Good day and thank you for standing by. Welcome to Freshworks Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Joon Huh, Head of Investor Relations. Please go ahead.

Thank you. Good afternoon, and welcome to Freshworks third quarter 2024 earnings conference call. Joining me today are Dennis Woodside, Freshworks’ Chief Executive Officer and President; and Tyler Sloat, Freshworks’ Chief Operating Officer and Chief Financial Officer. The primary purpose of today’s call is to provide you with information regarding our third quarter 2024 performance and our financial outlook for our fourth quarter and full year 2024 as well as our preliminary outlook for full year 2025. Some of our discussion and responses to your questions may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on Freshworks’ current expectations and estimates about its business and industry, including our financial outlook, macroeconomic uncertainties, management’s beliefs, the timing and amount of future repurchases of our Class A common stock, the anticipated benefits, costs and the timing of our workplace realignment and associated reduction in headcount and certain other assumptions made by the company, all of which are subject to change. These statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those projected in our forward-looking statements. Such risks include, but are not limited to, our ability to sustain our growth, to innovate, to reach our long-term revenue goals, meet customer demand and to control costs and improve operating efficiency. For a discussion of additional material risks and other important factors that could affect our results, please refer to today’s earnings release, our most recently filed Form 10-K in our other periodic filings with the SEC. Freshworks assumes no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this call, except as required by law. During the course of today’s call, we will refer to certain non-GAAP financial measures, Reconciliations between GAAP and non-GAAP financial measures for historical periods are included in our earnings release, which is available on our Investor Relations website at ir.freshworks.com. I encourage you to visit our Investor Relations site to access our earnings release, supplemental earnings slides, periodic SEC reports, a replay of today’s call or to learn more about Freshworks. And with that, let me turn it over to Dennis.

Thanks, Joon, and thank you, everyone, for joining us today on the call. I’m pleased to report that we had a strong third quarter. We outperformed across all our key metrics and exceeded our previously provided estimates for growth and profitability. The Q3 results reflect our focus on product innovation, operational discipline, and our strategic imperatives. Revenue grew 22% year-over-year to $186.6 million, and we generated free cash flow of $40.1 million, resulting in a free cash flow margin of 21% for the quarter. We nearly doubled our free cash flow compared to last year, representing a margin improvement of more than 700 basis points year-over-year. Adding our revenue growth and free cash flow margin for Q3, we exceeded the Rule of 40 in the quarter. We’re proud of the operational efficiencies we’re creating while scaling our business. We ended the quarter with more than 69,600 total customers with a net add of more than 800 customers. This represents the highest organic net adds for customers in the last four quarters. We welcomed notable customers onto the Freshworks platform, including Republic Airways, University of Oxford, ChampionX, the City of Bellevue, SpareBank 1 and TechStyle Fashion Group, to name a few. Last quarter, we outlined our three key strategic imperatives to drive durable, profitable growth as we scale the business. The first imperative is that we invest in our largest, fastest growing employee experience business. This includes ITSM, ITAM, IT operations and ESM. Our second imperative is to continue delivering AI capabilities across our platform to increase productivity for our customers and employee experience and in customer experience. Our third imperative is to accelerate growth for our customer experience solutions, which include our customer service and sales and marketing products. Today, I’ll share proof that our strategy is working. I’ll start…

Thanks, Dennis, and thanks, everyone, for joining on the call and via webcast today. We’re pleased to report that we have exceeded our revenue, non-GAAP operating income and free cash flow estimates this quarter, showcasing the strong discipline in our business model as we execute on our strategic imperatives. Our commitment to driving growth while maintaining a vigilant focus on operational efficiency, has allowed us to further expand our non-GAAP operating margin to 13%, increasing more than 500 basis points quarter-over-quarter. In Q3, we grew free cash flow 82% compared to last year to $40.1 million, resulting in a free cash flow margin of 21%. We are committed to making operational improvements that will position the business for profitable growth and sustained long-term success. For our call today, I’ll cover the Q3 2024 financial results provide background on the key metrics, provide our forward-looking commentary and expectations for Q4 and the full year 2024 and close with our preliminary outlook for 2025. I’ll include constant currency comparisons for certain metrics to provide a better view of our business trends. As a reminder, most of our discussion will be focused on non-GAAP financial results, which exclude the impact of stock-based compensation expenses and other adjustments. Starting with the income statement. Total revenue in Q3 increased to $186.6 million, growing 22% for both as reported and on a constant currency basis. Professional services revenue contributed $2.2 million in the quarter as we continue to shift services revenue to our growing partner network. Device42 revenue contribution was approximately $8.8 million for the quarter. Our EX business, which includes ITSM, ESM and Device42, continues to be the main contributor of our growth. As Dennis mentioned, the EX business ARR grew 40% year-over-year with approximately 10 percentage points being contributed from Device42. Moving to margins.…

