Todd McElhatton: That is correct. And like I said, a couple of things to keep in mind. One is you certainly had a tough compare in Q2 of last year. So the second half of the year will be a much easier compare for us. But again, just as the cadence of our business works, you certainly expect to see an acceleration in the second half as we start the year off, kick off new territories, people build their pipeline, develop that, you start seeing that close in the second and third quarter or the third and fourth quarters. And obviously, the fourth quarter is always our largest quarter as a company, not atypical from any other SaaS company.
Luv Sodha: Got it. And one quick follow-up on the — obviously, I appreciate the commentary around landing smaller and faster. But I guess how does that impact the upsell opportunity over the longer term? And maybe over the near term, how do you offset the smaller lands against ARR headwinds that you were seeing? Thank you.
Tien Tzuo: Luv, this is Tien here. I mean that’s a great question. And so the question is, look, if you’re doing smaller lands, what are the implications of that? It’s one, the reasons we highlighted, we’re still signing up the same target customer where we believe the customer lifetime value is the same. And so when we are doing a smaller, faster land, our goal is ultimately once we get them live and that we can continue to grow with them. And so that is the mindset that I would have you approach how we’re thinking about the business.
Robbie Traube: Yeah. Just to reiterate that, it’s an opportunity for us to then expand. And that’s the relationship we have with our customers and the ability for us to do that and grow that as we go forward. And I strongly feel it’s a great, great approach for us, and we’re seeing those results from that.
Luv Sodha: Got it. Appreciate it.
Todd McElhatton: One last — and again, well, I think the one thing that we’ve seen is it’s not the size of the initial land. It’s who have you targeted and what is the opportunity within their — in their business. And that’s what we’re being super disciplined about is picking those right customers that have the opportunity to build. So maybe that’s the automobile manufacturer that is at the very beginning of their journey, starting to monetize these new services. Maybe that’s a new company in the tech field that’s growing or maybe that someone in the media business that’s moving from an advertising to a subscriber model. And those all provide us huge opportunities, not only through the billing and the additional products we can add there.
We’re putting the full suite of products on. And the other thing that’s been a really good help on us, too, is Zephr. And the lands of Zephr tend to be a little bit lighter. But one of the things that you saw this quarter was, two of the biggest deals that we had, including one of the deals over $1 million was Zephr plus Zuora, and The Atlantic was another very nice media deal for us that we highlighted. And again, that was Zephr plus Zuora. So we’ve got a lot of opportunities as we can land at a size, maybe not as large as some of the things we’ve done in the past, but those have nice growth opportunities in front of them.
Luv Sodha: Got it. Super helpful. Thanks, Todd.
Operator: Your next question comes from the line of Joseph Vafi of Canaccord. Your line is open.
Joseph Vafi: Hey guys. Good afternoon. And Luana, if you’re listening in, congratulations on your second son.
Tien Tzuo: She is listening. I am getting text already.
Joseph Vafi: A lot of questions have been answered and asked already. But maybe just I know you don’t break out Zephr all that much in kind of terms of its profitability profile and maybe some of the other metrics. But — it does seem like the business is doing well, moving outside of the media vertical. And so if there’s any color at least qualitatively, you can add on kind of its profile versus perhaps some of the core Zephr products and how we should think about it relative to any mix contribution it might provide over time.
Tien Tzuo: Yes, we don’t really break it out, but I would tell you that the Zephr team is only halfway through the year, right? They’re above their plan for so far year-to-date. And there’s nothing special about them that would change their gross margin profile.
Todd McElhatton: The other thing I guess I would note, Joe, too, is one of the things we’re seeing Zuora plus Zephr is an accelerator for us, especially in that media vertical. And then the second point of that would be is that technology is now extensible elsewhere in the Zuora portfolio. You saw that within the upsell of 24-hour fitness. We’ve got other companies that we’re talking with that are outside of the media vertical. So again, we feel really good about that. But Zephr now is fully integrated into Zuora. And so we don’t necessarily track the financials of the business. But as you know, we were very disciplined when we put that in. We made room in our investment portfolio wasn’t incremental. And last year, as we took on that investment, we saw that profit continue to improve.
Joseph Vafi: Sure. I mean it does seem like a few quarters later, a year later, it was a thoughtful add, so congrats on that. So — maybe secondly, I know you were kind of proactive with the cost structure here as the macro was slowing down. And obviously, we’re seeing some of the benefits there with some really solid profitability and free cash flow. Just in case we get into like the situation of a high-class problem and the macro gets better, just kind of wondering how you may tweak your go-to-market from here versus what might be a stronger macro and what we might expect — would we expect — I know you’re not providing guidance, but would we expect to see like a flattening margin profile for a while or something like that or — just some thoughts on your strategy around go-to-market if and when we get to a better macro. Thanks.
Todd McElhatton: So I guess I’ll answer that in two ways, Joe. I think the first thing is we are absolutely committed, regardless of what the macro looks like to expanding our margins. Now if you started to see there was an opportunity to make investments and accelerate that, we would certainly be able to do that. The way Robbie’s got the team structured, we have the leverage to be able to add additional selling resources on and get good leverage from that. So what you might see is the margins aren’t growing as fast, but they’re going to continue to grow.
Joseph Vafi: Got it. Thanks very much, guys. Nice to see the great results.
Todd McElhatton: Thanks, Joe.
Tien Tzuo: Thanks, Joe.
Operator: There are no further questions at this time. I will now turn the call back to Tien Tzuo for any closing remarks.
Tien Tzuo: Thanks, everyone, for joining us today. Congratulations to the entire organization for another solid quarter. We obviously remain committed to our strategy and most importantly, we are looking forward to sharing additional product innovations with you all and talking to you on these calls and outside in the rest half of the year. Thanks a lot.
Operator: This concludes today’s conference call. You may now disconnect.
