Workiva Inc. (WK) Q4 2016 Earnings Report, Transcript and Summary

Good afternoon. My name is Mike, and I will be your conference operator today. At this time, I would like to welcome everyone to Workiva Inc. Fourth Quarter and Full Year 2016 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I will now turn the call over to Adam Rogers, Senior Manager of Investor Relations. You may begin your conference call.

Thanks, and good afternoon everyone, and welcome to the Workiva fourth quarter and full year 2016 earnings conference call. This afternoon, we'll begin with comments from Chairman and Chief Executive Officer, Matt Rizai; followed by Executive Vice President and Chief Financial Officer, Stuart Miller. And then, we’ll turn the call over to questions; also on the line today is Marty Vanderploeg, President and Chief Operating Officer. A replay of this call will be available until March 2nd. Information to access the replay is listed in today’s press release, which is available on our website under the Investor Relations section. As a reminder, today’s conference call is also being broadcast live via webcast. Before we begin, I’d like to remind everyone that during today’s call, we’ll be making forward-looking statements regarding future events and financial performance, including guidance for our first quarter and full fiscal year 2017. These forward-looking statements are subject to known and unknown risks and uncertainties. Workiva cautions that these statements are not guarantees of future performance. All forward-looking statements made today reflect our current expectations only, and we undertake no obligation to update any statement to reflect the events that occur after this call. Please refer to the Company’s Annual Report on Form 10-K for factors that could cause our actual results to differ materially from any forward-looking statements. Also during the course of today’s call, we will refer to certain non-GAAP financial measures. Reconciliations of non-GAAP to GAAP measures and certain additional information are also included in today’s earnings press release. And with that, we’ll begin by turning the call over to our Chairman and CEO, Matt Rizai.

