Elizabeth Porter: Great, thank you very much. I wanted to ask a little bit on the non-software side. I believe last quarter, you mentioned growth had moderated in Q3. So I just wanted to get a sense for how growth trended in Q4? I know you mentioned it remained healthy, but any sort of qualification on Q4 versus Q3 and outlook into fiscal ’24. Thank you.
Cameron Hyzer: It remained consistent. It’s maybe down a little versus where we were in Q3, but at kind of mid-teens growth, that’s pretty healthy for that area of the business. As we look forward, I think that we’re expecting that net retention overall stays pretty consistent. How that interact between the technology businesses and the non-kind of technology businesses that we serve will likely be impacted by just how the macroeconomic situation unfolds more than anything else. But yes, I think we see some good stability there. We still see a lot of opportunity in terms of new customers coming in because we’re just so underpenetrated with respect to those industries. And I do think that while we haven’t built it into our expectations, the kind of natural usage of AI in those non-technology businesses is pretty low. And our ability to really push insights to those sellers, I think is probably pretty exciting with respect to those customers.
Elizabeth Porter: Great, thank you.
Operator: Our next question comes from the line of Brad Zelnick with Deutsche Bank. Your line is open.
Brad Zelnick: Great. Thank you so much for taking my questions. First for you, Henry, the changes that you made last year to flatten the sales organization, you also moved some key people around. What if any tweaks are you making now into the new year? Just wanted to revisit that to make sure you feel you have the right players out in the field. and in the right configuration. And I just had a quick follow-up for Cameron as well.
Henry Schuck: Yes. Thanks for the question, Brad. I feel really great about the team that’s around me. The team that we brought together from a product and engineering perspective from a go-to-market perspective. I feel like we have really great I have really great partners across the business today. And they are — they have an opportunity now to execute across the business, and we’re expecting a lot from them.
Brad Zelnick: Okay. Cool. And Cameron, as it relates to the write-offs, is it still contained to SMB customers? And how has it been playing out relative to expectations and the reserves you’ve been taking? And lastly, what are you assuming in 2024 guidance for bad debt.
Cameron Hyzer: So it has been playing out largely as we’ve expected. It is almost entirely — and I think that’s where we expect it to say it tends to be kind of the lowest spending folks that we have, which, for us, we’re really focused on getting as many of those customers into a product-led motion where we’re collecting either an ACH payment or a sales payment upfront. And avoiding the need to go chase those customers or see them fall out later on. For our expectations in 2024, we’re expecting a similar level of write-off activity, which ultimately might be a slightly lower absolute number in terms of bad debt is there’s not as much to catch up on from previous periods as we had in 2023.
Brad Zelnick: Very helpful, thanks.
Operator: Our next question comes from the line of Michael Turrin with Wells Fargo Securities. Your line is open.
Michael Turrin: Hey, great. Thanks. I appreciate you taking the question. I want to go back to just some of the segmentation commentary. And on the software side, we’ve spent time in the past talking about just the renewal cycle and Q1 seasonal impacts, given it’s mid-February, anything you can do to just top level set where you are in terms of those renewal discussions and if the combined fleet base there is at all stabilizing relative to the step-down you saw over the prior year? And maybe Cameron, if you can just add any commentary around how the visibility coming into this year compares to prior periods given it sounds like they’re or signals, some of the pressures are moderating with the guide still assumes what sounds like stable to potentially declining retention rates in the coming year. Just further commentary on the feed base and what’s happening there is helpful. Thanks.
Cameron Hyzer: Sure. I’ll just start out, Michael, and then let Henry add some color. But certainly, in terms of visibility coming into the year, I think we do feel that trend that we’ve seen coming out of Q3 and Q4 is much more stable and that our customers are being more surgical in terms of how they’re thinking about their investments and where they’re putting seats and those sorts of things. So I think that makes us feel good about our visibility and frankly, I think it’s prudent for us to think about the fact that the world could get worse and the retention could get worse as we kind of develop guidance and think about it. I’ll let Henry jump in on any other color.
Henry Schuck: I would just say that our customers continue to have budgetary constraints and they’re scrutinizing every dollar of spending. And so we’re still managing through that inside of the customer base. That hasn’t — against the back half of 2023 that hasn’t changed in any material way.
Michael Turrin: Got it. Thank you.
Operator: And our next question comes from the line of Brent Bracelin with Piper Sandler. Your line is open.
