Good day, ladies and gentlemen. Thank you for standing by, and welcome to Intapp's Third Quarter Fiscal Year 2022 Earnings Conference Call. At this time all participants are in a listen-only. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker host, David Trone, Senior Vice President of Investor Relations. Please go ahead.

Thank you. Welcome to Intapp's third quarter fiscal year 2022 earnings conference call. On the call with me today are John Hall, Chairman and CEO of Intapp; and Steve Robertson, Chief Financial Officer. During the course of this conference call, we may make forward-looking statements regarding trends, strategies and the anticipated performance of our business, including guidance provided for our fourth fiscal quarter 2022, full fiscal year 2022 and fiscal year 2023. These forward-looking statements are based on management's current views and expectations, entail certain assumptions made as of today's date and are subject to various risks and uncertainties, including those described in our SEC filings and other publicly available documents that are difficult to predict and could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Intapp disclaims any obligation to update or revise any forward-looking statements, except as required by law. Further, on today's call, we will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results. A reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and as an exhibit to the Form 8-K furnished with the SEC prior to this call. With that, I'll hand the conversation over to John.

Thank you, David. Good afternoon, everyone, and thank you for joining us. We ended our fiscal third quarter with strong results. We continue to deliver on our mission to enable professional and financial services firms to better connect their people, processes and data through our AI-powered software solutions. Our target firm showed continuing strong demand for digital transformation and we saw record adoption of our cloud platform. Intapp was a pioneer in targeting the professionals who work in large professional and financial services firms. Together, these professionals lead an incredible global $3 trillion deal-making industry, yet they have been traditionally underserved by the technology industry. Traditional enterprise software products like corporate CRM or ERP were really built for product-centric corporations. In contrast, the firms that we serve have been historically organized as partnerships. They have a unique organizational structure, go-to-market approach and value-creating workflow that is based on the expertise and market insights of the professionals, not on making and selling widgets. Intapp's cloud solutions are purpose-built to help the professionals in these firms to build and cultivate their own area of expertise, to harness institutional knowledge across their firm, to find and win the right opportunities in the marketplace, to make better decisions using market data and to deliver better outcomes for their own investors and their clients. Today, professional and financial services firms are rapidly adopting cloud solutions that are purpose-built for the way they do business. With Intapp's established and trusted brand, our specialized product strategy and our deep understanding of these markets, Intapp is well positioned to lead the cloud transformation for this industry. Our strategy is working. In our third quarter, our cloud ARR grew 49% to $148 million. Cloud now represents 58% of our total ARR of $254 million, which was up 26% year-over-year.…

Thanks, John, and thanks, everyone, for joining us today. As John noted, we had a strong quarter with our cloud ARR up 49% year-over-year and our total ARR up 26% year-over-year. Before I go through our financials, as a reminder, I'd like to quickly review a few fundamentals of revenue recognition in our financial model. Cloud ARR is recognized as SaaS revenue ratably, following a new sale or renewal. On-premises ARR is recognized in two parts: 50% as subscription license revenue, recognized upfront at the time of the sale or renewal, and 50% as support revenue, recognized ratably and included in our SaaS and support revenue line. Because it is recognized ratably, SaaS and support revenue is more predictable quarter-to-quarter, while subscription license revenue can vary based on the timing of revenue recognition. Okay, moving to our numbers. Q3 was another strong quarter for Intapp as follows: SaaS and support revenue was $49.8 million, up 35% year-over-year, reflecting both new sales to new clients and upsells and cross-sells to existing clients of Intapp's purpose-built cloud solutions. Total revenue was $69.7 million, up 25% year-over-year, driven primarily by continued strong sales of our cloud solutions as well as by solid growth in professional services revenue. Subscription license revenue was $10.9 million compared to $11.8 million in the prior year period, primarily reflecting ongoing migrations of on-premises software to the cloud, mitigated by strong renewals of on-premises subscription licenses in the current period. Professional services revenue was $9 million as compared to $7 million in the prior year period, reflecting software implementations consistent with the growth in our new sales. Overall, we continue to execute our land and expand model, ending the quarter with more than 2,050 clients, 484 of which had ARR of more than $100,000, up from 408 in the…

[Operator instructions] And our first question coming from the line of Koji Ikeda from Bank of America. Your line is open.

