Good afternoon, everyone. I would like to welcome you all to the Procore Technologies, Inc. Full Year 2023 Q1 Earnings Call. My name is Rebecca, and I'll be your event specialist, operating today's call. After the speaker's presentation today, we will conduct a question-and-answer session. [Operator Instructions]. I would now like to turn the conference over to Matthew Puljiz. So, Matthew, please go ahead when you're ready.

Thanks. Good afternoon, everyone. Welcome to Procore's 2023 first quarter earnings call. I'm Matthew Puljiz, VP of Finance, With me today are Tooey Courtemanche, Founder, President and CEO; Paul Lyandres, CFO; and Howard Fu, SVP of Finance. Further disclosure of our results can be found in our press release issued today, which is available on the Investor Relations section of our website, and our periodic reports filed with the SEC. Today’s call is being recorded and a replay will be available following the conclusion of the call. Comments made on this call may include forward-looking statements regarding our financial results, products, customer demand, operations, macroeconomic and geopolitical conditions. You should not rely on forward-looking statements as a prediction of future events. All forward-looking statements are subject to risks, uncertainties and assumptions and are based on management’s current expectations and views as of today, May 3, 2023. Procore undertakes no obligation to update any forward-looking statements to reflect new information or unanticipated events, except as required by law. If this call is replayed reviewed after today, the information presented during the call may not contain current or accurate information. Therefore, these statements should not be relied upon as representing our views as of any subsequent date. We will also refer to certain non-GAAP financial measures to provide additional information to investors. A reconciliation of non-GAAP to GAAP measures is provided in our press release. And with that, let me hand it to Tooey.

Hi, thanks Matt, and welcome everyone and thank you for joining us today. I'm going to begin by expressing my sincere gratitude for the team's hard work to deliver our Q1 results. So, let me dive straight in and share a few highlights from the quarter. In Q1, we grew revenue 34% year-over-year and we added over 600 net new customers reaching over 15,000 total customers by the end of the quarter. We continue to demonstrate durable growth, while improving operating leverage in the business. And, for the third year in a row, we were named one of G2's Best Global Software Companies, reaching our highest ever ranking of number 14 out of 100. This is a testament to the value that our platform continues to deliver to the construction industry. Over the past 90 days, I have spent a lot of time on the road, and had the privilege of meeting with our customers and shareholders all around the globe. Investors often asked me about the broader demand environment, and I continue to stay close to our industry owners. Our customers continue to share that their backlogs remain healthy, and that in many cases they're busier now than ever. And, that the labor shortage is still the biggest challenge in beating demand. Additionally, in aggregate, third party external indices that we watch have remained stable. However, we did notice a new dynamic surface in Q1. Specifically, we saw some cautiousness on construction volume commitments, but work that hasn't yet been awarded. We saw this within a small portion of our customers that came up for renewal in the quarter. Let me give you a hypothetical example, which I believe will help you illustrate this. Imagine that you're a construction company here in the U.S. You're hearing in the news…

Good afternoon, everyone, and thank you, Tooey, for the kind words. As Tooey indicated, today marks my last earnings call as CFO. It has truly been a privilege working with all of you. And I want to thank you for the partnership as I embark on my next chapter at Procore, leading our Fintech organization. Now on to the quarter. Today, I'll quickly recap our results, share some color on our performance and hand it over to, Howard, to conclude with our outlook. Revenue in Q1 was $214 million up 34% year-over-year. Our non-GAAP operating loss was $4 million representing an operating margin of negative 2%. And our key balance sheet metrics, specifically short-term RPO and short-term deferred revenue continued growing 30% or greater year-over-year. Our Q1 performance was well rounded, in that we saw growth across multiple facets of the business. I'd like to take a step back and share some additional color on our performance. First, you may recall back in Q4, we noted a sequential drop in net new customer adds from Q3, primarily driven by higher logo churn within our smallest customers. As we shared, this did not have a material impact on our Q4 financial results given dollar churn performed as we expected. That said, we wanted to call out that what we saw in Q4 is not yet proving to be a trend, as we saw net new customer adds return to historical lows. Second, as Tooey mentioned, This quarter, we started to see a small portion of our customers exercise some cautiousness in their construction volume commitments. Although this wasn't apparent in our financial results, in the interest of transparency, we wanted to provide some color on what we saw. We believe this reflects a heightened sense of conservatism within a minority of…