Brent Bracelin: Good afternoon. A lot of the questions have been asked and answered on the demand. I wanted to double-click into operations OS. I think you flagged that at 10% of revenue mix now. Henry, are there any levers to drive broader adoption, particularly in the enterprise space? What’s the attach rates today? Could you just double quick into what is driving the mix shift to operations OS, and how much potential is there for that segment to be an upside lever this year? Thanks.
Henry Schuck: Yes. Thanks for the question. operations OS, our DAS product that fits inside of operation at OS continues to be one of our fastest-growing products, particularly in the enterprise. There’s still a tremendous amount of white space, not just in accounts that we haven’t gotten operations OS and DAS into, but also accounts that are using a small piece of operations OS or data as a service. And every account data is looking to do something real with generative AI from a go-to-market perspective, the first thing that they’re struggling with is how do I get my data up to date and accurate and then keep it that way, and we’re the most obvious solution to that problem. And so our sellers across the enterprise are taking that message into their customers. There’s still — that continues to be an area that we’re immensely focused on and have put together a really strong team around and think that’s going to be a meaningful grower in our portfolio this year.
Brent Bracelin: Helpful color. Thank you.
Operator: Our next question comes from the line of Alex Zukin with Wolfe Research. Your line is open.
Alex Zukin: Hey guys, thanks for taking the question. I apologize for coming in a slightly loud place, but maybe just the first one, can you maybe unpack verticals that you saw or pockets of strength that you saw in the quarter and in the pipeline from a vertical and geographic perspective? And then I have a quick follow-up.
Cameron Hyzer: Sure. So from a vertical perspective, tends to be all those things outside of technology and IT services and software. So financial services continues to see strength. Manufacturing continues to see strength, transportation logistics, retail, kind of all of those more traditional industries are areas where we continue to build. And frankly, they’re all in the either teens or, in some cases, 20%-plus growth areas. Geographically, it tends to be a little bit more U.S.-centric still. I don’t think we’ve seen our European businesses kind of pick up. They continue to grow, but they’re much lower penetration area. So I’d say that we don’t see the same sort of acceleration internationally, as we’ve seen historically.
Alex Zukin: Perfect. And then maybe in terms of the guide for the year from a revenue perspective, as we go through this, let’s call it, attenuating open period of macro uncertainty, it looks like the back half and maybe Q4 sets up for a mild reacceleration. But just maybe help bridge, how we should think about the exit rate for growth in Q4? And as we think about some of those potential sources of upside in the guidance.
Cameron Hyzer: Yes. So certainly, our expectation is that Q1 will continue to be tough. And certainly, the we expect to see some downsell pressure continuing in Q1 as we’re lapping kind of peak negativity still. I think if you build out a model, you’ll end up with Q4 exit growth rate relative to Q4 of this year and the low to mid-single digits. Obviously, the mid would be much more at the high end of the range. And low would be at the low end of the range. So as you get further out into the year, if that spread widens a little as we think about guidance.
Alex Zukin: Perfect. Thank you guys. Congrats on great quarter.
Operator: Our next question comes from the line of Tyler Radke with Citi. Your line is open.
Tyler Radke: Thanks so much for taking the question. If you were to unpack the strength in the quarter, the slightly better revenue than you’ve seen over the last couple of quarters, was it primarily driven by the strength in the create and close business? Or could you just talk about linearity of the quarter? And then specifically to the create and closed business, did that strength continue into January and the first part of February? Thank you.
Cameron Hyzer: Yes. So linearity in the quarter was reasonably good, I would say, maybe a little stronger towards the end of the year in December than what we saw in in October. Although, honestly, a lot of that has to do with the mix of what different businesses come in. So we do tend to see that December tends to be more enterprise-weighted, and that is where we’re seeing the most traction with customers right now. So I think that improvement certainly helps that enterprise business does not tend to be created and closed within weeks. That’s much more of the enterprise motion that we’re going with. As we think about how that’s continued into Q1, for better or worse, Q1 does tend to be a more SMB-focused renewal time frame, and it tends to be one of our biggest expiring quarters. So while in segment by segment, we’ve seen a continuation of what we experienced in Q4. The mix shift makes Q1 actually a little tougher than even what we saw in Q4.
Tyler Radke: That’s helpful. And then a quick follow-up on the Copilot product. Just a clarification question. When you talk about doing these upgrades. Are you — I guess, is it going to be a price tailwind as you perform these upgrades? Or is it possible that CoPilot just kind of gets folded into the base level of offering. So I guess, is it — are you going to be charging an upsell at this point as you think about that upgrade path?