Thank you, Adam, and thanks to everyone for joining us today to discuss our fourth quarter and full year 206 results. The fourth quarter kept off another strong year for Workiva. Subscription and support revenue in the fourth quarter was $38.3 million, up 19.4% from the fourth quarter of 2015, and total revenue in the fourth quarter was $46.4 million, up 16.3% over the same quarter last year. For the full year 2016, revenue was $178.6 million, up 23% over the prior year. We're pleased to have generated positive operating cash flow in the fourth quarter of almost nearly $10 million, and we expect operating cash flow to be breakeven or better in 2017 and annual thereafter. Stuart will provide more details later on this call. In 2016, we added 248 new customers including 76 net new customers in the fourth quarter. More than 70% of the Fortune 500 companies now use Wdesk. We continue to diversify our revenue sources. For the full year 2016 non-SEC used cases reached 49% of our subscription bookings, up from 39% in 2015 and 25% in 2014. We expect these bookings diversifications to continue. Customer demand for broader-based enterprise-wide Wdesk solution continues to grow. So, we have been evolving our business model, enhancing user management and improving our technology to capitalize on these enterprise-wide opportunities. Our lengthened expense sales strategy focuses on acquiring new customers and building our existing customer relationships by using a direct sales model. In the fourth quarter, we've reallocated our sales and marketing resources to simplify our account management model with localized coverage. Our sales model is designed to leverage growth from our partnerships and enterprise-wide initiatives and create strong relationships with our customers with improved coverage. In addition, in the fourth quarter of 2016, we began to augment our direct sales channels with partnerships. Overtime, our partners will include technology companies, consultants, service providers and accounting firms. We expect our partners to support our sales efforts through referrals and co-selling arrangements as well as expand the use of Wdesk through integrated technology offerings. Earlier this week, we announced our partnership with OpenGov that will further expand Wdesk across municipalities. OpenGov will be offering Wdesk with their OpenGov budget builder to help municipalities modernized the way they create and publish budget books, create comprehensive annual financial reports known as CAFR as well create quarterly reports and other related documents. We expect to announce additional partnerships in the coming weeks and months. Now, I'd like to share a few recent customer examples that show the breadth and depth of Wdesk. A multinational consumer goods company is using Wdesk for a priority issue assessment, which surveys and ranks its customers on climate and energy issues. Maritech Corporation [ph] uses Wdesk for its monthly supply chain report. United Technologies signed on to use Wdesk for statutory reporting in the UK. Somerset Trust Company uses Wdesk for its audit plan process in which they assess financial statement line items to show material accounts for process audits. In a global insurance company used Wdesk to create its 1,000 page actuarial memo and embedded documents that can page evidence that included 34 supporting opinion letters, cover letters and memos. Since mid 2014, we have continued to gain market share in the Sarbanes-Oxley Act market. We currently have nearly 500 SOX customers. SOX customers' wins in the fourth quarter include healthcare service group, Brown-Forman and Del Monte among many others. We continue to be excited about our growth in the audit management, which is a subset of our much larger market that’s defined at governance, risk and compliance known as GRC. Recently, State Street Bank and Trust started using Wdesk as a repository for audit evidence. They also used Wdesk to manage the workflow of individual audits for 60 entities, which roll up into one combined report. We continue to be encouraged about the growth opportunities for Wdesk and enterprise risk management or ERM, which executives use to identify systemic risks, determining access risk magnitude and plans strategic responses. Recent ERM customers include Spark Energy, Maiden Holdings and Silver Bay Realty. We also see growing demand for Wdesk within private companies for a variety of used cases. New customers include insurance, ecommerce, technology, real estate and financial services companies. We have also seen SOX success at private companies, which often chose to comply with SOX guidelines even though they are not required to do so. For example, the private company Apta recently began using Wdesk to build their internal controls documentation. We also continue to gain market share in the SEC compliance market where demand remains robust because Wdesk is the best practice. Lastly, we see increasing demand for our additional used cases in state and local governments and universities. New customers in this market include Port of San Diego, the University of Cincinnati, and the Texas Municipal Retirement System. Press release of this quarter also announced Wdesk expansion across our customers' organizations. They included Hi-Crush and Sarbanes, which are using Wdesk to save the time and money when managing their assessments of internal controls over financial reporting required for SOX. Maritech Corporation that continues to expand its use of Wdesk into certifications, public relations and other types of financial reporting, and MFA Cornerstone that uses Wdesk to help its clients, streamline collaboration and improved compliance efficiency. So, as you can see 2016 was a great year for Workiva and are more than 1,200 employees. In November Deloitte visited us on its 2016 Technology Fast 500 list and more recently Wdesk won a BIG Innovation Award from the business intelligence group for how it has modernized the way people work. In the fourth quarter, Charters Research named Workiva a category leader in the FinTech Quadrant for data integrity and control solutions in financial services. Charters Research also named Workiva its Risk Take 100 lists, which is based on an independent study of leaders in the Risk and Compliance technology. In summary, our fourth quarter and full year 2016 was strong. Adoption of Wdesk continues to gain traction with new and existing customers and our sales pipeline continues to build. We’re excited about the multiple growth opportunities in front of us, and we remain focused on executing on our initiatives. With that, let me turn it over to Stuart Miller.

