Good afternoon, and thank you for joining us today. With me on the call are Owen Ryan and Therese Tucker, Co-Chief Executive Officers of BlackLine as well as Mark Partin, Chief Financial Officer. Before we get started, I would like to note that certain statements made during this conference call that are not historical facts, including those regarding our future plans, objectives and expected performance, in particular, our guidance for Q2 and full year 2024 are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent our outlook only as of the date of this call. While we believe any forward-looking statements made during the call are reasonable, actual results could differ materially, and these statements are based on our current expectations as of today and are subject to risks and uncertainties, including those stated in our periodic reports filed with the Securities and Exchange Commission, in particular, our Form 10-K and Form 10-Q. We do not undertake and expressly disclaim any obligation to update or alter our forward-looking statements. whether as a result of new information, future events or otherwise, except as required by applicable law. All comparisons we make on the call today relate to the corresponding period of last year, unless otherwise noted. Finally, unless otherwise stated, our financial measures disclosed on this call will be non-GAAP. A discussion of these non-GAAP financial measures and information regarding reconciliations of our historical GAAP versus non-GAAP results is currently available in our earnings release, which may be found on our Investor Relations website at investors.blackline.com or on our Form 8-K filed with the SEC today. Now I will turn the call over to BlackLine's Co-Chief Executive Officer, Owen Ryan. Owen?

Thank you, Matt, and good afternoon, everyone. Thank you all for joining us today. BlackLine exceeded revenue and profitability expectations in the first quarter with $157 million in total revenue, a 17% non-GAAP operating margin and $40 million in non-GAAP net income. While we are still in the early stages of implementing our new operating model, we are pleased with the progress we are seeing. I will review this progress, highlighting areas of early success and identifying those areas that require a bit more time to achieve operational maturity. Regarding execution, we are seeing an uptick in activity at the top end of our sales plan. While the volume of deal is still lower than we want, this improvement in activity gives us some early indications of demand stabilization. In the first quarter specifically, we encountered several instances where larger multi-solution deals pushed out. As part of this, we still see customers and prospects maintaining their prudent and thoughtful purchasing behavior. Going forward, we expect to aggressively pursue these opportunities either directly or jointly with our partners. Next, efforts around elevating our market message and brand are progressing well. We are receiving positive feedback from both customers and partners, indicating that our message, particularly around artificial intelligence and our industry-focused strategy is generating favorable interest. On AI, this was evidenced during our recent BeyondTheBlack event in London, where innovation in AI dominated discussions among attendees. We believe that our innovation here, which Therese will detail shortly, is beginning to stand as a meaningful differentiator with the opportunity to drive and accelerate even deeper accounting and finance automation for our customers. We are also seeing signs that our industry approach is resonating strongly with our customers, partners and prospects, who see numerous opportunities to address their industry-specific challenges. In fact, because…

Thank you, Owen. As the demands and challenges within the office of the CFO continue to evolve, there is a critical need for innovative solutions that deliver tangible results and drive business outcomes. We firmly believe that artificial intelligence will be pivotal in meeting these needs and will rapidly become integral to modern finance and accounting operations. As leaders in the market who are committed to providing an AI-driven platform for the office of the CFO, we are moving swiftly to fulfill our promises and execute on our strategy. This entails not only integrating AI into our platform but also introducing new AI-powered solutions to better serve our customers. To bring this to life, I want to outline how we are doing this today and what we plan to release over the coming quarters to support our customers and greatly enhance the value that they receive from BlackLine. In our financial close pillar, we've recently introduced a new solution aimed at identifying and mitigating risks within the journal entry process. Our Journal Risk Analyzer utilizes generative AI to visually present accounting teams with key trends, insights and anomaly detection related to manual journal entries. This solution efficiently captures and assesses journal entries from various ERPs and subledger systems, providing dynamic actionable insights for customers to proactively address potential areas of fraud and policy violations. Given the large volumes of data spread across our customers' technology landscape, generative AI serves as an invaluable tool to empower informed decision-making and minimize compliance and audit risk. Currently available to early adopters, we anticipate making this solution generally available later this year. Next, within both our financial close and consolidation and financial analytics pillars, we are launching BlackLine's document description summarizer. Integrated seamlessly into our current solutions, this represents a productivity enhancement to our…