Thank you, Tyler. As I reflect on our progress from Q3, the results are a clear indication that our strategy is working. I’m heartened by our product innovation, operational discipline and strategic focus that positions us to drive durable, profitable growth. We are excited about the many opportunities in our business and the transformative potential of our AI solutions. Thank you to our customers, partners, employees and shareholders for your ongoing support and we’re looking forward to a strong finish to the year. And with that, let us take your questions. Operator?

Thank you. [Operator Instructions] Our first question comes from the line of Scott Berg from Needham & Company.

Hi. It’s Rob Morelli. Thanks for taking the question. Great to hear some of the competitive wins on the mid-market enterprise. Can you just touch on maybe some of the trends you saw in the SMB sector and how that business fared versus your initial expectations? Thanks.

Yes. So thanks for the question. We saw some real positive signs in Q3 around SMB, but that really is a continuation of some trends we’ve seen in prior quarters. If you go back three quarters ago, we had net adds of around 400 customers last quarter – two quarters ago, it was 600 and this last quarter it was 800. And that trend is the result of some focused product investments we’ve been making in ensuring that customers get to value faster. And then some efforts we’ve made on the sale side and the service side to help those customers see the value in our products, which has helped churn in particular. We’ve also had some positive momentum in converting customers from free plans into pay plans. They’re seeing value in AI, they’re seeing value in the conversational solutions that we have on the CX side in particular. So that SMB business is starting to come around. We’ve been talking about it for a while. And I think we saw some real positive signs this past quarter. We’re excited to see how that plays out in Q4 and into next year.

Got it. Helpful color. And then on the reduction in force, any areas that were, I guess, impacted more than others? Or was it pretty broad-based? Thanks.

Yes, it was pretty broad-based. I would say, at the margin we made some reductions in sales and marketing that are more focused on putting more of our effort around fewer markets, bigger opportunities. But generally, it was fairly broad-based. And really what we were doing is focusing our teams on the things that matter, the three big areas that I’ve been talking about. EX and really driving that business up into the mid-market, AI, AI capability across all of our products and getting that CX business back to more robust growth.

Got it. Helpful. Congrats on the quarter and thanks for taking my questions.

Thanks, Rob.

Thank you. One moment for our next question. Our next question comes from the line of Pinjalim Bora from JPMorgan.

Great. Thank you for taking the questions. Congrats on the quarter. I want to ask you, I think I heard CX business kind of improved a little bit from, I think, 7% to 10% or something like that in ARR. What is driving that? Are you seeing – has seen growth kind of troughed at this point? Is that kind of a bold statement at this point to make? And what are you seeing in general and seat growth in CX and ITSM?

Yes, so a couple of things. So first of all, yes, the CX business has seen an increase in growth in Q3. And that’s really the continuation of this trend that’s persisted for a couple of quarters, where we started to see net adds pick up over the last three quarters. We’ve seen churn come down. As I mentioned, churn for our CX business was at an all-time low in Q3. That’s the result of focused product investments that we made and some improvements we’ve made in how we support and service customers. In terms of seat additions, we’re seeing seat growth continue across the business, but CX in particular. So we’re pretty optimistic about where that business is heading. We’re doing better operationally at driving growth from the business. I mentioned the free to paid conversion being higher this past quarter, as a result of some real focused efforts. And as the SMB comes back, we’ve talked about this for some time, our CX business skews SMB, SMBs were more affected by higher interest rates, and we saw that in the form of lower expansion rates. But if SMBs come back, we’re very well positioned to see that reflected in that CX business.

Yes. Understood. One follow-up for Tyler. Maybe talk about the assumptions around the 2025 number around ITSM-CX. Are you kind of assuming CX to grow about 10% for next year within the different components? And are you taking in anything from AI at the moment?

