Daniel Reagan: Excellent. Super helpful and then just one follow up, with the transition of Girish to EC and Dennis assuming the CEO position, congrats there. You’ve already provided a bit of color on this, but could you dive a little bit deeper into any changes in strategic initiatives and operational focus? You’re focused on the low end, improving SMB conversion that’s been discussed. At the high end you have momentum, but now a newer focus with opportunities around Device42. Any color there on initiatives and any changes would be awesome. Thank you.
Girish Mathrubootham: Yeah. So no changes from what we said before. Really focused on that SMB opportunity and getting that business back to healthy growth. Focused on continuing to drive up market, which is primarily IT focused on the AI opportunity, which is across all of our products. Those are the things that are really driving our business now. And then lastly, just focus on continuing our expansion, motion, expansion, cross-sell upsell as we have more products now, we have Device42. That’s another product that we can cross-sell into our existing base. Excellent.
Operator: Our next question comes from the line of Pat Walravens with Citizens JMP.
Pat Walravens: Oh, great. Thank you, Dennis. It’s actually, it’s Pat Walravens. So I would love to go back to the agent replacement conversation and let me share a quick anecdote with you, and then I would love to hear how things might different or similar for Freshworks. So I spoke to a large company at another vendor that has a couple thousand agents. They’re adding the AI option from this other vendor and they’ll reduce the number of agents by a lot, maybe in half. And so I said, okay, great. So your contract value is going to go down, right? And the answer was, oh, no, the total contract value is going up. This other vendor is already moving to consumption pricing and they bake that in. And we really don’t mind that much because we’re saving so much on the labor that the marginal increase in the software cost is just a much smaller amount than the labor savings. So does that dynamic work for Freshworks or is there something different?
Girish Mathrubootham: Hey, Pat, this is Girish. So this is exactly the same dynamic, and we had already also explained it earlier. So we all know that customer service automation is something that businesses want, and it’s not today after GenAI. It’s been something that businesses want right from the day they started putting in IVRs, in call centers, right. So this has been a journey for us and of course, GenAI is accelerating that and our Freddy Self-service is also built to capture and leverage that and as you clearly stated, for the customer, it’s a win-win because by investing in technology, they’re saving a lot more in terms of overall not having to hire so many people. And that translates into a better revenue realization potential for Freshworks also. That’s exactly true.
Pat Walravens: And so are you able to increase the size of the contracts overall on the renewals?
Girish Mathrubootham: Yeah. So again, its early days, but what you’re describing is exactly what we’re pursuing, and that’s what you’re talking about with respect to reduced agent count. Where that happens, we’re basically replacing human costs with software costs and so our customers are on that exact same wavelength. Not all of them are looking to reduce staff, but for those who are, there’s absolutely a business case to be made for spending more on the software. And remember, we have a consumption product. That’s what Freddy Self-serve is. You pay by session, which is basically the equivalent of a ticket and they understand that language. They understand how to monetize the ticket or what the ticket costs them. So they’re willing to pay on a consumption basis for avoiding that human interaction.
Operator: Our next question comes from the line of Elizabeth Porter with Morgan Stanley.
Elizabeth Porter: Great. Thank you so much. I wanted to ask a bit on more of a macro question. The macro headwinds deal hesitancy has been an impact really across software. So I wanted to get your view on how conversations are trending with customers as it relates to just how long deals can be pushed off and how does that balance with this rush to invest in AI and not wanting to be left behind? Kind of any sort of view on kind of when that pendulum and shift back to customers being more willing to engage in deals would be super helpful for your view.
Tyler Sloat: Well, as I said earlier, that we’re seeing two different trends in the larger account space, which for us is in that 500 and up cohort. We’re seeing good momentum. We’re seeing a lot of interest. We’re seeing a lot of deals and you’re seeing that in our numbers overall, as our customer base continues to shift into larger relationships with us, higher ARPA, that tends to be on the IT side of the house, but not exclusively because some of the deals that we talked about this quarter, like Stitch Fix, are customer support deals. It’s SMB, where at least for us, we’re seeing the kind of headwinds that you’re talking about, the prolonged decision making, the no decision, etcetera.
Elizabeth Porter: Got it. Thanks. And then for the Device42 acquisition, kind of wondering if you could give us any sort of additional color on how the deal sizes might compare relative to your current ITSM deals. Any sort of revenue or growth that we could think about as it relates to the asset that you’re willing to share.
Tyler Sloat: I’ll take the back part of that. So, as I mentioned, we’ve been a partner with Device42 for a while. We’ve actually been reselling their product, but it’s really more on a limited basis, but we do know that it works with our customers and it’s integrated. We said our Investor Day, we’ve got over 8600 Freshservice customers paying us greater than 5K a year and Device42 has about 800 customers and of the 8600, very few of them actually are using Device42. So we think there’s going to be great synergies there and that’s the purpose of this deal. We really think this is an investment in Freshservice, which that product has been doing really, really well and positioned really well. But we also know that this is not having the capabilities of the Device42 has made us less competitive in the upper enterprise and so our expectation is that this is going to fill that gap, that we know that there’s deals that we’ve lost because we haven’t had that and so our expectation is that this is going to be revenue accretive.
We don’t have the numbers yet to share. We’ll do that after we close the deal. But we did say in the script that revenue accretive for the year. And also we think it’s going to be cash flow neutral.
Operator: Thank you. This concludes today’s conference. Thank you for participating. You may now disconnect.