Hi, guys. Thanks for taking my questions. Really nice quarter here. A couple from me. Wanted to firstly ask you kind of on your last comment there on the guidance or I guess, first look on the 2023 revenue growth. 20%, that's a really nice number. I guess what are you seeing maybe in terms of the bookings trends or the pipeline or end market demand trends that's really giving you the confidence to give this number today?

Yes. Koji, this is Steve. I think that we are seeing just strong new sales activity across the board. And as you would note, we did raise our NRR range a couple of points here and feel like we're getting good contributions, both from new logo sales and from cross-sells and upsells. And we've talked before about some of the kind of uneven revenue you see from things like our subscription license business and we're starting to come to the end of some of the impact of that, that you would see, given all the cloud growth we've had over the last few quarters. So we're just feeling like that's the likely place we'd be and thought we'd just put it out there at this time.

Got it. Got it. And then just a follow-up. On that net revenue retention, the guidance range up to 110 to 114, up from 108 to 112, thinking that's for the total business so that would imply that cloud NRR, the kind of the range is much higher than that. So I was wondering if you could unpack maybe that cloud NRR piece. Is there anything from a specific product or vertical that's driving the bulk of that kind of increase in the NRR expansion range? And do you view those drivers to be the same over the medium term here? Thank you for taking my questions.

Well, nearly all of our new sales is cloud, whether it's new logo or NRR upsell/cross-sell. So it's the same either way. I think we're seeing strong contribution from financial services and from professional services, and so it feels balanced and our markets feel pretty solid right here. John, feel free to add to that.

I think that's right. The firms that we're calling on are continuing to execute the digital transformation programs that they put in place. They want to modernize their operation. They historically have been underserved by the traditional horizontal software providers, and they see us increasingly through references and referrals across the industries as the player that's bringing the modern cloud platform to them. So I think we're starting to get some real momentum here in user adoption, in cross-sells, in upsells, and we're just growing in confidence that this is a long-term trend.

Thanks, John. Thanks, Dave. Thanks for taking my questions.

You bet.

Your next question coming from the line of Kevin McVeigh with Credit Suisse. Your line is open.

Let me add my congratulations as well. Just really, really exceptional results. I wonder, can you give us just some context, I mean I know you're not necessarily tied to M&A or kind of IPO activity, but some of your clients are, yet you're seeing acceleration in the adoption. Is it the scope of things that they're focusing on that's driving that? Or just any puts and takes just given the current environment because the fundamentals are strengthening despite the market volatility that a lot of your clients serve.

Thanks, Kevin. Yes, the core of our end markets are the private capital markets, which is a secular growth industry of 20%, give or take, that has sustained itself even through the economic cycle past couple of times. So we're selling to a growth industry that has more and more dry powder. And multiples go up and down, but they're investing through those. And then the advisory community around those investors are helping them to make those deals, whether it's the initial fund formation or deployment of capital or disposing of assets at the end of the holding period and realizing some return on those. And all of those factors are kind of at the center of our growth pattern. And then we have a whole set of expansion capabilities within all of those advisory firms as well for some of their other activities. So over the course of our company's history, we've grown right through the whole economic cycle two or three times. And I think the long-term trend for the private capital markets is to gain traction on the public markets as a form of investment, and we're very well positioned to take benefit from that.

That's super helpful. And then just my follow-up was the Microsoft partnership and KPMG seem really, really interesting. Should we expect other partnerships like that because it feels like that's driving a structurally higher level of client engagement in terms of just the spend. And without getting too specific, are there other examples of where we should expect that type of collaboration going forward?

