Pete Godbole: So, I would describe it as being — remember, the biggest driver is people buying and gross expansion. So that’s just companies deciding there isn’t a budget in small companies and saying, “I’m not adding another seat”. Things that used to happen, we call our transactional business. People would pop in and say, I need another seat. Everything in these smaller enterprises and expansion is going through a more detailed review process. And frankly, that’s the part of the business that’s suffering. Now what happens where there’s a reduction. I think in some ways, people are leveraging the model to make decisions around, can I convert somebody from being creator to a collaborator? Can I look at people in the platform and say, who actually absolutely needs it? That’s a smaller driver in this equation, but that’s what generally happens. It is not a switch to a different product most of the times. It’s say, can I do without person of the platform.
Operator: We’ll go next to Taylor McGinnis at UBS.
Taylor McGinnis: So, can you comment or quantify what you’re seeing so far in quarterly DBNR at the start of this I know you said enterprise was strong, but just curious if that means stable or what that exactly means? And then as a follow-up, it seems like in order to get to ARR growth of 14% for the year, you’d have to assume a pretty significant deterioration in DBNR. So, is the assumption that SMB and enterprise quarterly DBNR continue to worsen throughout the year?
Pete Godbole: Yes. So, Taylor, I’ll answer your question in these parts as you went through it. The first one is our enterprise dollar-based net retention rate for Q4 is over 120%. So, we were pleased by how that played out. That’s the first part of it. The second part of it is our assumption is what we’re making is the SMB portion of that. Remember, I told you the SMB DBNR was close to zero. So, it wasn’t significantly over 100. We’ve assumed that, that continues to worsen as we go through the year. What we’re doing is essentially taking a more conservative approach to the way the macro might roll out and how the trends might evolve as one part of it. And we’re also dealing with an element of as we think of the enterprise portion of it. Enterprise sales cycles are back-end loaded as is the total bookings. We’re early in the year. So being a little more thoughtful and prudent as we make those determinations and how big those enterprise bookings and DBNR could be.
Taylor McGinnis: Got it. And then just as a quick follow-up. I think you mentioned earlier that there might be some initiatives in place to potentially prevent some of the weakness that you’re seeing or help curb some of the weakness that you’re seeing in the SMB segment. Can you just walk us through what some of those initiatives might be?
Mark Mader: Yes. There are three things that we’re doing. One is the leading edge, which is about lowering friction on the sign-up and getting started. So that’s widening the funnel. I would say the other pieces that have been in flight for a number of quarters now, the first of which is being released later this quarter, is, we’ve gotten a lot of feedback from both the sell side, buy side, as well as customers on, we really like the power of your platform, but boy, could we modernize it a little bit, please. And one of the big new views that we’ve been working on, it’s been actually in evaluation with over a thousand of our large customers for, coming up on five months now. I believe that is going to shift this quarter. It’s a new view, it’s beautiful, it’s fast.
People love it. It helps on understanding your data and Smartsheet better, that drops this quarter, that’s available to every single business plan, every single enterprise plan. When we think about stabilization and we think about resonating with the SMB buyer, they want new stuff. They want beautiful stuff. They want to package in a way that’s accessible. So, as we look at our guide, one of the conservative things is the new view hasn’t released yet. The massively modernized view existing views we have with SHIP this year haven’t launched yet. Do I think those are going to pull harder than what we’ve had? Yes, I do. And until I see a quarter where I see the, the reaction to those things, both in terms of initial conversion rate, engagement of existing users, which drives an IT administrator’s ability to continue to grant them that license or revoke the license, these are all things that I view as potential tailwinds.
What I can say is we’ve been uber disciplined on shipping those things when they’re ready. So that first view that launches later this quarter, that thing will be ready. And I know customers love it. And again, what part of our job will be is to report out to you on a quarterly basis. Now when they drop, what happens in terms of engagement, we’re doing that on AI right now, will report out on views. And I would expect because of the vastness of the lead flow we get from that SMB lower end of the market, it’ll be really interesting to see how those new experiences drive conversion. The conversion one is sort of the hero metric, but I think the retention piece is the more nuanced one. And I think these can play as big a role in retention as they do in initial conversion.
So those are the ones that I’m really keying off of in terms of improved performance.
Pete Godbole: And one of the things, I’ll add to what Mark said is the fact that do remember our guidance philosophy is based on things we can see we have experience on. So, the parts that Mark mentioned are not included in our guide because we need to see the experience as the full set of these features come to bear in market.
Taylor McGinnis: Thanks so much.
Pete Godbole: You’re welcome. Taylor.
Operator: Our next question comes from Steve Enders at Citi.