Pinjalim, so we wanted to put some numbers out there for 2025. We saw what consensus is that we’re kind of in the middle of our planning efforts right now for next year. Also, Q4, as you know, is a really good quarter for us. So there’s still a little bit of unknown there. What we do know is that we have a lot of control on the bottom line, and we’re very optimistic about our capability to kind of achieve and overachieve on the numbers, specifically the greater than 25% free cash flow margin. We haven’t broken out. So we just put out a range for revenue based on what we’re preliminarily seeing right now as we go through the planning process. At the end of the year, we will break that out more and obviously provide a lot more color, and we haven’t provided any details on the product breakdowns.

Got it. Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Brent Thill from Jefferies.

Thanks. Just back to the improving execution. I mean when you think about how you kind of split between macro getting better, your own internal team executing better in the field. How would you kind of characterize the split? And is there improvement across both? Is there more improvement on execution? No macro improvement? How would you characterize that mix?

Yes. Thanks, Brent. So first of all, speaking about EX. So on the EX side, we’ve continued to have success in moving up market. And you see that in the 40% headline growth, 30% organic growth for that business. And that’s because the solution that we have in terms of fast time to value, low TCO, enterprise-grade product, that really is resonating in particular with customers that have, say, 5,000 to 20,000 employees. That’s where we’re really gaining a lot of traction, and that’s regardless of what the macro is doing. We’re also seeing traction in AI. And again, I don’t think this has much to do with macro, but we’re seeing widespread adoption of Copilot. It’s now half of all of our large deals have a Copilot element to them right out of the box. And we have a lot of upsell that has Copilot. And then on CX, we’ve been executing against this playbook to improve that product experience, improve the first 30 days for some time. We’ve started to see signs of improvement in the prior quarter. This past quarter, we made a big emphasis on driving better conversions of free users that are really just dabbling in the product into paid deployments, and that’s worked out quite well. So again, it’s hard to separate what’s macro and what’s us, we’ve done a lot of work to drive the business. And I have to say a lot of that credit goes to the teams here.

Okay. And Tyler, good to see mid-teen margins, I would assume that’s more of a pit stop and kind of a long-term playbook has more in it over time? How are you balancing kind of that framework growth versus profitability?

Yes. I mean we’re clearly – so I think you’re talking about kind of what we said for next year, which is kind of mid-teens non-GAAP operating margins and income and then the free cash flow greater than 25%. Look, we’re definitely focused on being efficient and producing cash and bringing profit to the bottom line. But that being said, we’re definitely also very focused on investing in growth, and it’s part of kind of some of the things we announced but really specific to the strategy that we outlined, right. And we’re really focused on kind of doubling down on that strategy and definitely are still investing in growth.

Great, thanks.

Thank you. One moment for our next question. Our next question comes from the line of Brent Bracelin from Piper Sandler.

Thank you. Good afternoon. Really appreciate the preliminary look into next year and obviously, the focus on improving margins here with the global restructuring. Dennis, I just wanted to frame in light of that, in light of the strong balance sheet, in light of the appetite to double down in really the mid-market enterprise. Can you talk about like opportunity for smaller M&A? How fragmented is the market? How broad is the product today in that Freshservice area? And how much more room can you fill out the portfolio there to accelerate growth potentially?

Yes. So thanks, Brent, for the question. So look, EX is a fantastic market. The market is growing double-digit rates. The competitive landscape is very clear. You got ServiceNow, who cares about the biggest companies in the world. We do run into Atlassian. There’s a number of small players and some incumbents, but nobody is really focused on that mid-market and lower end of enterprise where sophisticated IT departments that need a solution. They want to automate their IT operations, ITAM, ESM, and they need an enterprise-grade platform. That’s what we provide. There’s a lot of growth in that market. So just ESM alone, right. That’s where we’re investing some of the resources that we reallocated into the EX team to going deeper in ESM, in particular, in HR workflows, where we have a lot of customers asking us, help us out with onboarding, help us out with offboarding. Managed service providers, another big area of opportunity, we have over 1,000 MSPs on our platform today, and our product doesn’t have the kind of capabilities that they really want to manage multiple customers. So we’re building that, and that should help spark more growth for our MSP biz. Device42 and ITAM is a huge opportunity for us. And beyond ITAM, we see in ops and generally, AIOps potentially observability. All these are spaces that are open to us. We have a lot on our plate right now to execute against the areas that I identified. But we’re pretty optimistic about that. Of course, we are always on the lookout for acquisitions that we can tuck in and scale. We’ll tend to look for areas where we have road map holes or capability gaps and we want to scale up faster. So that’s another tool in our toolkit as we continue to scale the business. And generally, we’re committed to delivering long-term value for our shareholders. So we’re going to be smart about the investments that we made. Right now, Device42 is on everybody’s minds here, how do we scale that? And we’ve seen real good progress in the first couple of months of having D42 under the same roof.