Thank you. As Matt indicated, we’re pleased with our results for the fourth quarter and full year 2016. In particular, we’re pleased to generated positive operating cash flow of nearly $10 million in Q4. We expect operating cash flow to be a breakeven or better for full year 2017 and annually thereafter. That the improvement in our cash flow outlook is primarily due to expanding revenue and a faster rate in our headcount growth rate. I will begin by reviewing our fourth quarter and fiscal year 2016 results and then I’ll comment on our first quarter and full year 2017 financial outlook. Thereafter, we’ll open up the call to your questions. We generated total revenue in the fourth quarter of $46.4 million, an increase of 16.3% from Q4 last year. Breaking out revenue by reporting line item, subscription and support revenue was $38.3 million, up 19.4% from Q4 2015, 50.7% of the S&S revenue increase in Q4 came from new customers, added in the last 12 months. The remaining 49.3% of the increase came from deeper penetration of our existing customer base. The average contract value on subscription and support from all customers continue to rise. Professional services revenue was $8 million, an increase of 3.4% from Q4 2015. Higher customer count and services for non-SEC use cases accounted for most of the growth in services revenue. Services revenue grew at a single-digit rate for two reason, sales cycles on larger non-SEC deals were longer as we discuss last quarter, and we have automated part of documents set-up that no longer requires billable hours. Turning to our supplemental metrics, we finished Q4 with 2,772 customers, a net increase of 248 customers from Q4 of 2015, and a net increase of 76 from Q3 of 2016. Our subscription and support revenue retention rate excluding add-ons was 95.4% for the month of December 2016, compared with 95% in September 2016 and 95.8% in December 2015. Customers being acquired were ceasing to file SEC reports accounted for over half of the revenue attrition consistent with our experience today. With add-ons, our subscription and support retention was 107.4% for the month of December 2016 compared with 108.7% in September 2016. Increased subscription revenue on non-SEC use cases from existing customers continued to be the primary driver of our add-on revenue retention rate. Moving down to the income statement, I’ll talk about our results before stock-based compensation, in other words on a non-GAAP basis. Please refer to our press release for a reconciliation of our non-GAAP and GAAP results. Gross profit was $33.4 million in Q4, up 14.9% from the same quarter a year ago, representing a gross margin of 72% compared to a gross margin of 72.9% in the Q4 of 2015. Now breaking out gross profit, subscription and support gross profit was $31.2 million equating to a gross margin of 81.4% on S&S revenue, compared to $24.6 million or 82.5% gross margin in the Q4 of 2015. Gross margin from S&S contracted 61 basis points due to an increase in employee compensation as well as increased server costs. Professional services gross profit in the fourth quarter was $2.2 million, equating to a 27.1% gross margin, compared to $2.7 million or 34.1% gross margin in the same period last year. Turning to operating expenses, research and development expense in Q4 was $14 million, an increase of 8.5% from Q4 last year due to increased compensation and additional staff as we continue to dedicated more resources to enhance our Wdesk platform. R&D, expense as a percentage of revenue improved this quarter to 30.1% which is 215 basis points better than Q4 last year because revenue expanded at a faster rate in headcount growth. Sales and marketing expense declined 3.1% in Q4 to $17.6 million, driven primarily by a reduction in consulting and recruiting fees, travel and advertising expenses. We continue to focus on improved operating efficiency as sales and marketing expenses as a percentage of revenue this quarter improved 760 basis points to 37.9% from 45.5% in Q4 last year. General and administrative expenses were $5.6 million in Q4, a decrease of 17.2% compared with $6.7 million in Q4 of 2015, due to improved operating efficiencies and a reduction of the accrual for incentive compensation expense. G&A expense as a percentage of revenue in the latest quarter declined to 12% an improvement of 485 basis points from Q4 2015. Operating loss was $3.7 million in Q4 of 2016, compared to a loss of $8.7 million in the same period last year. Workiva’s operating margin improved over 13.7 percentage points in Q4 2016 versus the same quarter a year ago, primarily because the growth rate in revenue exceeded the growth rate in headcount. Net loss is $3.8 million for Q4 2016 compared to the net loss of $7.2 million in Q4 2015. We posted a net loss per share of $0.09 in Q4 2016, compared to a net loss per share of $0.18 in the same quarter a year ago. Turning to our balance sheet and our statement of cash flows; at December 31, 2016, cash, cash equivalents, and marketable securities totaled $62.7 million, and the increase of $8.9 million compared with the balance at September 30. In Q4 2016, net cash provided by operating activities was $10 million, compared with a use of cash of $5 million in the same quarter a year ago. Workiva’s operating cash flow improved from negative $21.6 million in 2015 to a negative $10.4 million in 2016. At December 31, 2016, total deferred revenue increased $18.7 million from September 30th. Long-term subscriptions support deferred revenue increased $6.3 million in Q4, driven by customer contract renewals for multi-year terms. Short-term subscription support deferred revenue increased $8.4 million in Q4 driven by new sales and conversion of renewals from quarterly to longer terms. We continue to make steady progress on converting quarterly contracts to annual contracts. Services deferred revenue increased $3.9 million during the quarter, reflecting a typical build-up that we see just