Operator: Our next question comes from Rich Hilliker of UBS. Please go ahead.
Rich Hilliker: The first one is for Eric. In the past, we’ve talked about the 3,000 to 50,000 student segment and how that’s an important driver for organic growth moving forward. I’m wondering if we could talk a little bit or if you could give us a little bit of color on how that segment performed in the quarter. Any color or any metrics would be really helpful.
Eric Shander: Yes. And thanks, Rich. Just for everybody’s benefit, what Rich is referring to is our enterprise customers, right? These are the 3,000 to 50,000 students. And then obviously, the larger ones in that are the strategic — that actually has performed quite well. And I can talk both from a retention standpoint as well as a bookings momentum standpoint. As you all can appreciate, our first quarter from a renewal standpoint is a low point just renewals volume. Our renewals volume really happens in Q3. But what we are seeing is good retention rates with the Enterprise segment as our teams are working on the upcoming renewals, they are partnering with the sales teams from that, as Hardeep mentioned, there’s a lot of good opportunities within that segment.
And we’ve made some sales changes with some of the leadership team over the past year on that. And what we’re seeing both in terms of bookings as well as pipeline. That is a very good segment for us and will continue to be a nice contributor as we kind of look as we go through the rest of the year.
Rich Hilliker: Okay. Great. Maybe my next question here. You’ve given us a lot of helpful details around what customers are interested in and adopting and how you’re broadening your portfolio. One remark was that you have the strongest cross-sell ever in Q1. I’m wondering if we could more pointedly talk about which specific products drove that or if there’s any sort of commonality or trends that you could just re-highlight for us?
Eric Shander: Yes. I mean — so I’ll start, Rich, on that. So, as we announced our Indiana Department of Education, it’s actually our largest special programs opportunity that we’ve ever had in the Company’s history. But that is an existing customer. It is a large cross-sell opportunity for us. From an ARR perspective, well over $5 million on that. This is the largest cross-sell we’ve seen, obviously, Indiana being a big contributor to that. But even back to some of the prior comments I made, we did see nice momentum across our enterprise segment as well. And I don’t know, Hardeep, if there’s anything else you’d add.
Hardeep Gulati: Yes, typically, what we see, Rich, is that every one of our products would actually have deals in many of the quarter. So, when you look at across the 20-plus products, there will be always some deal happening on every one of the products, right? So, whether it’s Unified Insights, CI, Naviance, each of the talent products, each of the areas of CCLR. There’s always multiple cross-sells happening for us. And that’s the exciting part of it is it’s just the breadth and the depth of the volume of the cross-sell we do in any quarter.
Operator: Our next question comes from Joe Vruwink of Baird. Please go ahead.
Joe Vruwink: I wanted to go back a little bit to the conversation around pipeline. It seems like you’ve gone through kind of a more robust grading and validation process around pipeline. When — on the outside looking in, we look at your guidance for not just this year but also the midterm framework. Does that embed a certain conservatism maybe conversion rates below prevailing trends just on the potential that schools become distracted when trying to finalize budget decisions into the next school year. And then Similarly, what about the forward gross retention assumptions that you’ve baked into the midterm forecast?
Eric Shander: Yes. Joe, it’s Eric. Let me start, and then Hardeep can add in. In terms of the guide, as you all can appreciate and have seen over the last several quarters, large deals will drive quarterly variability, but yet as we look at the full year achievement, right, we’re certainly very firm on where we believe we’re going to end from full year. So, what you’re really kind of seeing is just us kind of recalibrating a little bit just in terms of some potential larger deal variability, but yet reaffirming the full year. So that’s all you’re seeing in the guidance that we provided. And then just from a gross retention standpoint, we continue, and like I said, Q1 is our lowest period from a renewal standpoint, but Q1 was very successful.
We’re obviously ramping up through Q2 for our Q3 period. And the early signs are extremely positive there as well. So, I would just say that there isn’t anything that we’ve seen to date that has us concerned that we’re going to see something unexpected.
Hardeep Gulati: And Joe, I guess the other part of your question on just the different trends, what we see, right? I think this is the beauty of our business. When you look at compared to a niche solution, right, they might have certainly a growth and certainly, that particular area, demand has impacted for whatever reason, they might slow down and then come back up, right? But what happens in our solution is because we are pretty much selling to all the different mission critical elements, all the critical software elements as well with our data products pretty much impacting the entire decision-making for these districts we see a lot more consistent results. Now certain products might have up and down, depending upon area.
We’ve mentioned like classroom was a bigger growth area for us back in the 2021 area and then data picked up all that demand, and we saw a lot more growth out of the data product. So, we will do see some variations I think this is what we are highlighting is when we look at this year, right, some of the big areas of focus, as you mentioned, like budgeting is a big area, and that’s why you still see the demand for our data products, demand for our Allovue products. is to them. As they continue to look at how do they improve attendance so they can improve their funding. We see a lot of demand for our attendance intervention, our MTS to help provide the intervention support as well as our communications so they can actually engage. So, these are the kind of things.
This is what we are able to have the front row seats with these districts on their strategic priorities and the broader need. That allows us to both invest our innovations as well as our acquisitions to one of the top priorities we see in the trend. Having that full view across the nations with 80% of the school districts sitting in front of superintendents, CIOs, academic advisers, we are able to get that view, which allows us to make sure our sales motions, our sales plays, our marketing play and our innovation is all aligned to where we see the priorities. And that gives us the robustness of demand what you don’t see in other K-12 players because they don’t have the mission critical solutions, and they don’t have the breadth and depth of the view and the coverage model.
Joe Vruwink: Okay. That’s great. And then I wanted to actually ask about Allovue. It has a good brand and it’s come up a couple of times on this call. what sort of financial impact might that have had in the quarter and maybe the full year? And then, is that all going to be in software? Or is there actually kind of a consulting or services component to that business as well?
Hardeep Gulati: We’ve already closed a couple of deals like Chesterfield and Columbus, but largely, this is — we have built into our models, what you guys have shared with the guidance when we gave the full year guidance. We already have that visibility. Most of this is going to ARR. What I would tell you there are one or two large big services deal in the pipeline as well. If there are those things, we will let you guys know. But largely, this is again most of ARR-based business.
Operator: The next question comes from Fred Havemeyer of Macquarie. Please go ahead.
Fred Havemeyer: I wanted to begin on competition. I — been a couple of points out there about Infinite Campus and others in the core SIS space. So, I wanted to just drill into SIS, in particular, and ask our vantage point is the largest market shareholder and market share leader in North American SIS and K-12. What are you seeing? And are there any major changes in the competitive landscape?
Hardeep Gulati: Fred, as I mentioned, right, we are still the clear market leader. We have more than double the market share of our nearest competitor. We are best in class. If you look at the deals like Stride, which is a public company which decided their SIS solutions, Puerto Rico, if you look at from a perspective of Toronto Public School, these are major districts, which look through all the different competitions and selected us as an SIS. Our gross retentions are top class. So, there would be deals where we might lose 1 or 2 deals. But when we look at from the — our win rates, we win more than we lose. And we are all — we are definitely in terms of capabilities, the most modern solution, and the rest of our platform gives us even more differentiator into SIS because we allow them to integrate with all these other pieces.