Thank you, Therese. Our financial results this quarter highlight our disciplined approach as we navigate both the current market environment as well as our ongoing business transition. Despite this, we expect to continue to invest into strategic parts of our business to support our long-term growth drivers, especially innovation. Further, we remain committed to aggressively pursuing opportunities to drive even higher levels of efficiency and productivity across the business. With that in mind, let's review the financial results for the first quarter in a bit more detail. Total revenue grew to $157 million, up 13% with subscription revenue growing 15%. Services revenue declined 7%, primarily due to progress on our partner-driven services delivery model. Calculated billings growth was 6%, with trailing 12-month billings growth of 11%. As Owen mentioned, we experienced a number of larger deals slip this quarter, which was a driver of the lower-than-expected billings performance. Remaining performance obligations, or RPO, was up 7% with current RPO growing 10%. We closed the quarter with total annual recurring revenue, or ARR, of $605 million, up 10%. Net new customers increased by 13 in the quarter, bringing our total customer count to 4,411. As discussed previously, our strategy to become more targeted in the middle market is expected to influence this metric in the near term. Our revenue renewal rate in the first quarter was 93%. We are still seeing recurring themes here, such as vendor consolidation and cost discipline from customers, especially within the enterprise. Net retention rate, or NRR, was 105% and in line with our expectations, driven primarily by modest account growth and user adds this quarter. Strategic product performance represented 20% of sales and came in below our target range of 25% to 30%. This was influenced by large deal slippage this quarter as many of…

Thank you. One moment while we compile the Q&A roster. The first question comes from the line of Rob Oliver of Baird.

Mark, my first one is for you. Just on the deal slippage in the quarter. Can you talk a little bit about -- I mean, Q1 is never traditionally the strongest quarter for you guys. So I was wondering if you could to give us a little bit deeper insight into how much of this is just sort of general macro and confidence that deals are going to close versus incremental weakness and/or less spending from some of your customers or less partner pull through, say, from SAP? And then I had a quick follow-up.

Remainder of the year and staying focused on them. The fact that they're in the pipeline, we are actively working with our customers and our sales team on driving those deals. That's where we are now. So for your question is that those deals continue to move through the pipeline today.

Great. I'm not sure if it was me because I missed the first part of your answer. Could have been me. And then Owen, just want to step back a little bit as we move -- anniversary now your arrival. And I wanted -- and I wanted to just talk a little bit about some of your strategic initiatives. When you look at kind of the things that you laid out, whether it be go-to-market and revamping sales, the SAP partnership and some of the work you're doing with the SIs and stuff. Where do you feel you've made the most progress and where we could see that manifest in activity as we move through this year versus where you still have maybe even more work to do?

Sure. Thanks, Rob. A couple of things. I think one is we feel like we made a tremendous amount of progress with our partners over the last year. As I think we've shared with you, we've rationalized the number, we have the partners that we're working with are really all in. I'll share a story from the [ script ], one of our partners who we have not done as much work within one of our strategic products has basically taken 50 of its offshore resources recently and redeployed them to working on the BlackLine solution versus a competitor. That will take time for itself to work its way through this -- the system. But again, I think it's a good indication of our partners being really committed and focused to what we're trying to do. So I'd say that's probably been the area where I feel like we've made really the greatest amount of successful so far. I think second would be the progress we continue to make with SAP. The relationship continues to grow in the marketplace around the product roadmap, the opportunities to really improve our win rates together, which is just terrific. And then the last thing would be industry and Therese touched on it a little bit, Mark touched on it. We knew we had something in the industry when we really started to dive in and look at our customer portfolio and recognize that we have a very compelling story. And again, maybe -- sorry, I keep telling stories. I'll give you another one. So you may all -- I'm sure you all know that most big firms, companies when they're going out for an RFP, they hire a third party to write the RFP for typically. And so not too long ago, Therese and I were overseas, and we were meeting with one of these consulting firms who was writing the RFP for a major company, probably top 50 global enterprise. And we spent probably an hour going through the industry and helping this service provider sort of prepare to write the RFP and telling the story about how BlackLine helps its customers in this particular industry in a way that was, I think, eye-opening for this consulting firm. As I sit here today, I have a very high degree of confidence when the RFP comes out and the winner gets selected, whether it's in the fourth quarter of this year or the first 2 quarters of next year, the way that we were able to articulate for this firm, how BlackLine could help a customer through all aspects of what a company needs to do in a particular industry is going to be a differentiator. We're starting to speak -- we are speaking the language of our customers in their industry language, which is making a big difference for what we're trying to accomplish.

