Tom Krywe: Yes. And you can see that in our K and our Qs, the quarter-over-quarter keeps dropping down. We’re about down to 30% of our deals and revenues coming from currencies, not in the U.S. dollar.
Peter Platzer: And don’t forget that we have not all of our cost is in U.S. dollar. So like, we don’t want to drive the number to zero. But we are steering that very, very carefully to that. There is a matching impact, which then reduces the volatility from FX. So net-net, I think we are starting the year 2023 in a better position than we started the year in 2022 with regards to FX risk.
Ric Prentiss: And obviously, you’ve kept resolute focus on the free cash flow path and the circling March to September of 2024. What variables push you to the March side of that versus the September side of that? Is it revenues ramping? Is it cost control? Is it CapEx? What kind of drives to the higher or lower end date as far as when free cash flow positive?
Tom Krywe: I mean, you hit all the fronts. It’s a mix of everything, right? We’re €“ that’s why we’ve put out the guidance that we had on the top line. We feel that’s like a nice strong guidance there. We’re constantly looking for ways to improve and leverage the business even further, even though you can see in our results, we already have very strong leverage across all four of our solutions. And then the CapEx front, we’re always managing that. We’ve been doing a great job year after year after year on the replenished satellites. We’ve been still sticking with the same amount of money we spent on an annual basis. I think this year we actually did a little bit less on that front than the normal 10 to 12 mill that we do on the replenish. So yes, it’s actually all of them and we’re constantly looking how to prove those. But I think we’ve done a fantastic job in the results in 2022 in all those areas. And then the guidance that we put out covering all that.
Peter Platzer: I really wish that you could be part of some of our operational meetings Ric and see the relentless drive that we have, right? And we use that word, and it’s a common English word, but it is one of Spire’s six values. So it means for us a little bit more than just a word out of the Oxford dictionary in looking to improve things. Just as a small anecdote, there is a reasonably famous book that talks about removing constraints from processes and streamlining them achieving higher quality, more throughput with less resources. It’s called the goal. And every single one of my senior managers and executives got a personal copy signed by me with a strong ask on the quotation marks to read it over the holidays, because this is what we are about constantly looking for operational improvements.
I don’t think you get the operational leverage that you see in our margin improvements unless you are constantly asking yourself, how can I do more with the same resources, increasing customer satisfaction, but decreasing cost and improving our margins.
Ric Prentiss: I appreciate the extra details, .
Peter Platzer: Thank you.
Operator: The next question comes from Jeff Meuler with Baird. Please state your question.
Steven Pawlak: Hi. Thank you. Steven Pawlak on for Jeff. I guess the question around the ARR shortfall in the fourth quarter relative to the guidance. I appreciate the detail, Tom, but I guess in more detail we can get, was it just some larger contracts that took more time? Was it €“ were the sales cycle lengthening happening sort of across the market? Is there I guess slower upsell or is it sort of new business issues? Any more details do we get on that that? Thanks.
Tom Krywe: Yes, no, that’d be great. I think one way to think about is really taking a step back and looking at our ARR for the full year. So we grew 41% year-over-year. But if you average that out, and I’m making it perfectly linear on a quarter-over-quarter basis, the sequential growth was 7.2 million, which is some really nice progress that we made all year on constantly adding more and more ARR. If you also look at our land-and-expand strategy that goes along with that, we added 135 net new customers in the ARR. So we added a nice pool of new customers to the group across all four of our solutions. And then when you look at the expansion side, we had 117% net retention rate that’s up from 110% the year before. You don’t get that kind of improvement and those type of numbers, if you don’t have stickiness in your solutions, if you don’t have low churn, you don’t have the many use cases that you’re solving and the value add that you’re giving to your customers.
So we felt very happy on what we did from a full year basis, where the area that we wish we had done better is the linearity from a quarter-to-quarter standpoint. And really the macro environment did hurt us there where you start the quarter, everything seems great, the pipeline’s nice and solid. And then especially with those seven digit plus deals that you’re talking about. As you’re going through the quarter, all of a sudden they start going well, actually now I need to get further approval processes. Or, well, what the funding is getting a little bit frozen at the moment, but then things free up later and it might then wrap quarters. Ultimately we always got these wins and we got the deals and that’s why our annual numbers that came out to where they are.
And we were really happy with things but the linearity from a quarter-to-quarter, not exactly what we would always perfectly want there. So we’d love to have a, just to be more spread out evenly, so but very happy where we ended the overall top line growth in the numbers.
Peter Platzer: And if I maybe add like a little bit more, generally would say, to give you more color there. If you look at our mix between commercial and government, we always talk about it roughly being equal is kind of like where we want to steer the ship. We’ve seen such tremendous amount of growth in our business on the commercial side in 2022 that we ended up the year a bit over-indexed on the commercial side, right? And so we have effort to kind of like move the ship back to like more 50/50 based. And on the commercial side, you see more impact from macroeconomic headwinds than you see on the government side. It wasn’t really that people said, I don’t want the solution. I just said like, I just can’t get it done right now. I really still want it. And now can we get things done a little bit later, and that happens more on the commercial side than on the government side.
Steven Pawlak: Appreciate the call. Thank you.