Thanks, Paul, and thank you to everyone on the call. Before I share our outlook, I want to remind folks of our guidance philosophy which remains unchanged. We set our revenue and margin guidance at a level that we have very high conviction we can deliver on in almost any environment. Specifically, our guidance not only takes into account the cautious customer sentiment we observed this quarter, but also allows flexibility for it to become further pronounced. With that, here is our guidance for Q2 and full year 2023. For the second quarter of 2023, we expect revenue between $216 million and $218 million representing year-over-year growth between 25% and 27%. Q2 non-GAAP operating margin is expected to be between negative 7.5% and negative 8.5%. For the full year of fiscal 2023, we expect revenue between $908 million and $912 million, representing total year-over-year growth between 26% and 27%, which is an increase of $12 million from our previous full year guidance. As Paul noted, given the early stages of our Procore Risk Advisors insurance offering, we are not expecting material revenue contribution from that initiative this year. Non-GAAP operating margin for the year is expected to be between negative 5.5% and negative 6.5% which represents an improvement of 100 basis points from the guidance we issued last quarter and implies year-over-year margin expansion of 450 basis points. As Tooey and Paul indicated, next week, I will be starting my next chapter with Procore as CFO. Over the last two years, I have had the opportunity to work with Tooey, Paul, and the leadership team. And I have developed an appreciation both for everything Procore has accomplished over the past two decades, as well as the tremendous potential ahead. I look forward to working closely with all of you in continuing to advance Procore’s mission from my new capacity as CFO. To close, I'd like to thank our customers, partners, employees, shareholders and the industry as well as the communities we serve for giving us this opportunity. Now let's turn it over to the operator to begin Q&A.

Thank you. [Operator Instructions]. We have the first question in the phone line is from Sterling Auty of SVB MoffettNathanson.

Yes, thanks. Hi, guys. Paul, what a way to finish as CFO with the mic drop on these results, but maybe for my question, I'll turn to Tooey, you talked about broader indices for construction being stable. What would you say to investors in terms of what should they be looking at in terms of these broader industries to determine whether they should be encouraged or maybe concerned about the performance Procore as we move through the remainder of the year?

Yes. By the way, Sterling, great to hear from you and great question. With the first thing I would point out to anybody is, don't over index to any one particular data point. We look at a lot of external factors as well as internal when we kind of come up with our overall sentiment. But I will say when I look at the quarter, the conversations that we've had with the customers have all been very largely positive as they have been in the past. Backlogs remain strong, labor shortage is still the number one challenge. But as I mentioned in the opening remarks, there are some kind of mixed signals. A great example of this is I was talking to a customer the other day and I asked him about their backlog and he literally referenced a tsunami of work, that he has to deal with. But then in the follow-up call to another customer as they were talking about their backlog, they said it was all good, except they had one project that had was unable to obtain financing after talking to many, many banks, and he was convinced that a year ago this deal would have been financed. So, there's all these different contradicting data points, but we haven't heard anything from our customers that indicate that these challenges are widespread or systematic. But we -- when we come back to thinking about what we are thinking, I want you to know that we are confident in our ability to deliver upon what's in our control, but we do, just like all of you do, look at these external data points, but we only try to interpret them in aggregate.

That makes sense for me, just one quick follow-up. So is that concern -- you mentioned that example about financing, is it a tighter credit market that's more of the concern or would it be concerned that in a cost savings efforts that customers would decide to either delay or cancel projects that are currently in AGC's backlog?

