Ethan Bruck: Got it. Thank you, guys. And congrats again on the results.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Brent Bracelin with Piper Sandler.
Brent Bracelin: Thank you. Good afternoon. G, I’ll start with you here. It sounds like you’re excited by the CS Suite product, a couple of hundred customers deploying that this quarter. What is the ASP uplift as you think about a customer that moves to CS Suite? Is there an ASP uplift when customers move? Or should we think about this more of a modernized stack and with no uplift. Thanks.
Girish Mathrubootham: Okay. Thanks, Brent. And so first of all, yes, there is an uplift. I probably have to get back to you the exact numbers. But because the pricing is slightly higher for the CSS suite than standard Freshdesk or Freshchat alone, I would think it’s probably, I would say, 10% to 20% higher, but actual realizations could be different. So — but yes, in principle, there is an ASP uplift because the customer is getting bots and conversational agent experience as well as ticketing all in one package. So it’s higher than Freshdesk stand-alone and Freshchat stand-alone and bots will add on usage-based pricing as well.
Brent Bracelin: Got it. Helpful color there. And then Dennis, just as you think about the business here, there are there some moving parts? You guys are doing a good job of navigating a challenging environment. One of the things that stood out to me is clearly, you’re talking about strength on the enterprise, strength in ITSM. We are looking across the industry seeing some weakness on the SMB side. If I look at net logo adds, it did look like enterprise was down slightly and the SMB space was up. Maybe if you could just give us an update on what you saw overall in the quarter relative to larger customer demand, SMB and update that PLG 2.0 initiative, is that starting to have a little bit of an impact here on net adds? Thanks.
Dennis Woodside: Yes. So just to back up a bit, remember, the markets that we’re competing in are massive between sales and marketing, customer support and IT and any business of any size needs what we provide, needs an IT solution, needs a customer support solution, need sales and marketing solutions. So the market is massive. And still, when you get into SMB, still relatively underpenetrated, about 40% of our revenue is from SMB today. . We — in any given quarter, we’re going to see fluctuations across SMB versus our large account acquisition. Also, if you think about like in enterprise, in particular, you tend to have a lot of buying cycles that take place at the end of the year as opposed to in the third quarter. So that potentially played into it for Q3.
But in SMB, in particular, we’ve started to do some of the things that I talked about at the Analyst Day to improve the efficiency of our — and the scale of our SMB business. We’ve spent this past quarter, Q3, diversifying some of the sources of leads in — before the funnel. So early, think about like going into affiliate marketing and investing more in SEO to drive organically into our trial funnel. What we’re doing this quarter is focusing on improving the efficiency of that funnel itself. And that’s through things like creating more personalized journeys for a prospect that’s in the trial itself using chat and other means to communicate to that trial is to help them get educated on the product and get to value faster. And we know if we get to value faster ideally in the first day or two of trying the product, you’re much higher — much more likely to convert.
So, we think there’s a lot of levers that we haven’t really pulled there in optimizing that funnel, which will play out over the course of the next year. So I think we’ve got very broadly speaking, continue to be pushing into mid-market customers, lower end of enterprise, in particular, with our IT products, more and more emphasis on cross-sell and expansion of our existing base and then getting that SMB funnel humming through what we’re calling PLG 2.0. Those are the three big levers we’re really going to be playing with over the course of the next year and that we’ll be talking about on our calls.
Brent Bracelin: Super helpful color. Thank you.
Operator: Thank you. One moment please for our next question. And our next question comes from the line of Brian Schwartz with Oppenheimer & Company.
Brian Schwartz: Thank you for taking my question. Tyler, just to button up the NRR guidance and the compression. I think you called out ITSM kind of being the expansion is weaker than expected in your introductory commentary. But then in the Q&A, it sounds like maybe it was a little more broad-based. So just wanted to get maybe some clarity on that if it’s constrained to the ITSM business? Or you’re seeing it across the product set. And then Dennis, one question for you just on the new customer adds. Can you shed any light on what you’re seeing across industries? We heard about some weakness in automotive and suppliers. And just wondering if you’re seeing any strength there or weaknesses across industries, given how horizontal the solution is? Thank you.
Tyler Sloat: Brian, I’ll take the first part. No, I don’t think — we didn’t need to call out ITSM expansion in particular seeing pressure, mainly just saying the expansion motion in general continues to see pressure, which it has for over a year now, really the agent addition part of that. I think what we called out is that, on ITSM we actually had a little bit of price leverage this year and so that kind of offset a little bit of the agent additions that might have slowed. And so that was kind of more of a positive to ITSM in general, ITSM also has better churn characteristics as it’s dealing with larger customers. So hopefully, that clarifies. We weren’t trying to call out expansion pressure on ITSM specifically.
Dennis Woodside: I think — so just on the industry question, for the reasons that I was just talking about the fact that we address such a broad market, the fact that the market is very horizontal. If you have an IT department or a customer support department, you need to automate it. We don’t have any single industry that really drives a lot of concentration for us today. we tend to get — I would say, on the larger accounts, we tend to get a nice reference cycle where we get two or three travel companies. Next thing, we’ve got 10 travel companies, we’ve seen that with industrial recently where we had a handful of industrial companies, some in steel, some in manufacturing, all of a sudden, we’ve got a lot going on there. And then the other area that we have seen, I would say, fairly continued strength over the course of the last several quarters is in higher ed and education where lots of universities are trying to automate all aspects of their business.
They’re trying to become more efficient as well, typically have very fragmented IT stacks across different departments, University of Pennsylvania is an example of one that we referred to where that was an expansion of an existing account where they’re trying to put everybody on the school and the same platform. So those are the kinds of things that we’re seeing across the board. But I wouldn’t say that there’s any specific industry that showed particular strength or weakness given the broad base of customers that we have.