The next question comes from the line of Chris Quintero of Morgan Stanley.

Owen, you mentioned you're taking a more streamlined approach to pricing that will go live later this year. Do I have that right? And if so, what changes are you making? And what do you expect the impact of these changes to be? And then I've got a follow-up.

Yes. A couple of things. So we've completed most of the pricing study work at this particular point in time. we'll be rolling that out over the course of this year and as renewals come up over the succeeding years, I think a couple of things that were important for us to sort of step back and think about is with our fuller platform of what we offer, some of them are more sort of user based, some are more usage based. And we had gotten feedback from our customers asking for us to make it but easier and simpler for us to go ahead and price and do work with them. So that's a lot of what we have been focused on trying to drive. I think overall, we feel pretty good about the results of that work. We've tested it with several hundred customers and prospects to sort of validate what we were seeing and experiencing. And so we'll get that rolled out again very, very soon. Obviously, change in management with these things are important. And we're also doing it in an environment where we still have to compete against certain companies as we go up against them in the marketplace. But overall, we like the work that's been done. We feel good about the outcome. And ultimately, you do this so you can charge more for the product that you're -- they're delivering, and that's ultimately what we expect to be able to do. I think we've learned a lot about how to articulate our value to our customers, and that's based upon the feedback from our customers. So we'll make sure we get that done.

Got it. That's really helpful. And maybe for Mark, really great to see the free cash flow margin of 28%. Is there anything one-time in nature impacting that number? And how should we think about free cash flow conversion for the rest of the year?

Yes. I think the team did an excellent job in Q1, collecting AR that was really a great effort from everyone. As we move through the year, I think we'll see free cash flow margin at or around our operating margin rate. So I don't expect our cash generation from AR to continue like that. So it will come down here through the remainder of the year.

The next question comes from the line of Pinjalim Bora from JPMorgan.

This is Jaiden Patel on for Pinjalim. ARR came in a little bit below expectations. You mentioned that there was large deals that got pushed out. Is there any way to quantify those deals? And of those, do you think there's a certain percentage that will close in Q2?

Thanks, Pinjalim. With -- Yes, we will close some of those deals and already have in Q2. Yes, we'll continue to work them through the remainder of the year. It's not uncommon to have slipped deals from quarter-to-quarter. We saw more in Q1 around the large deals. And in some ways, I think in our earlier remarks, we talked about those related to being macro as well as our ability to get our arms around what our new operating model has strengthened as we move through the year on our new operating model. So quantifying it, I think would be difficult at the moment. So thanks.

Our next question comes from the line of Adam Hotchkiss of Goldman Sachs.

I guess to start, could you just give us an update on the product education aspect of your customer success efforts? I know this is something that's been a focus for you in the past, in particular, around cross-sell opportunities and platform usage within your existing base. But I'm just curious how you think about that within the context of, sort of the things you're doing with AI and AI being such a focus for folks in the office of the CFO. Does that allow you to get your foot in the door around continuing to educate customers and drive more usage of the platform?