Well, let me zoom out a little bit, Sterling, you say that this is a single example in many, many phone calls that I had. So, I don't know the specifics behind that particular deal. I just know that the sentiment was that this deal might have been financed last year when it wasn't financed today. But again, that's just one small data point, but I'm trying to illustrate the fact that there's so many -- the industry is so big and there are so many different sectors that everyone's experiencing it slightly differently.

Understood. Thank you.

Sure, sir. Thanks.

We now have DJ Hynes of Canaccord.

Hey, guys. Thanks for having me on the call. Great quarter. Paul, maybe one for you just sticking with some of the headwinds or the pockets of challenge that you're seeing. What are you seeing in terms of duration on new deals? And I guess the reason I'm asking is I'm just trying kind of triangulate around what we're seeing in RPO growth versus CRPO growth. I mean, the latter is obviously much better. Is it duration playing into it? Is that where there's some of the conservatism?

When you look at the long term RPO, which I imagine is what you're referencing here. What I would tell you is there's a component of it that comes tied to that conservatism that Tooey was talking about, but I would not over index status the meaningful driver of it as much as long term RPO has a lot of moving variables around the timing of multi-year renewal. When those come up, there is traditionally a lag between Q4 to Q1 in general. And so for the most part, what you're seeing in long term RPO isn't something that drives concern. But there is an element of it of customers being more cautious to sign up for larger longer term commitments.

Yes. Okay. And then maybe a more strategic question. So quality and safety, I think one of your more mature products. So part a, is like where are you in terms of attach rates there? And then more interestingly, part b, does the entrance into insurance and kind of potential to deliver these data driven cost savings in any way accelerate adoption of quality and safety in the base?

Great question. So look, I'd actually bring you back to the Investor Day we had a long time ground break where we talked about what the share of our wallet looked like in terms of which products drive which amount of our overall ARR. And if you'll recall, the narrative we've always given is the older a product is, the more penetrated is in our marketplace -- among our customer base and quality and safety is one of our oldest products. So we have a pretty healthy majority penetration there and we do believe that will not only help us as we think about the data we can provide to carriers and partners as we go about this insurance initiative. But to your point, it does in our mind believe there we create this opportunity to bring the rest of the folks along for that ride with quality and safety because we do believe that the more you adopt these solutions and the more we can prove to carriers that you're adopting best practices, the better rates will be able to get you. However, keep in mind, it's not unique to quality and safety. There's data and project management, there's data and financials, there's data across multiple different products that we believe will be valuable in time.

Yes, DJ, just to think of it this way is that because we're the risk management business primarily with our software, all of our products add to contributing to understanding risk. So there's a benefit for insurance folks to encourage the adoption of all of our product suites.

Yep. Makes sense. Thanks for the color guys.

Yeah. Thanks, DJ.

You now have Saket Kalia of Barclays.

Okay. Hey, guys. Thanks for taking the questions here. Tooey, maybe just to change it up a little bit from the environment. I'd love to talk a little bit about the competitive landscape. I think you've talked about this a little bit in prior calls. Just maybe some slight shifts in the competitive landscape. Curious if you could just give us an update on that. Particularly as maybe there are, I don't know, some changes in the macro backdrop as well.

Yes. So, Saket, good question. Here's the kind of the short answer is that there really has been no major updates from last quarter like we haven't seen anything significant change at all. One of the things I pointed out last quarter, which I want to restate was that in 2022, we saw one of our largest competitors less frequently than we did in 2021. But we won more ARR against them and maybe that's the change of referencing that we had seen, which again is a testament to the value I think we provide the industry. But I want to kind of be very clear. We have not seen any competitive dynamic changes that are meaningful. And remember, you know this probably very well that 50% of the folks we talk to every day are coming from analog pen and paper greenfield opportunities and it's not a competitive dynamic. So not much to report on that front.