We're very excited about both the Microsoft and the KPMG partnership. And as you might recall, as we were coming public, one of the things we were talking about is we got more traction in the marketplace and got more scale, we would be able to form relationships with some of the larger strategic partners in the market, and I'm very excited that we're at a stage now where that's starting to happen. And you're right, it's helping us to have a higher level of engagement with the firms, particularly the large complex global institutions where there's just a huge upside for us to sell through our platforms to all the different components inside one of these big global institutions. And one of the things that we've talked about is that just within our top 100 clients, although we claim them when we win the logo in some form, there's $1 billion of additional upsell and cross-sell that we can do if we never sold another logo beyond our initial 100 that we have today. So building out this ecosystem of capability to help us tie ourselves deeper and deeper into these large firms is going to support our growth there. We will continue to look for additional partnerships as we scale. We're not announcing anything like that today, but it's part of our growth strategy to build out our ecosystem and to get a rich ecosystem that gives the big firms more and more support options in the way that they work with us.

So just a really, really amazing job. Congrats again.

Thanks very much.

And our next question coming from the line of Alex Sklar with Raymond James. Your line is open.

Thanks, John. Maybe to start, I wanted to ask about the new Intapp document solution for legal that you all announced this week. It sounds like there might be some repackaging of solutions that you had plus acquired with Repstor. But is that solution targeting kind of the larger document management system opportunity? And can you provide any color on kind of the value proposition, particularly for your existing legal customers?

Sure. So this absolutely was the expansion of some of the technology and expertise that we acquired with the Repstor acquisition that we did just before we came public last year. As you will recall, we've done seven acquisitions over our history, and we're going to look opportunistically at M&A in our future. This particular one expanded out our platform into areas of Microsoft Office, Teams, 365, SharePoint. And one of the things that we've discovered is that as is our tradition, our client users in many of our firms, in this case, from the law firms, the outside council law firms who circulate in the industry and go into sometimes in-house corporate legal departments, experienced the technology that they had there and said, "Wow, we could really use what Intapp is bringing to market in this area." And a lot of the corporate legal departments have not had great success with the large corporate document management systems. They have made a big commitment to Microsoft Office 365 and Teams. They want the collaborative experience and they want it embedded directly in the working environment that most of them spend their days in, which is Outlook and SharePoint and Teams in those systems. And so our approach to this whole category is to leverage the environment that the firm's professionals are already working in, in this case, the company's department lawyers already working in. And the solution there is something that's easy for them to adopt. It's something that we can get through the IT departments there because they're already committed to Microsoft in a big way, and it brings a lot of value quickly to the users there. So we're excited about this. It's a good example of the way that the professionals across this deal-making ecosystem circulate a little bit. And historically, that's been our market expansion strategy is to follow the clients and follow the demand and bring them products that releverage the platform that we've already invested in.

Okay. That's great color. And as a follow-up for you, Steve, just maybe following up on Koji's question as well, the 20% outlook for 2023 look – is really impressive. As the kind of comps get harder here post the Repstor acquisition, it does look like it's an acceleration versus what's implied for the fourth quarter guide. I just want to see if there's anything timing-related there you could call out.

Well, I'm not sure I completely followed that, exactly how you phrased that. I think that this is just how we feel it's looking right now going forward and thought we would put it out there. I mean, the fourth quarter will come. When it comes, I think we've suggested in the past, there are some interesting comparisons quarter-over-quarter, particularly as it relates to our subscription license business that are sometimes a little tough to work through, and that will be another one in Q4. But as I said, after that, I feel like with our growth in cloud, given the percentage of our overall mix and the way this is going, I think that will start to be less and less a factor for everybody as they try to model our business. So that would be helpful and good.

Okay, great. Thank you.

And our next question coming from the line of Parker Lane with Stifel. Your line is open.

Hi, guys. Thanks for taking my questions. Just looking at the target again for next year, how much of that considers migrations of the base versus net new? Are you seeing any acceleration in the pace of customer migrations? Or did that held really steady here?

No. I would say it's pretty steady. We're still at sort of low single to mid-millions per year kind of steady cloud migrations, again, at the moment at the pace that makes sense for our client base and that continues. And so, no particular acceleration there. It's the same consistent pattern we're seeing for now.