ahead of the 10 cases. Now recapping our full year 2016 results, total revenue was $178.6 million, up 23% year-over-year. Subscription and support revenue was $143.1 million increasing 23.1% over 2015. Professional services revenue was $35.5 million, up 22.6% from the prior year. So our revenue mix in 2016 was about 80%, subscription support 30% professional services. Moving down to P&L and again focusing on non-GAAP expenses. Gross profit was $127.9 million rising 20.9% year-over-year and representing a 71.6% gross margin. Operating loss was $29.3 million, compared with the loss of $30.7 million in the prior year. Operating margin improved 608 basis points in 2016, mainly because our revenue growth exceeded our headcount growth rate. Headcount is largest driver costs of Workiva and grew just 4.5% in 2016. Net loss was $29.7 million in 2016 and net loss per share was $0.73, which compares to net loss of $32.4 million in 2015 or $0.81 a share. Before I address guidance, I’ll review the seasonality of our business model. Seasonality effects as mentions of our financials revenue since its cash flow, first revenue. Our professional services revenue peaks in Q1 because many of our SEC customers followed 10-K in the first quarter and hire Workiva to help them with XBRL tagging. The utilization rate for our professional services team runs close to 100% in the first quarter every year. Utilization rates run lower in the other quarters. The second area of seasonality relates expenses, our sales and marketing expenses peak in the third quarter since we hold we hold our annually user conference in September. The third area of seasonality is cash flow. Workiva typically pays cash bonuses in the first quarter also as we delivered professional services in the first quarter we burned off to time deferred revenue related to services that were invoiced during the prior year, which shows up as a use of cash on that line items in Q1. So, operating cash flow is typically the lowest in Q1 relative to the other quarters. Now, turning to our guidance for 2017, our guidance on a non-GAAP loss from operations and non-GAAP loss per basic shares excludes the impact of stock-based compensation. Please refer to our press release for a reconciliation of our non-GAAP and GAAP guidance. For the first quarter of 2017, we expect total revenue to range from $50.3 million to $50.7 million. We expect GAAP operating loss to range from $10.1 million to $10.5 million. Non-GAAP operating loss is expected to be in the range of $5.8 million to $6.2 million. We expect GAAP net loss per share to range from $0.25 to $0.26. Non-GAAP net loss per share is expected to be in the range of $0.14 to $0.15. Our loss per share guidance assumes 41.1 million basic and diluted shares outstanding. Our guidance for the full fiscal year 2017 is as follows. We expect total revenue to range from $203 million to $206 million. We expect GAAP operating loss to range of $47.7 million to $50.7 million. Non-GAAP operating loss is expected to be in the range of $29 million to $32 million. For the full year 2017 we expect operating cash flow to improve to breakeven or better and we expect annual operating cash flow to remain at breakeven or better thereafter. We expect GAAP net loss per share to range from $1.18 to $1.26. And finally, non-GAAP net loss per share is expected to be in the range of $0.72 to $0.80. Our loss per share guidance for the full year assumes 41.3 million basic and diluted shares outstanding. Here is some color commentary on our guidance. So our 2017 guidance builds on a few points that we articulated our last call. First, we expect to continue market share growth in SEC, continued solid growth in bookings for our non-SEC used case in 2017. We assume the sale cycle in the larger SOX internal control, enterprise risk management and regulatory risk areas will remain relatively long. Second, we expect to recognize some revenue related to our partnerships later in the year. Third, we expect a modest amount of revenue from enterprise deals also later in the year. Fourth, we planned to continue to control operating expenses in a way that helps us to achieve both our revenue growth and cash flow goals. Finally, we expect IPO and M&A activity will remain at levels similar to those in 2016 and we believe M&A and delisting will continue to account from majority of our churn. Before wrapping up I would like to comment on the political environment. The new administration at Washington has promised de-regulation on multiple fronts including repealing or modifying parts of the Dodd-Frank Act. We think it's too early to predict specifically what might change in legislation or regulations, it could affect our business and we will continue to closely monitor developments in this area. While it's too early for prediction we want to provide some context. We maintain a broad relationship with many of our financial services customers, broad in the sense of multiple used cases. Stress testing is just one use case. Our subscription revenue related to Dodd-Frank stress testing accounted for less than 1% of our aggregate subscription revenue last year. Stretching the analysis to our related area CCAR which applies only to the largest bank holding companies, our subscription revenue in 2016 also accounted for under 1% of our aggregate subscription revenue. We are hearing from our financial services customers that senior management and their respected Board of Directors want to continue to see stress testing analysis even if the regulators no longer require it. Stress testing is a good tool for risk management. To wrap up, Workiva posted another strong quarter, we are pleased with the progress we are making on cash flow and operating margin, demand remains robust for our solutions and we remain focused on executing our growth plan to capitalize on our multibillion dollar market opportunity. And we are ready to take your questions. So operator we begin the Q&A session.