Got it. And yes, that was the one that I was referring to. Very helpful update. Paul, maybe for you. I know it's hard to break out the exposure that Procore has. So I think you said 70 -- or I think Tooey said 70 categories or subcategories of construction. But I think we mentioned something like 5% or under 5% from office construction. I don't want to put words in your mouth that I know it's really hard to sort of break this out, but Is that industry mix a good proxy for Procore?

Yes. So look, I would clarify the 5% we're referencing is construction in the industry not specific to Procore's customers. But along those lines, I would tell you what we've shared with investors over the years remains consistent, right, where we don't have meaningful exposure is kind of single family residential, that arm of the world. And so as long as you back that mix out of how to think about it, I would tell you looking at the distribution of those 70 categories is the best proxy we can give you the how to think about the distribution of our own business and it's why we consistently point back to aggregate of construction volume being the critical metric to watch.

Very helpful. Thanks guys.

Thanks Saket.

Thank you. Your next question comes from Brent Bracelin with Piper Sandler.

Good afternoon. I wanted to go back to just the diversification of the model here, just as we think about the strength in RPO that really stood out to us particularly given an environment where you had, I think residential starts down 29%, overall market down 9%, non RAS goes up 11%. So walk us through the business model. Is this just more diversified relative to your ability to sell more products into the base? Are you just seeing a shift in where the constructions coming from? Any color to help us pinpoint kind of the strength you're seeing versus what looks like a challenging kind of cyclical industry kind of headwinds. I get those mixed signals. We're going to be in an environment with mixed signals for a while but in the quarter pretty good strength here, trying to understand why?

Yes, I mean, look, you kind of spelled it out when you started to describe the numbers you have seen, right. We saw residential take a pretty meaningful hit where you saw non-residential actually show strength in resilience. And what we were kind of trying to call out what we were speaking to earlier in his remarks is when we really think about Procore, we certainly have meaningful business within the world of multi-family. So I don't want to say we don't participate in residential. But if you actually go carve out multi-family, its numbers will look very different than the broader residential category. Where we are really playing is in that non-residential world and that's why I bring it back to say the strength and resilience of Procore's business has to do with the fact that our customers touch all of the categories that make up non-residential and they themselves manage a very diversified book. And so we have the benefit of really going alongside with them in this journey of watching the industry shift, but watching overall construction volume continue to increase. And so that is obviously a very healthy contributor for us in terms of that CRPO. But I don't want to diminish that we are continuing to see good success in that cross sell dynamic and the ability to drive further penetration with more of our products. And so the two of those things certainly combined contributed to that success.

Helpful color. And then just one quick follow-up as we think about the transition, Paul, to Howard, you're obviously going to be entering a new role next week. I appreciate the low bar you're creating for yourself talking about [Indiscernible] from Fintech services. I look forward to a conversation with Howard next quarter on contribution. But in all seriousness, as you think about the portfolio, growing portfolio of Fintech services, risk advisers, Procore pay, materials financing, PCN in there. What do you spend your time on next week? What are you most excited about relative to what impact you can have dedicating your attention to those three, four areas? Thanks.

Yes, look, that's the wonderful thing about the transition. I'll answer on my half in the middle and let Howard speak to it as well. I'm going to be setting my time across those different portfolios. I think for us, the driver of this decision in this transition, what we had talked about in the previous call really comes back to this idea that we've got a really deep bench, obviously, tremendous amount of confidence in Howard and the finance team. And that there is just a really big opportunity here to go focus and dedicate that energy to where I can have the biggest impact. So pretty excited to kind of focus, but I might have taken Howard questions.

No, that's okay. Thanks. So, I and Tooey continuing to be very excited about where Procore is going. A couple of things I want to make sure I call out is that look for better or for worse part, I've been joined at the hip over the last two years. And so we are very aligned in terms of where the business is going from a strategic operational and financial standpoint. Specifically about where I'm going to focus my time, I typically would break it up into three categories and there's a lot of different directions to go in those different categories. First, is around operational excellence. And this ties back to what Tooey has been talking about in terms of efficient growth. The second to your point is around making sure that we have lined up monetization across both the short, the media term, the short term, the middle term and the long term. And then to connect both those two things together, the third category is really about capital allocation in terms of where we deploy our resources by geo by product and all across of the different functions within the company. And that is actually really a continuation of what we've been already doing and what I've already been focusing over the last couple of years along with Paul and Tooey and the rest of the leadership team.