Thanks, Adam. We have spent a lot of time in the last year, making sure that our entire organization is extremely customer-centric and focused on the value that BlackLine can actually deliver. As a result of that, we've got a number of different training programs that are really being extremely well received by our customers. They include a number of recurring webinars on new features to make sure that our customers know what the roadmap is entailing as well as bottom line events that have been going on in person where we get both prospects and customers together. And there's a fair amount of education that happens during those. And then there's also the BlackLine Academy with its corresponding consulting events, where we actually will take -- different accounting practices, processes and help them transform them because when people really use BlackLine well, the result is digital finance transformation. And so these are hands-on workshops that our customers can attempt to really get deep knowledge on how to use BlackLine to transform their organizations. So it has been a big push of ours over the last year, and it's been very well received by our customers.

That's really helpful, Therese. And then within that context, how are you broadly thinking about monetizing some of these AI investments, particularly as you think about seat or usage-based pricing within the context of the productivity improvements that AI might bring your customers, how do you ensure that you're going to be extracting the value, you think some of these investments have been worth?

Well, one of the best things about including productivity enhancements is that the software becomes more sticky. People cannot imagine giving it up for something that's free. Okay. So I love the stickiness factor. And for me, that's worth more than sort of extracting another dollar out of somebody. And that's really for the places where we are embedding AI. I think it was Rob Kugel of Ventana, who said productivity by a 1,000 cuts. Loved it, right? Just like everywhere where people are doing things manually, where can you introduce AI to really make their jobs go faster and be more accurate. So in the embedding part, I think it just becomes part of the fabric of what we offer to our customers and makes them delighted. In terms of new products, we're still sort of learning our way here. We just came out with the Journals Risk Analyzer. And that we've already got more than 20 early adopters signed up for that. And we're going to use them to help us determine what the value that they are receiving is, and that will help us determine how to price it.

The next question comes from the line of Brent Bracelin of Piper Sandler.

Mark, I wanted to start with you around the pipeline build today versus three months ago, I get there are some deals that slipped, not uncommon in Q1. But can you just characterize visibility in the pipeline and how much build you saw in the last 3-months?

I can. Thank you, Brent. We've got a handful of new great leaders in the company. One of them is running marketing and has been instrumental and already beginning to accelerate our pipeline coming out of Q1 and into Q2. So what I would say about the pipeline is that in Q1, we talked about the top end of the funnel being strong, big deals, multi-products having really good influence with partners. Our ability to close those deals in Q1 was challenged. As we move into Q2, our ability to hold on to those, nurture them and get them over the finish line is part of where we're spending a lot of time and then creating new accounts, new logos, new customers and expanding in to our customer base across the globe is a concerted effort now with Emily and the rest of the sales team. And that has actually picked up quite nicely, heading here into the sort of middle to the end of Q2.

Helpful color. And then maybe, Therese, for you. If I go back a couple of years ago, the pandemic clearly drove a higher spend priority around from these finance transformation projects. Obviously, in the last 1.5 years, we've seen the priority go down as people focused on kind of economic macro headwinds. We are now looking at S/4HANA end of life in 2027. I know SAP is starting to get a little more excited above some migrations to the cloud. Do you think that could be the next catalyst that could drive maybe an increased priority around finance transformation? Just trying to think through the tailwind you saw in the pandemic, some of the headwinds you've been challenged with on the macro side and just thinking through maybe that as a potential catalyst or not for increasing priority around these finance transformation projects.

Well, we do certainly see the potential that the SAP partnership could bring us, especially with the migrations to S/4HANA. But Brent, you raised a really interesting point, and it's one that we wrestle with as well. Companies, CFOs in particular, have been very focused on digital finance transformation. But at the same time, they've not always gotten sort of the results that they had hoped for. And it's really been one of our focuses is how can we actually deliver that kind of value in a way that makes people want to continue that journey with BlackLine and invest more. So I think that part of it is, how do we communicate better with our customers and with our prospects on how to have effective digital finance transformation as opposed to a result that disappoints. So we have been internally thinking about that a lot, and that's really driving a lot of the work that we're doing around case studies, around the academy, around different trainings, even the product roadmap itself is how do we deliver digital finance transformation in a way that's going to keep people engaged and keep them on that journey. So I think we're hoping for the macro to get better. That's disappointing in and of itself. We certainly do appreciate the partnership with SAP. It always has great potential, especially as people move to S/4HANA. And then I think there's work that we ourselves can do to better prove out the value proposition to our customers.