[Operator Instructions]. Your first question is from Tom Roderick from Stifel.

This is Matt VanFleet on for Tom. I guess looking at both your growth trajectory and the expectations for breakeven on the cash flow, how should we think about your ability to grow, especially in some of the newer non-SEC markets with lower headcount? And in addition to that what areas are you going to continue to do sort of aggressively add people and where have you sort of rescaled for where the business is at now?

This is Matt, let me started. I don’t think we have reached any scale on any of the businesses that we’re going to after. We’re been very thoughtful, making sure we understand, what the requirements are for our customers to be able to use our platform as good as possible, and for that, we continue to make sure that we streamline internally the reallocating of resources to make sure that we meet the demands or the customers, as well as possible and as efficient as possible. And we’re actually seeing quite a bit of demand from all the different markets that we've mentioned, that we’re talking about and we’re continually going to be aggressively going after all those. But I think we have enough capacity knowing that we can meet the demands of -- early demands of some of those customers, but we’ll continually scale as appropriately being mindful that, making sure that we use our resources as appropriately as possible. So we think that we still are continuing to see growth in every single market that were after and we’re continuously also looking at opportunities in other markets, especially through a partnership model that we're excited about expanding.

And then talking about sort of reallocating from your sales resources to focus on, I think you mentioned some more localized relationship building. I guess what is changing in terms of either locations or is it geographies being moved around between existing sales people. And what additional investments do you plan to make to help facilitate that?

Marty, you want to ask that?

Sure. There are two major components of that realignment is really, one is giving every account one account manager. We did have some overlays prior to that. And that really helps us focus and bring a lot of discipline in the account. The other is mainly geographic, we’re moving to more efficient model having people closer to build those relationships. And so, we think that those adjustments are going to increase our efficiency dramatically in terms of our sales.

And I guess just a quick follow-up on that. What’s the timeframe to execute that and get to the point where you feel like you're going to start realizing the benefits of those investments?

Hopefully, we’ll start realizing it starting this quarter and is going to an ongoing benefit that we’re going to roll over and as time goes on we'll continue to make sure that we have an efficient operation and greater transparency with this and then also continue to expand the sales efforts.

And Matt you saw that in the fourth quarter that our benefits are already apparent from the expense side, so I guess Matt was really addressing the more revenue side too.

Marty, you want to add something?

Your first question about why we are optimistic that we can continue to grow is really based on three key pillars. One is the efficiency of our sales team, we just talked about. And then the other two things Matt alluded to were the partnerships, we're seeing good demand from partners out there that want to partner with us now that we have a good footprint in this different markets and then we are getting demand from customers that want to see large deployments of our technology and we're starting to ship some of the sales team to deal with those types of relationships, so that's really the focus in terms of how we're going to grow.

I mean I want to add to that in case of other subsequent questions kind of come. As you guys all cover a lot of companies and all of different sizes, and that this is pretty normal for the lifecycle of a company as we are growing. Distribution channels always get to be more comprehensive and you want to adjust to that based on the demand that you are getting from different parts of the organization and we have a very good handle now that with large corporations what they want and then we also have a pretty good idea about smaller than Fortune 1,000 companies and what they want and we're adjusting and growing and evolving our sales organization distribution channels just like any other company who would go through our stage and our size that does. So from my point of view it's nothing different then when you get to this age and the stage of a company that you make these move to continue on going forward.

Alright, thanks for the details appreciate you taking my question.

The next question is from Jason Velkavrh from Robert W. Baird.

I think that first question I have is, I think you've mentioned in the past you track internally cost of acquisition, we do our own cash evaluation just based off of the public data, so I'm just -- we saw a tick down to an increase in sales efficiency. I'm just curious, are you seeing that internally in the metrics you are looking at, an increase in sales force efficiency and if so you've mentioned the few actions you've taken, just anymore elaborations you can give on the actions you've taken that have driven more sales force efficiency?

Yes, I mean as a result of the improvement on sales and marketing cost as a percentage of revenue and I have accounted the reasons around that for the quarter, the absolute reduction in that expense was reduced consulting and recruiting, reduced travel and reduced advertising expenses. The reduced travel relates to the localization of the account coverage the advertising expenses just relates to a review of where we were spending money and where we felt like we were getting bang-for-our-buck and then recruiting and consulting was just a review of where we were getting returns. So you are right, it did improve a bit in the fourth quarter, it's different for each different teams and we monitor it on multiple cuts.

Okay, thanks and then you mentioned, we noticed the increase in the differed revenue balances part of that sounds like it was due to some converting quarterly billing customers to annual. I'm just curious if you can give a status update, I think there were around 1,400 customers. Just kind of how far along -- I think originally that was a two-year process, how far along are you in converting that original customer base to annual?

