But what we are seeing is some sales cycle elongation that we alluded to just a few minutes ago. And that’s a macro circumstance, if you will that we know is short-term, but it’s impacting our ability to move deals through the pipeline and get those deals closed. And it is a timing situation. I want to make sure that everybody clearly hears that from us is that, we strongly believe that this is timing based on the fact that customers continue to tell us, that the importance of upskilling and reskilling has never been higher in the organizations. We’re not seeing a material decrease in budget per head — per employee, right, allocated to upskilling and reskilling. That may be happening with respect to broader education. We’re not seeing that or hearing that with respect to upskilling and reskilling.
But what is happening is, what CFOs around the world have been doing including our own, which is making sure that they’re keeping a close watch on what’s happening from a macro and geopolitical perspective and being more conservative than we’ve seen in the past, with respect to allocating spend. We know that’s going to change at some point in time. We see the same indicators that everybody else is seeing, that we think this is going to be a soft landing, and that could start to have a positive impact sooner than later. But sales cycle elongation, and timing is really the reason why we’re seeing a little bit of what we’re seeing on the ARR side, but this — we strongly believe this is short term and that it’s going to change like you all are alluding to, as soon as the macroeconomic climate improves, which could be sooner than later.
Brett Knoblauch: Perfect. And if I could just add, maybe just one more on kind of net revenue retention. Is the decline there — can you maybe just parse that through, what’s coming from upsell — or kind of fewer upsell or fewer expansion versus churn. Has churn kind of been, what you’d expected? Has churn picked up from what you’d expected, or is that kind of sequential decline mostly related to expansion?
Sarah Blanchard: Yes. Thanks, for the question. Our gross dollar retention has remained stable. And so really what you’re seeing is the same thing that we’re seeing kind of across the board which is these longer sales cycles are impacting the speed at which we’re expanding and upselling. But again, the long-term opportunity it hasn’t changed. When the macro improves we expect sales cycles to normalize and net dollar retention to return.
Brett Knoblauch: Perfect. Thank you guys.
Operator: The next question comes from Noah Herman with Oppenheimer. Please go ahead.
Noah Herman: Hey guys. This is Noah from JPMorgan. Just a quick question with respect to the macro environment. Are you seeing did you see maybe like a sequential step-down in the macro environment potential incremental pressure? Just want to get a sense of whether or not the elongation of sales cycles is that increasing on a sequential basis? And maybe just what you’ve kind of seen through July? Thanks.
Sarah Blanchard: Yes, I’ll take that. So, we did see sales cycles further elongate in the second quarter and we do expect that to continue in the back half of this year and potentially into the first half. So, what we expect to see is from an ARR perspective growing at a fairly similar amount quarter-over-quarter until the macro starts to come back the sales cycles come back down and we’ll start seeing increases in productivity from our sales team.
Noah Herman: Okay, great. And then just a quick follow-up. Can you maybe just provide us an update on the international expansion as well as the partnership strategy there? And maybe just which regions you’re sort of seeing the most traction with Udemy Business at this point? Thank you.
Greg Brown: Yes, thanks for the question. On the international expansion side we continue to see our New Ventures division operate at a very high level. Japan continues to be one of our fastest-growing countries. Our partner Benesse there continues to perform at a very high level. And from a productivity standpoint, couldn’t be happier with what we’re seeing there. One data point that I think is relevant is we’re now in over 60% of the NIKKEI 225. So we’re seeing further expansion into the Japanese market. We had a major event there this last quarter. We had — effectively, we oversold the event in terms of the interest in what we’re doing as far as upskilling and reskilling and our ability to help organizations in country. So, again, very happy with what we’re seeing there.
And we’ve taken that model and we ported that model to Korea, Vietnam, and in China and we’re seeing very similar traction and trajectory in Korea, Vietnam, and China much earlier. So, it’s early days there. But Korea had a really nice quarter as well. So, I feel really good about the investments in Asia-Pacific on that front. Additional to that our partnership with AWS also had international impact. This last quarter we had multiple six-figure deals closed through the partnership with AWS. And we also saw something that was a bit of a surprise and — a surprise obviously to the good when I explain what it is which is we had a number of deals that for a variety of different reasons were stalled. Budget potentially was being reevaluated. And when we introduced the AWS partnership and explained that their retained committed budget against the AWS partnership to be allocated towards Udemy it unlocked these deals and one of them was a $500,000 annual contract value deal with a large financial services organization and we saw a number of these.