Great to hear. Thank you for the color.

Thanks.

Thank you. One moment for our next question. Our next question comes from the line of Elizabeth Porter from Morgan Stanley.

Great, thank you so much. I wanted to understand the fiscal 2025 guidance a little bit more. It sounds like EX is still strong and CX is getting better and you also have the opportunity to drive better monetization with Freddy. Just given organic billings right now, we’re already in that mid-teens range. Are there any areas that you are kind of incrementally cautious on? Or help us think about some of the puts and takes?

Yes. Hey Elizabeth, this is Tyler. So again, we’re right in the middle of our planning process, right, for next year, and we’re kind of going through everything. As a reminder, we’re going to lap the annual anniversary of the Device42 acquisition. So the back half of the year, the comparables do get more difficult. And so we’ve taken that into account. We’ve also, I think, taken kind of puts into account in terms of how we’re looking at the year. And right now, yes, we’re saying that low to mid-teens. Now as Dennis just mentioned, there’s a whole bunch of things that we are, say, accelerating on road map on the EX side in particular. There’s also a whole bunch of AI investments that we’re going to continue to make. And as we see dates firm up from when these are coming out and as we can see expectations of what this might mean from a business model impact perspective, we’ll build those in. We’ll provide a lot more color at the end of the year with our Q4 earnings, but we wanted to put that out there because that’s kind of our best view right now.

Yes, certainly appreciate the look. And then just as a follow-up, I wanted to dig in on Freddy and ask about I know it’s early, but the uplift that you’re seeing to some average deal sizes when customers do start to adopt Freddy. And is it typically rolled out to a smaller segment of users and then kind of expand from there – details on how that motion goes?

Yes, Elizabeth, it’s Dennis. So Freddy is rolled out to all customers. In fact, we have substantial adoption among SMBs. SMBs in many ways, can benefit the most because they’re the ones that have in some cases, B2C businesses and they need to handle lots of consumer questions. They don’t have a lot of people to staff. So it really has been across all segments for us. As I mentioned earlier, our attach rates are going up. So our attach rates this past quarter on larger deals, that’s for us a $30,000 and up deal, we’re north of 50%, and that’s improved from last quarter, that’s for copilot. So we’re seeing that copilot product getting a lot of traction. Customers are seeing up to 30% improvement in some cases more in terms of speed of resolution, and that allows them to free up their agents to do other things, allows them to scale their business faster. On the self-service side, we’ve seen our customer count double since the beginning of the year of paid customers for Freddy self-service. And we just launched Freddy AI Agent, which is really designed to be super easy out of the box, get up and running with AI within 30 minutes with an agent that can answer any question that pertains to your products. Anything that’s in a FAQ or in a product manual, you can train the AI Agent on. And then your customers can ask questions directly to the agent and get answers that do not require a human. So as a reminder, we’ve been monetizing copilot just since February, and our self-service product today, while it’s quite powerful, it does require a level of programming to manage. So with the introduction of AI Agent, that opens up a new market segment for us, a customer that wants to do more faster in an easier way. So we’re pretty optimistic about AI and how it’s affecting both our CX and our EX business. At this point, it’s becoming a core to all of our upsells and all of our new deals.

Great. Thank you.

Thank you. [Operator Instructions] Our next question comes from the line of Ryan MacWilliams from Barclays.

Guys, this is [indiscernible] on for Ryan MacWilliams. Thanks for taking my questions. Just curious how linearity looks throughout the quarter? And if you left the quarter with better visibility on 4Q and fiscal year 2025?

Yes. Hey, thank you for the question. This is Tyler. We – so we have two businesses, right, from a go-to-market perspective. We have this inbound business that feeds the SMB, which linearity for the SMB actually in Q4 is pretty even, especially – and we’ve talked about this in the past that SMB actually slows down a little bit in the holidays and season because they tend to act more just more like an individual. That being said, over time, we’ve shifted more and more to our field business as driving the majority of bookings and revenue for us. And that field business looks much more like an enterprise sales motion. So the monthly linearity of that tends to be back-end loaded. And we have visibility to the extent that deals are out there, but that does tend to be back-end loaded. There are larger deals and have been increasing in size over the last couple of years, and we’ve been talking about that. So it’s a mix, but definitely has become more back-end loaded.