Helpful color. Thank you.

Thank you.

We now have Brent Thill of Jefferies.

Thanks. Tooey going back to some of the headwinds you started to see, can you just give us a sense of the magnitude or Are there any commonalities in terms of where you saw that? Did you see it later in the quarter earlier in the quarter? Just any additional color there? And I guess for Paul and Howard, your guidance is above the magnitude of the beat. So many are asking kind of the confidence of raising above the magnitude of the beat what's enabling you to do that? Thanks.

Sure. Well, I'll start with the trends, which I will tell you are -- we don't see any at this point. So the commonalities are really hard to tie together. But I think what you're doing is I really sympathize with anybody who is thinking about their business right now because if you read the news, there's a lot of reasons to be a little spooked about the economy. And so in general, we think it's just coming up in conservatism kind of across the board. But there isn't one segment, there isn't one geo, there isn't one stakeholder that's standing up.

Yes. And then to touch on the guidance piece, Howard mentioned this, I mentioned this in our overall call. The reason we're bringing up the theme of conservatism here is that we really want to be transparent with you all as to the various different data points we're seeing in our business. But when we set our guide at the beginning of the year, we were very intentional to tell investors that this guide factors in a macro environment that gets notably worse in time and we would still be able to hit against that guide. What we're telling you now is while we've seen some degree of cautiousness out there that we still have a lot of conviction in the guide we put out there, and that you all should feel very comfortable that even in a world where we see this consciousness get worse that we will still deliver on the guide we provided. Howard, anything to add to that?

Yes, just a couple of one small thing is just to echo that we are highly confident in hitting the guide. Keep in mind that we not only had that philosophy in Q1, but we have that philosophy in Q2 in addition to also continuing to raise our guidance on the top and bottom line. We still feel that way with that raise.

Thanks.

Thank you.

Your next question comes from Dylan Becker of William Blair.

Hey, guys. Nice job here. Maybe Tooey from a high level to the extent that repurposing or retro fitting some of the office dynamics you called out and how that plays into maybe broader sustainability and ESG initiatives. Is that coming up in customer decisioning. I know there's a lot of historical waste in construction. You've got a complex regulatory environment and in layering in kind of visibility and transparency. But is that something that customers are prioritizing and kind of maybe driving some of the decisioning process here as well?

That's a great question. So we're seeing a lot more of this outside of the U.S. market, so EMEA in particular where this is a topic that will come up with conversations with our customers there. But I think you're right, which is Procore has been trying to solve this challenge of the $500 billion worth of waste and rework that happens every year. And that is a tremendous impact on both our economy as well as our environment. So we've been heavily focused on it. We had enterprise customer advisory board meeting recently. And I would say that about 5% of the time was talking about ESG tracking and management. So it is out there, but it's still relatively muted in the North America market, but I think over time, we're going to see a lot more of this.

Got it. That makes sense. And maybe that kind of flows into the second question on international. I know kind of a progression and path to improvements here, but thinking about maybe that regionalized segmentation and maybe how partners can play a role in supporting some of that broader productivity ramp you guys have called out that you expect layer in overtime as well?

Yes, look, I think we've talked about this in the past in terms of how we think about partners internationally. And the honest answer is we see it similar to how we approach the U.S. market in the sense that we will meet the customers where they are. And so different markets have a different motion in leveraging partners and that's true of resellers, but it's also true of integration partners. It's true of lots of different components of how these industries go about digitizing. And so as we think about our international markets, we're very thoughtful to understand how the different markets need to be served differently and we are prepared to meet the customers as I said where they are.