The next question comes from the line of Koji Ikeda of Bank of America.

I got two. So the first one, big picture question on Accounting Studio. Congrats on the long-awaited release there. I know that's quite a milestone. So the question is around is the platform such a meaningful change to what BlackLine has offered in the past that it could require your partners and the buyers out there to really digest all the new innovation that I assume is packaged into this new Accounting Studio before they're really ready to buy it?

We've been working with partners as part of the process of getting a really cool product out there, Koji? And so I don't know that they're going to need a ton of time for digestion. I think with the Accounting Studio, one of our plans for it is that our partners who are experts at process transformation will have the opportunity to embed their very specific intellectual property into a library of potential templates. Okay. Now in order to turn that on and actually utilize it, of course, they would have to work with the partner. And so it's really -- the idea of the Accounting Studio is to really give our partners a forum for bringing their expertise to a lot of customers very quickly. Now that may take some planning and some work on their part to actually detail out the steps and the various APIs necessary. But I think overall, we've been keeping them informed as we go.

Got it. Got it. And maybe another question for you, Therese, or Owen or Mark, is really around how ready the end market is for generative AI? I found over the years that your end market and really kind of the accountants out there that I've spoken with can be very loyal to their software vendors, but also can be very resistant to change at the same time. And it does sound like some of the demand can be pinned to how ready to end market is ready to adopt generative AI. So just curious on your thoughts on the overall acceptance of generative AI out there?

Boy, I am so familiar with our market and our buyers, and they don't love change. that is 100% true. It's why we're taking the approach that we are with the embedding of different features that are just incredibly useful, and by the way, they all have flags that allow you to turn them off. We're going to use that as a way of building trust in generative AI with our customer base. So in other words, we're taking them on that journey. We're a little here, a little there, a little more, build the trust, make them familiar and then over time, we can increase their productivity by embedding it more and more and more. So I would say that you're correct. People do change slowly. But if you take them on a journey with you and show them the benefits as they go, there'll be much more apt to adopt overall.

Yes. I think, Therese, just adding to that, if you think about when we rolled out an executive sponsor program at the end of last year. And so talk about our top 400 customers. So a number of ours as executives are out meeting with the CFOs and the corporate controllers of our largest customers. And I think there's a couple of things that come out of it. One is they're under pressure to use AI in some way, shape or form, trying to figure it out, they've got some budgets set aside for it but not sure exactly where and how to use it. And I think it's the conversations that we're engaging with them and would sort of help us pinpoint the places where they'll be most comfortable-- most comfortable where their auditors will be as well because they have to sign off. And so that's what we're trying to drive. And I think as we look at it, and there was a question to Mark a couple of moments ago, one of the encouraging things that we've seen -- at least I've seen in the first couple of months of the year, particularly in March and April, now I think about it, is going out and talking with customers about their roadmap. And they've got a BlackLine roadmap that goes out 24 to 30 months of the different products that they're sort of thinking about when they would bring them in to start working with them. And I think we've shared in the past that the way buyers behave today is different. These big bang projects that tended to have a much higher likelihood of failure are not the way customers are doing it any longer. They're chunking it all piece by piece, making sure it works, can demonstrate value to others in the organization and then they go on to the next piece. And so the good news for us is the horizon looks very nice because of these opportunities and where we sit on their roadmaps. The challenge always is, you wish it all would happen sooner, but that's just not the way the world is going to operate for the foreseeable future from our vantage point.

The next question comes from the line of George Kurosawa from Citi.

I'm on for Steve Enders. Owen I wanted to ask about kind of the changes to the go-to-market organization. It sounds like those are playing out well so far. Maybe if you could talk about what seems to be working and what changes are left to be made?