Got it. Great. Thanks, Tyler. And then its an improvement in macro environment needed for Freshworks to get back to the 110-ish NRR? Or are there other levers that you can support this metric near-term?

So first of all, I would just say an improvement in macro is not required for us to continue to drive the growth that we’re seeing. And I don’t think that the improvement, it’s not entirely clear, but I think we’ve done a lot to drive growth, in particular in that CX business and that EX business as well. So I think we’ve got a lot of growth levers ahead of us regardless of what the macro kind of throws at us. And again, are pretty excited about going into 2025 with where we are and the momentum that we’re building in the last half of this year. Tyler, anything on the NDR?

No. For net dollar retention, as Dennis just mentioned, the work we’ve been doing, we’re really pleased with how churn has been going. And Dennis mentioned CX an all-time best turn rate in Q3, and we’re just going to continue those efforts. From an expansion motion, we’ve been talking about the reduction of our expansion rate for two years now, and that really is driven by agent addition expansion. Now our agent counts are going up, and we’re clearly expanding with customers still, but we’ve been very, very focused on how can we expand with customers outside of agent addition. That’s a lot of the AI products we’ve been talking about. It’s a lot of addition strategy as well as things like Device42 and ESM. So these are all things that we are in control of ourselves, and we are actively working on. Now clearly, interest rates, in particular, impact SMBs and if that starts to turn, that we think that would be a benefit for us and a tailwind. We just can’t count on it.

Got it. Great. Thanks, guys.

Thank you. [Operator Instructions] Our next question comes from the line of DJ Haynes from Canaccord Genuity.

Hey guys. Dennis, I was hoping maybe you could double click a little bit more on Device42. I mean, obviously, we have the headline numbers. It looks like you’re taking a little bit more of a conservative cut at Q4, which I think makes sense at this point. But just can you speak to kind of the demand you’re seeing for asset management, integration of the employee base, kind of how you’re thinking about the lift that we’ll take to rewrite that product? Color along those lines would be helpful.

Yes, sure. So let me just break it into the go-to-market imperatives and the product imperatives. On the product imperatives, very clear. The first deliverable that you’ll see in Q1 is a much improved integration between Freshservice and Device42 that our customers have been asking for that allow bidirectional sync of information in a very seamless way. The second milestone will be towards the latter part of next year, which is a cloud-based version of Device42 that we can sell seamlessly alongside Freshservice. So we’re on track for both of those. Lots of work is going on to ensure that they’re successful and excited to start with the launch of the new integration. On the go-to-market side, the priority has been building pipeline in cross-selling Device42 into our existing base of thousands of IT customers and bringing them into deals where we have larger accounts that are looking for a sophisticated IT asset management solution. So a lot of Q3 was spent seeding the pipeline, getting D42 involved in deals, getting them into the sales cycle. Now, we’re in the process of starting to close down some of those deals. Some of them are going to last into Q1 and then making Device42 just a core part of our selling motion. So we’re pretty excited about where that stands. Device 42s pipeline. Raj Jalan, who is the CEO of Device42 who never been this big because they just got an influx of demand from our existing customers. So I think it’s a real winner for us over time. It’s still really early, but we’re excited about it for sure.

Excellent. And then I do have a follow-up on your comments around agent seat count on the CX side of the business. It’s good to hear that they continue to grow. I’m curious specifically about what that looks like for customers using Freddy self-service. I know you had 1,100 of them. Are seat counts there growing as well? Is it flat? Are they down? Like when they incorporate self-service, what happens to seat counts?

Yes. Overall, seat counts are going up. So I don’t have a breakout in terms of different customer cohorts, but overall, they’re going up. And I think that, that just customers are going to have a mix of AI and human agents. They’re going to find value in freeing up the time of the human agent from the more mundane task, but that’s what we’re seeing so far. We’re seeing continued growth of seats while customers are taking on AI as well across the base.

Yes, yes. Okay. Very good. Thank you, guys.

Thank you.

Thank you. [Operator Instructions] Our next question comes from the line of Patrick Walravens from Citizens JMP.