Got it. Understood. And then nice growth in the $100,000-plus customer cohort over the last year. Are you seeing larger and larger organizations moving into that cohort? Or has it really come from a balanced approach of those customers that have been with you for a long time, moving up into the cohort as well as your sales teams going out there and capturing more of the large sale opportunities?

Yes. I would say it's a good mix of both. I mean, John, you might want to add color, but I think we do see both. We land – we can land heavier at $100,000-plus for sure and we can also grow clients over that amount as part of an upsell or cross-sell. So it's a good mix.

Got it. Appreciate the color. Congrats on the quarter.

Thanks.

And our next question coming from the line of Arvind Ramnani with Piper Sandler. Your line is open.

Thanks for taking my question. Good set of results. Just a couple of quick questions. As far as like kind of the macro environment and sort of potential for recession, I mean, have you all kind of thought of that? Is that – any of those things, kind of macro factors, kind of incorporated as you think about the 20% growth for next year?

Well, I'll start and maybe, John, you can elaborate. I mean we're certainly mindful of what's going in the market for sure and the threats of recession and so on. I think – and we're thinking about that. But as John said, we are seeing strong momentum in the business. The spend on technology for our solutions for our clients is a relatively small part of their fairly profitable P&Ls, and they have – they are – the digital transformation trend is a strong one, and it's a value-added thing for our clients to be doing and they're doing it. So we're mindful of it but I think we feel relatively good about where we are right now. So yes, I have considered that for sure.

Okay. Perfect. And then the other thing is from a product development perspective, I mean, you clearly rely on technical talent. How has kind of the talent environment been with some of the capacity being kind of sucked out of this Eastern Europe and Russian region? Are you still able to like recruit and retain your talent? Just if you can comment on that, that would be great.

Yes. There's definitely a tight talent market for technical talent in particular, we're looking out there. One of the reasons that we are excited about some of the partnerships and some of the other things that we've talked about is that we're growing the ecosystem. It gives us more access to resources to help meet the demand coming from all these firms. We're also recruiting aggressively ourselves. It's taking a little longer to get people in this environment, obviously, but we're doing it. So I think that's going to be a continuous part of our project, to make sure that we are continuing to focus and get the best possible talent and get them into the company and get them helping us to execute the vision. I will say on the flip side, we've seen some excellent, excellent talent come to the company over the past few quarters, some from even our competitors or our clients who see the progress that we're making and the brand that we're establishing in a lot of these very prestigious end markets that is very attractive. And so folks are having a lot of success joining us, and I think that's going to help us even in a tight market. But it's something that we've got to pay attention to.

All right. Perfect. And if I could just slip one more in. Just given some of the valuations coming in, are you kind of looking at sort of the opportunity for M&A? Or is it not like a big priority now?

Well, I would say, look, we're always looking. That's part of our – it's one of the drivers of our business over time, as John said, and you can see and know. But yes, in a market like this, it's kind of an interesting one to do deals, I would think. But we are always looking, and I would say there's nothing in particular here that we would talk about, but it's always part of the program to keep looking.

Perfect. Thank you very much.

And our next question coming from the line of Terry Tillman with Truist Securities. Your line is open.

Hi. This is Connor Passarella on for Terry. First one here. So you've mentioned that you're seeing some solid momentum with new logos. I'm just curious if there's been any shift in terms of maybe where you might be landing within the client organization. So as you gain traction, you kind of – do you kind of find yourself speaking more with senior management at client companies to start to realize the importance of a cloud transition on an enterprise scale?

Yes. Thanks, Connor. It is true. We are – as we grow and grow within many of the clients that we're working with, increasingly talking with more senior people inside the organization who view the cloud transformation as an important component of an overall strategy of modernization for their firms, that has several benefits. They want to become more efficient operationally and economically. They want to inform their professionals with better data about the markets that they're competing in. They want to arm those folks with better insights to make wise investment decisions and provide the right kind of advice to their clients. And there's a talent war as well. I mean all of our end market firms are competing in their own version of the talent war. And the current generations of people coming into these firms want to work in a modern, cloud-enabled way. And so there's sort of macro trends there that are driving these folks to continue to see this as a strategic decision to modernize the firm and execute the digital transformation program. So at all size of the firm, from the smaller ones, the midsized ones, the larger ones, we are moving up in the audiences that we're calling on, to talk to people who have more of a strategic view, which I think is one of the reasons why we have some confidence that this is actually a meaningful trend over the long term, that these firms are just going to have to get with the times and get systems in that help them to compete and create the right environment for their people.

