Seth Gilbert: Thank you.
Dan Burkland: Yes.
Operator: Moving on to Jim Fish with Piper Sandler.
Jim Fish: Hey, guys. Thanks for the question. I guess Barry for you, surprised I’m the first one to ask this what has to go right or wrong at this point to hit that 16% 2024 guide? I know, the 16% has tended to be conservative in the past but with your Q4 guide here you’re exiting at about 17% for this year. So I guess walk us through the confidence for 16% to be kind of that sustained rate — prudent sustained rate, especially as you’re lapping some of the larger deals in terms of what they added for this year. Thanks guys.
Barry Zwarenstein: Yes Fish. So the 16%, which I’d like to emphasize is a starting point for us. Think of it in two components, new logos and secondly, the installed base. In terms of the new logos, we have a huge backlog that is sitting there that’s going to be deployed, not just the megas. But the bread and butter of $1 million to $5 million deals. And as Dan or I think mentioned earlier on, it might have been mine that’s a meaningful part of the revenue. In fact the — well, both the parcel delivery service and the healthcare company are helpful towards the revenue in 2023 and therefore also in 2024. The — the dots, if you will rather than the wells are much, much bigger by quantum amounts. They deploy faster and they are a size that they can make a difference.
So, between that backlog and what we call the go get, the gentleman sitting there on my right, Dan Burkland, he and his team are not just sitting on their ducks. They’ve got all these RFPs. They’ve got arguably the best go-to-market machine in the industry. And that can also bring in some more business as well aside from the backlog. So that’s on the new side. On the installed base side, we take a lot of comfort from the fact that we are beginning to lap the weak macro conditions that we’ve experienced in the recent quarters. And we wouldn’t be saying in our prepared remarks that the fourth quarter may be either flat or down or slightly unless we felt pretty sanguine about 2024. And it doesn’t — it’s very basic thing that you can do for yourself in terms of whether that alone contributes to the extra $145 million of revenue year-over-year.
Jim Fish: Got it. Thanks guys.
Barry Zwarenstein: Thank you.
Operator: We’ll now hear from Scott Berg with Needham.
Scott Berg: Hi, Mike and Barry. Thanks for taking my questions here. Barry, I wanted to follow-up on the question on the 2024 guidance a little bit. Kind of a two-part question there is one how should we think about linearity of the revenue? You have a couple of large deals coming online as that has been fully discussed here, but I just didn’t know if the kind of cadence for the — on the revenue side is pretty linear. And then what are your assumptions around seat growth in your installed base? You’ve obviously had some challenges in Q3 and you’re being more prudent here in Q4. How should we think about your kind of calculus around seats on the installed base next year? Thank you.
Barry Zwarenstein: Yes. Thanks Scott. So in terms of the linearity, we — every year have got a very consistent pattern about a little over half is in the second half of the year, call it, 51, 52, one year resumed 53, and the balance of course in the first half. It’s not going to be any different this coming year despite the puts and takes in terms of some of the deals that are ramping. In terms of the year-over-year comparison it was astutely pointed out in a recent research from somebody that that compares are tougher in the first half. So you’d expect the bigger increases in the second half year-over-year. In terms of the seat growth in the installed base, I don’t think we’re in a position – I know we’re not in a position to comment further at this stage beyond, looking at the dollar-based retention rate, that’s the best indicator of what’s going to be happening in the installed base.
So of course, it will grow. But at what rate will depend on probably a number of factors but mostly the macroeconomic conditions. I do want to mention as an aside, this is all about the logos – each individual logo being a little bit slower on average than logo churn. We – our logo churn is excellent, somewhere in the mid-90s on the enterprise side. And what we talk about it internally is that when inevitably the American economy turns around, we will benefit from that directly because we spring loaded. We can turn up the seats overnight. And so when the transactions pick up, agents will pick up and we’ll see that right away. And by the way just as an aside also now having profitable places.
Scott Berg: Excellent. Thanks for taking my questions guys.
Operator: We will now hear from Arjun Bhatia with William Blair.
Arjun Bhatia: Perfect. Thanks, guys for taking the question. I fully appreciate the conservatism in Q4 right? I think we’re all kind of looking through the choppiness in the macro. But Barry I think you mentioned that you had started where there were data points that suggest that in September, things have gotten weaker. Have you seen any change in your transaction volumes in September? And just as you think about your vertical exposure is there opportunity for other verticals to offset perhaps some weakness in the consumer vertical as you look at Q4 – 2024?
Barry Zwarenstein: Yes. So let me first deal with the healthcare verticals. There is a healthcare vertical which is also a seasonally important vertical with the open enrollment and the like. Our indications on that is similar to what we expected when we said that guidance of no meaningful upside thus far. It’s just gotten started about I think two weeks ago. In terms of the consumer, it’s in the month of October, it’s pretty much in line nothing dramatic to what we always – just from what we were assuming at the time.
Arjun Bhatia: Got it. Thank you.
Operator: Moving on to Meta Marshall with Morgan Stanley.
Meta Marshall: Great. Thanks. Maybe Dan a question for you. With so many of these deals kind of having AI attached or some sort of AI angle to them. Just what are you seeing in terms of bottlenecks either in do they take longer to get signed? Is it data privacy? Is it just what is the scope of what they want to do? Just trying to get a sense of where people are. I’m figuring out what they want to actually – what type of virtual solutions they want to use.
Dan Burkland: Yes. The attach rate is wonderful. Do they take a little longer? Yes I think on average if you look back a few years yes, but the whole – if the whole lot takes slightly longer which also comes with moving upmarket, as we’ve done. That’s fine. It’s a gradual process. It’s not a significant metric that really impacts anything from our perspective. And yes, the customers tend to – they sign up for an AI application. We go in, we implement. And oftentimes, our professional services team and consulting teams will work with them to find new use cases, additional use cases and really do a cross-sell, upsell kind of in progress while they’re implementing the solution, which tends to happen with any innovation that’s new to the buyer. And they have – it’s not a replacement in that sense. So they’re experimenting. They’re finding new use cases and we see great momentum as I mentioned with our AI and automation portfolio across the board.
Mike Burkland: And Meta, I would just add to that AI and automation revenue is growing faster than any other product area for us. That’s what revenue. And I already talked about it in my prepared remarks about 250 projects AI and automation projects being worked on by our professional services team in the quarter. So we’re starting to see kind of the – the end result if you will, right the lagging indicators of some of the things we’ve been talking about over the last few quarters in terms of momentum in bookings and attach rates. Starting to show up in revenue and revenue growth as well as a lot of active projects, not to mention a continuation on the bookings I mentioned, Agent Assist in terms of 150%.
Meta Marshall: Great. Perfect. Thank you.
Operator: Samad Samana with Jefferies has the next question.
Unidentified Analyst: Hey guys. This is actually Billy Fitzsimmons on for Samad Samana. Barry for you and I hate to ask a similar question to what other people have already asked. But I do want to triple click on the 2024 outlook. And then just so we’re all clear. And maybe to ask what Jim and Scott asked in a slightly different way. But obviously that 16% number is a starting point and it remains early, but can you just walk us through maybe some of the other factors that were incorporated into that number? How do you think through things like continued strong deal activity, continued international expansion, channel momentum, AI-enabled product adoption into that outlook? And does that 16% number incorporate kind of continued weakness in some of the more challenging verticals or a potential improvement?