Yes. It's fine. I had a meeting with like top -- some of our top producers this morning about what else we need to be doing in the marketplace, and it was a really great session on ideation of things that we could do together, how we continue to tell our story in the marketplace. The short version of this is we feel very good about the changes into the marketing leadership team. You might have all seen yesterday, we announced a new Chief Customer Officer. I mean, we knew he was going to be great. I've been following all the applause he's been getting on LinkedIn. He's clearly an executive, Jimmy Duan, that is going to bring a lot of value to our customers. We're making much more progress in helping them ensure that our customers get both well implemented as well as adopted. And that handoff is going more smooth. Smoothly than some maybe sometimes in the past that had occurred. I think we're getting back around our collateral and differentiating. The things that matter to buyers are not just the product, but it's everything else that also goes along with it. It's that customer experience, it's their confidence with security. It's -- when you think about it, BlackLine, I think it's 5 of the top 7 accounting firms in the world. Not only do they sell BlackLine service as a provider, they use it in their own firms. That's a pretty damn compelling story when you sort of want to think about things like that. And so we're trying to make sure that when we're going out there, we're continuing to tell the story, not just about the great product we have and all the innovation we have, but also the other things that may make a difference. And I think the one thing that's still -- it's still early, but there's a huge opportunity for us, is to accelerate that story of what we can do for customers around industry. And the use case is in connecting those people to each other of those customers to each other as well as prospects because that is proving to be a significant differentiator for us so far. A lot to do. We've still [indiscernible].

No. Go ahead, Please. Go ahead.

I was just going to say we're going to continue to try to make ours easier to do business with. And we're going to just keep driving real hard.

That's great color. And one quick follow-up, if I may. The new user metric came in a little below what we had penciled in. Maybe if you could just double click on kind of the trends you're seeing underneath the hood. And with kind of the shift to the pricing strategy, to what extent are you guys even managing the business to seat counts?

Yes. seat count is a proxy for one aspect of growth of our business, and it did not do well in Q1. We do expect that to pick back up in the coming years. But recall that a lot of our pricing, particularly in the strategic products and some of the big ticket items are not seat priced. So you're right about your Q1 number. And it still, again, is a great opportunity for us to expand in the financial close and the core platform, which we intend to do moving forward.

The next question comes from the line of Pat Walravens of Citizens JMP.

Okay. Great. So let me apologize if what I ask is a tough question, but I think it's important to ask. So I mean on April 11, OneStream put out a press release saying that they're at $450million in ARR and they grew 34% in Q1. And they also say they target the office of the CFO. So what's -- why is there this divergence in the results? Is it the part of the office of the CFO, you're targeting? Or is it something else? What would you say?

Yes. Pat, I think you just nailed it. It's where -- in the office of the CFO, the opportunities are -- and so there's been a lot of spend, as you might see, and it's not just with OneStream, but also some of the other players in the CPM space have had pretty good first quarters. You look at where the priorities seem to be based upon the office of the CFO and CPMs is right now #1. Doesn't mean that finance transformation, where we are in the Financial Close and Intercompany and consolidation and invoice-to-cash doesn't matter. It's just that particular space right now is a bit hotter, and that's where a little bit more of the spend is going. And we see it and we know it, but that's really what it is. It's where in the office of the CFO priorities are.

Okay. Great. Is there any plan on your part to get more exposure there?

We're always looking at our platform, and that will never stop. And we were -- we always are talking with our customers what they want, where they need. So last week, Therese, Mark and I hosted a Customer Advisory Board. It was a phenomenal day, a lot of insight in the things that they would like us to continue to focus on and build out. And so just stay tuned as we continue to evolve the platform.

The next question comes from the line of Alex Sklar from Raymond James.

This is John Messina on for Alex. I wanted to start with product innovation. Therese, you have several big product roadmap launches in 2024, Accounting Studio, The Financial Close, Central Command, the Journal risk analyzer, just name a few. It's a 2-part question here. Of the new products you're rolling out, which do you think is the most potential to play the biggest swing factor to drive more near-term adoption? And if the answer is different, what are you most excited for long term?