Great. Thank you, and let me add my congratulations. Hey, Dennis, can you just talk a little bit more about your conversations with customers on the AI front. Like what is the problem they’re looking to solve a benefit that they’re hoping to capture the most often? Is it just self-service for users? Or is it something broader? And then when they’re actually looking at implementing it, what is the biggest challenge that they have in terms of actually implementing these capabilities?

Yes. Thanks, Pat. So our customers are looking to do a couple of things. The first is they want to arm their agents with the best information, the best tools available to make them the most productive. And in some cases, that’s improving the quality of answer that they can provide by suggesting an answer because the AI has already been trained on things like product manuals and FAQs, the agent doesn’t have to do laborious research before answering a question that’s coming in from a customer, so they can answer more accurately in a more timely fashion. The customer at the end of the day, is more satisfied because the answer is more accurate. And the agent is more productive. They can answer faster, free their time up, either answer more questions or do other work. So that’s one area. And that’s where copilot has really taken off and become really clear in the marketplace as a solution that improves agent productivity 30% or more. And we’ve seen that time and time again, across customers. On the L-1 support task, they’re looking to deflect questions coming in that our routine road – this is the first test that they’re looking for routine road and free their agents from that kind of mundane work, frankly. And so the first thing they’re looking for is how can I create an agent that is fully trained on my information, my FAQs, my product manuals and answer questions right out of the box from customers. That’s what Freddy AI agent does, and that’s why we’re getting a lot of positive feedback on that. And again, it’s a quest to both improve the productivity of their existing staff, improve the experience of their customers. So we’re seeing success on both fronts. And I think net-net, what they’re not doing is they’re not saying, hey, I’m going to build it myself. And they’re not saying, hey, I’m going to go find another point solution. They’re looking to us in the first instance to solve that problem for them. If they’re looking for a new customer support tool, that’s the first question they’re asking. Tell me about your AI story. On the EX side, it’s the same thing. They’re looking to automate the employee experience have virtual agents handle more direct questions that employees are asking of IT, free those valuable IT agents up to do something else. And likewise, they’re looking to empower those AI agents or those human agents that they have with tools that make them more productive. So that’s a little bit of a flavor of what I hear. And I think we’re really well positioned to solve those problems.

That’s super helpful. Thank you.

Thank you. Our final question, one moment. Our final question comes from the line of Michael Funk from Bank of America.

Yes, thank you for the question this evening, guys. Keep with the AI theme, can you share what you’re seeing with the change in spend or contract value when customers adopt AI? I realize it’s very early days today. But any kind of metric there would be helpful.

So because it’s very early days for us, it tends to be a net expansion because they didn’t have AI before. Remember, we monetize our products in two different ways, for the products that have been in GA, monetize copilot as a per seat adder. $29 a seat per month is a sticker price. We monetize Freddy self-service as – on a consumption basis, right? Customers purchase seat pack or session pack of 1,000 sessions for $100 a pack. So when customers come in and they’ve not had a app before, it’s a net expansion on a dollar basis or we’re going in on a new sale, that’s priced separately, and that’s net increase in the deal value over what we would have without AI. So generally, for us, it’s been a net expansion of ACV. And you also see that in the average customer value for us in our numbers.

Okay. The incremental margin is similar or higher or lower when you add AI into a contract?

I’ll take that one, Michael. So incremental margins right now are similar, right? And we’ve done a very good job on gross margins, I would say, for a company of our size, and we’re going to continue to focus on that. We’ve also said, hey, there should be a little bit of noise in that number. Right now, we’re kind of above mid-80s on gross margin. We said, hey, low 80s to mid-80s is really, really good. We’ve built in what expectations are for the cost that we’re going to incur to serve AI to our customers. But at the same time, we’re obviously very – we’re focused on our pricing and packaging strategies there. Some of the future revenue will come from specifically Freddy self-service and Freddy AI agent that we just announced, right? Because that will be more usage based. And as customers use it, right, they will have to buy more bought packs over time to supplement that usage. And so that will be a revenue stream that is kind of to come as opposed to already with us right now. So we’re very focused on margins there. I think we’ve done really, really well. And obviously, we’re delivering even the numbers we put for next year, what we think are really good bottom line figures.

Great. Thank you all for time.

Thanks, Michael.

Thank you. This concludes today’s conference call. Thank you for participating. You may now disconnect.