Financial Data and Key Metrics Changes - For the second quarter, revenue was $184.6 million, up 14.6% year over year, with subscription revenue growing 15.7% and cloud revenue increasing by 29.9% [6][27] - Adjusted EBITDA rose to $38.4 million, representing an EBITDA margin of 20.8% [6][30] - Annual recurring revenue (ARR) grew 16.1% to $636.6 million, with average annual revenue per customer increasing 12.7% year over year to $142.6 thousand [6][28] Business Line Data and Key Metrics Changes - Subscription revenue increased to $157.8 million, while services revenue grew 8.3% to $26.7 million [28] - Cloud revenue was $86.2 million, up 29.9% from the previous year, with Ecosio contributing approximately four points to cloud revenue growth [28] - Net revenue retention (NRR) decreased to 108%, down from 110% in the previous year, attributed to lower growth of additional entitlements and regulatory changes in Brazil [7][29] Market Data and Key Metrics Changes - The company noted a slowdown in ERP migrations, elongating deal cycles, which is consistent with trends observed in publicly traded ERP providers [8][9] - In Europe, annual recurring revenue for Ecosio reached $10.8 million, a 33% increase from the prior quarter, driven by upcoming e-invoicing mandates [14] Company Strategy and Development Direction - The company is focused on leveraging internal technology investments and controlling expenses to maintain adjusted EBITDA margins while navigating macroeconomic challenges [9][10] - The ongoing cloud ERP upgrade cycle is expected to accelerate over the next two and a half years, with increasing demand for solutions due to global tax complexities [11][12] - The company is investing in AI and automated workflows to enhance its global compliance platform, which is expected to drive future growth [15][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic factors impacting customer activity and necessitating a reduction in full-year guidance, but expressed confidence in long-term growth expectations [5][10] - The company highlighted strong underlying demand and customer commitment, with churn lower on a dollar basis compared to previous quarters [13] - Management remains optimistic about the long-term growth drivers, including e-invoicing mandates and cloud migrations [34][50] Other Important Information - The company ended the second quarter with over $284.4 million in unrestricted cash and cash equivalents, along with $300 million of unused availability under its line of credit [32] - The guidance for the third quarter is expected to be between $190 million to $193 million in revenue, with full-year revenue guidance adjusted to $750 million to $754 million [33] Q&A Session Summary Question: Impact of macro factors on guidance - Management indicated that the macro impact is primarily affecting on-premise and services revenue, while cloud revenue guidance remains intact [37][38] Question: E-invoicing adoption rates - Management noted that the end-to-end offering is differentiating and that early customers are expanding their coverage, indicating a strong land-and-expand model [42][43] Question: Long-term growth outlook - Management expressed confidence in long-term growth due to strong transactional volume in e-invoicing and ongoing cloud migrations [49][50] Question: Changes in hiring plans - Management stated that most hiring pullbacks are in non-strategic areas, focusing on efficiency and core strategies related to e-invoicing [51][52] Question: Deal progression in Q2 - Management observed a softness in deal activity towards the end of Q2, with elongation in sales cycles impacting revenue [56][57] Question: Delayed deals from Q2 to Q3 - Management clarified that delayed deals are not indefinitely postponed but are tied to customer migration processes [63][64] Question: Guidance philosophy - Management confirmed that guidance adjustments reflect observed trends in the second quarter without changing their overall conservative philosophy [66][67] Question: SAP comments and visibility - Management noted that the softness is primarily in the US market, impacting their larger market opportunity, while European performance remains strong [74][75] Question: E-invoicing competition in Europe - Management highlighted that the mid and enterprise market seeks a single provider for multiple jurisdictions, which aligns with their strategy [97][98]