Okay. Well, there's actually -- yes, you're right about the innovation roadmap. It's really been a focus of mine over the last year. And it's not just the Accounting Studio or the Journals Risk Analyzer, it's also the new combined version of the Intercompany Financial Management product. And there's a lot of other things that we're doing as well in terms of FRA and consolidation. So it's sort of like asking me which one is my favorite child, John. I think probably the one that I'm the most excited about right now, so it could change next week, is probably the Accounting Studio. Okay. The ability to visually orchestrate all of the different processes that are going on inside of the office of the CFO is pretty exciting. And the visibility that you get into where the roadblocks are or how ridiculously complicated, sometimes people make things is pretty game changing. Okay. Expanding that so it includes our library of process transformations so that people can get real transformation in a very, very tangible results-driven way is pretty cool because I'm very much about let's show the value. And so I think that one probably has the most show the value factor to it. Although the Journals Risk Analyzer is also pretty cool because today, auditors are asking for a full set of manual journals in order to run analytics on those and being able to get ahead of that game, ahead of time where the anomalies are, where the key trends are, where the out of policy violations are, that's also a level of visibility that people don't have today. So those are probably my top 2. But if you give me another 10 minutes, I can extol the virtues of the others.

The next question comes from the line of Ryan Krieger from Wolfe Research.

Just 2 quick ones for me. On the customer side, if we look at the $1 million cohort, it's a little surprising to see that number actually go down this quarter. So anything to call out there? And then on the gross retention side, can you just break down how gross retention shook out from an enterprise or just mid-market perspective and maybe how that compared to last quarter or the last couple of quarters?

Yes. Thank you. On that number that you mentioned, we had a fairly material impact on ARR in Q1 related to FX impact. And so as a result, you see a number of the over $1 million customers slide back as a result of that FX calculation. Otherwise, it was flat on a year-over-year basis. On your second question, you might need to repeat that for us. We've had -- we're having some technical difficulties. It looks like on both sides. Go ahead, sorry, just better off if you repeat it.

Yes. And just on the gross retention side, if we look at the number, how did it break down on an enterprise versus mid-market basis? And how did that compare to the last quarter or the last couple of quarters?

Yes. Mid-market is hanging in the low 90s, and that's pretty typical for us. It even ticked up a little bit in Q1. Where we saw a bit of a step back is on the enterprise side in Q1, and we've talked a little bit about those in the prepared remarks that had hit us in both Q4 and Q1.

The last question comes from the line of Matt VanVliet from BTIG.

Just to be quick, I guess, as you're looking at the headcount over the next year plus here, now that you've backfilled a lot of the open senior positions, what is the general headcount? And how should we think about opportunities in go-to-market to either add headcount or add sort of sales support to improve efficiency and productivity there?

Thank you. Yes. Where we are today, we feel we've got really strong an adequate sales capacity for not just where the market demand is today and coming out of the first part of this year, but well into the second half. So we don't expect to have to hire or build a lot of QCR capacity. In fact, we have one of the most tenured and ramped rep forces we've ever had, and we find that to be a competitive and differentiated strategy as we're in the market with some of these great new innovative projects. So we're really proud of that team. And expect to get productivity as we move through this year. With the remainder of the company, our goal, at least in the near term, and to hit our midterm target model is to continue to grow different areas of the company, keep our pedal on the metal or metal on the pedal in the R&D as we invest in some of the initiatives that Therese was talking about, and you see that already in the numbers. And then as we move forward, we'll will work to drive continued operating leverage in other aspects of the business. And we've talked about where some of those are, including not just our cloud and our data centers but in G&A as well.

That does conclude the Q&A portion. I would now like to hand the call back over to Owen Ryan.

Thank you, operator, and thank you, everyone, for joining the call today. We appreciate your questions and following us as a company. And we look forward to talking to you soon. Have a great rest of the day. Take care. Thank you. Bye-bye.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.