Yes. In ballpark it’s between 1,100 and 1,200 remaining on quarterly contracts. So we’re making deliberate progress there, I think we even said in our 10-K that we just filed that, we expect to get most of those converted over the next 24 months. So we’re -- it is a process and there are competing priorities, but it’s going well. There is plenty to do that, plenty left to go.

Got it. And just one last one for me, I think on the last call you mentioned the business via partnership, the functionality that’s part of that partnership would be live this quarter. I was hoping you can give one, just an update on the status of that? And then two, I just wanted to clarify is that an up-sell feature to customers that are currently Workiva customers or is this an added features for those that are joint customers of both companies?

Two-part question. First off, we’ve enable to technology, we’re just doing a little more beta testing, but that is something that will be widely distributed in the next few quarters and it is an up-sell for us. And in many times, the business wire will be facilitating that, but it’s something that will begin soon and continue throughout the year in terms of momentum.

Got it. Thanks guys.

The next question is from Michael Nemeroff from Credit Suisse.

This is Alex Hu on for Michael. Thanks for taking the questions. So we saw some really good leverage in this quarter and Stuart thanks for the additional color on your initial 2017 outlook. But if I did my math correctly, it seems to imply a pretty solid step down from the run rate in Q4. I recognized the seasonality of expenses in your business, but it sounds like the reallocation of some S&S expenses for a more efficient sales model will be a more permanent shift, so just curious, why the large delta and also curious how does the recent partnerships impact your outlook from a leverage perspective?

So is the first question related to expenses and revenue?

Both, on expenses really on the leverage side.

On the leverage side. So if you noticed the first quarter guidance on operating margin implies a 770 basis points improvement relative to Q1 of last year, of 2016. So we are -- we’ve giving pretty significant indication about the continuing leverage on that line. And then the rest of the guidance implies flat operating margin relative to 2016 for the remaining quarters. We just, we have less visibility obviously in the second, third and fourth quarter than we do in the first quarter.

Okay, great. And then just curious, how does the recent partnerships impact your outlook, if any from a leverage perspective?

So it’s a little bit early to say. But for the idea behind these partnerships, they'd be obviously be mutually beneficial and our goal like, for instance, with the OpenGov partnership which we just have announced is that, because they are focused on the municipal market, they are going to, by our calculus be able to generate more customers more efficiently than we could replicating their distribution. So little bit early to tell, but we're hopeful and we certainly modeled it out.

And then one more just on your expectations for subscription booking mix from non-SEC used cases and 2017. Do you expect the current 50-50 mix a reasonable run rate or should we expect non-SEC used cases to become an even larger share of bookings overtime?

So we do expect non-SEC to continue to take a larger share of the bookings we haven’t given a specific target. One thing that could affect that is if the IPO market were to take off, that would obviously favor the SEC side, that would be good news. But all other things equal, we do expect the non-SEC to be the majority of the bookings this year.

[Operator Instructions] The next question is from Stan Zlotsky from Morgan Stanley.

First one, just help us understand what kind of benefit did you guys see in Q4 in the 32% billings growth and how much of that came from the billing term changes from quarterly to annual?

So we don’t disclose that but as we indicated the change in differed revenue, a big chunk of the longer-term part of the changing differed revenue was related to conversion of -- not conversion but renewal of existing long term contracts, it slipped over into two year contracts, renewing as two year contracts for example. So that really drove that number. The incremental amount from conversion of quarterly or annual in the fourth quarter was probably less than that and we are still in the ramp up phase on that 2016 and we are at a higher operating level on that in 2017 or at least that's our forecast in terms of converting those accounts.

I was specifically refereeing to the current billing, right, so the current differed revenue. And how much help do you get there, not -- the long term I understand it, it’s the short-term stuff.

The short-term was simply a mix of new and converting the quarterly to annual and we haven’t given the granularity that you're asking for.

Okay got it. And maybe just a high-level question, as you are going into 2017 what kind of growth are you looking for out of your head counting in your sales organization and even more broadly, where within the organization are you looking to invest as we head for the year? Thank you.

So we do see sort of still single digit growth in headcount, because we are expecting to get leverage from the realignment that we talked about. And we’re also looking for leverage from partnerships and the enterprise side and just actually the improved seniority of the sales team.

Okay. In closing, I want to thank you for joining us. Operator, you may now end the call.