus 2023? Just anything you can help us directionally with net rev retention as we go forward from here.