Got it. Appreciate the color there. Maybe just one quick follow-up. So as you've been adding more headcount to support and client success teams, what kinds of use cases are you seeing as a result of maybe stronger client relationships? And maybe how have your investments here helped to accelerate expansion so you can show your value faster and grow more quickly?

Yes. Thank you. So we are growing our client success and support teams as well as our services group as well as our account management group. We've been doing that consistently each quarter as we've grown the business. And part of what we do is engage with each client on a regular basis to help them explore additional areas where they can deploy the system. It's part of our take care of them, client success efforts. It's also part of our account expansion, land-and-expand strategy. So specifically, we're seeing opportunities in relationship intelligence. We're seeing – this expansion in the real estate area came directly from this kind of conversation with some of our multi-strategy private capital firms that needed help with their real estate investment groups. We've done the same thing in this corporate legal expansion that we've done, where the clients themselves have pulled us in to go pursue that market segment with some of the solutions we developed for the outside counsel firms. So there's a lot of organic land-and-expand momentum inside our business based on the operating model of how we engage with folks. The team has just done a tremendous job in our account management program over the past three or four quarters as we've invested more in both account management and services and client success and support to try to grow our footprint inside these firms.

Perfect. Appreciate the color. Thanks.

Thank you.

[Operator Instructions] Our next question coming from the line of Brian Schwartz with Oppenheimer.

Yes. Hi. Thanks for taking my questions this afternoon. John, I was wondering if you could just give us an update, provide any color on what you're seeing in terms of the demand activity, maybe the pipeline momentum in your international markets. You did talk about some real nice customer wins in your introductory comment. But can you shed any light into kind of what you're seeing in terms of the customer discussions and the pipeline momentum in your international business? And then I have a follow-up for Steve.

Great. Thanks, Brian. Yes, as you all may recall, the company does about 30% of its business outside North America, and we've been consistently growing. Originally, we started off in places like the UK. and Australia, but we've been consistently growing in Continental Europe, in the Middle East, in Africa, in Asia. And we've been adding clients in each of those areas and growing the clients that we've won in each of those areas in a very similar pattern to what we started doing in the United States and North America. So the international program is an important aspect to our growth strategy. It's a meaningful pillar for keeping our growth rate up. It's growing about the same rate as the rest of the business, so it's kind of in line as we continue to grow. But it's a great opportunity. We wanted to highlight some of that and some of those examples.

Thanks for that color, John. And then, Steve, the follow-up question I have, just wanted to ask about the services capacity here for the company. You mentioned in your introductory comments that you outsourced some of the services work here in the quarter when you were talking about the margin. I'm just wondering if that is lingering. Or I guess the question is, how do you feel in terms of the services capacity, being able to implement all these new customers in a timely fashion versus having to outsource more of that work? Thanks.

Yes. Yes. No. I think we feel pretty good about our capacity over time. And we are hiring steadily and regularly to keep pace with the growth in the business and then the growth in the services business. This may be have been a little bit temporary here right now. We had some reasons to sort of do a little more subcontracted than we might normally do this particular quarter. But I don't expect that's a permanent thing at all. I'm pretty comfortable with our capacity. It's not all that hard to get the services people we need in, but we have to keep at it. As John said, it's a tight market.

Thank you. And I'm showing no further questions at this time. I would now like to turn the call back over to Mr. John Hall for any closing remarks.

Okay. Thank you, everyone. We appreciate your attention and your questions. We have a great Q3 behind us and we're very excited about the continuing momentum. Thanks for your time today, and we'll look forward to talking to you all next quarter.

Ladies and gentlemen, that does conclude our conference with today. Thank you for your participation. You may now disconnect.