Got it. Helpful. Thanks, guys.

Thank you.

Thank you. We now have Adam Borg with Stifel.

Awesome. Thanks guys for taking the question. Maybe two. First, just on the international business going back to that, where are we with those the operational changes that we've been talking about and when we think when could we expect this improvement? And I have a follow-up.

Yes. So we mentioned this last quarter. So I want to say for this quarter there are no major updates. We continue to make improvements, which I'm very pleased with. But this is one of those things that's not going to be fixed overnight. So as we shared before, we expect to see improvements towards the end of this year. But there's nothing kind of significant right now to call out. But when there is, you'll certainly hear it from us.

Awesome. Thanks so much. Maybe just a quick follow-up. You talked obviously a lot about the pockets of macro concern. Just curious to first call it four plus weeks of the second quarter and the month of March. Any change in the demand environment overall or any change in those macro commentary that you talked about earlier? Thanks so much.

I tell you there's nothing meaningful to call out there. We're still very early into Q1 and we will keep you posted when we – sorry, Q2 and we will keep you posted when we report here in 90 days.

Awesome. Thanks so much.

Thank you.

Thank you.

We now have Ken Wong of Oppenheimer.

Great. Thanks for taking my question. Tooey, we touched on financing earlier and we all see the headlines with the regional banks. I guess, do you have a view on what that impact could be, what is the consolidation in the banking sector potentially what that impact is on your end market customer? And then to Paul or I guess maybe you as well Tooey, do you potentially see any pullback from regional bank lending to construction as a potential opportunity for your own capital lending aspirations? Thank you.

So on the first point, yes, this is not a topic that has been a trend that I've got enough information on to speak in terms of something that's going to impact Procore. But again, we do hear these anecdotal stories, but they are still somewhat few and far between.

Yes, I think we really -- it's one of the mixed signals there's a lot of positive trends, there are some that provide cautiousness and we are committed to keeping you all posted as we continue to learn more. But at this point, there's a lot of contradicting comments out there. In terms of your other question on the pullback of banking, I think I can be very simple. No, in no way. Our material financing program is a very unique specific program. This is not a business. We do not plan to become a bank lender.

Got it. Appreciate the color there.

Sure.

Your next question comes from Kash Rangan from Goldman Sachs.

Hey, guys. Congratulations on the quarter. Tooey, Paul and Howard, congratulations on your new role. It's pretty remarkable you guys are putting up these numbers whether it's a good economy, bad economy, whatnot. If you get a construct or deconstruct the growth algorithm, so let's say commercial construction is going to grow 4% or 5% and Procore is going to grow I don't know, pick a number 30%. If you can just help us understand what are the broader parts of the multi $100 billion construction industry that you're particularly leveraged as we can understand what really drives your growth, because I think as Tooey has mentioned, it's very hard to not react to the headlines, slowing economy, you know, banks, lending less credit crisis, whatnot. At the same time you guys putting up, you added 609 new customers, which is more than what you added in Q4 typically software companies have the seasonality in Q1, but you're bucking this. So we can just deconstruct the growth algorithm, what are the, I think you mentioned, one out of commercial construction is -- office is one out of 70 subsets. Things like that. So we can cover the deconstruction of the growth algorithm, lift the left -- link the left extreme, which is the growth in the industry to the growth at Procore, that will be mighty useful. Thank you so much.

Yes, happy to take that one, Kash. I think this is the beauty of the business we have in the diversification of the industry. I'd bring you back to kind of that comments that I had made earlier in this call in terms of thinking about those 70 different categories and appreciating that we Procore are pretty diversified across those 70 categories. What that really means Kash is we are still super early days in the overall penetration of the overall TAM, where early days in the ability to cross sell and drive more products into our customers. And so in the arc of time, we continue to be bullish on the opportunity for the business. But the cautiousness components, the things we've seen with customers, they do create a mixed signal out there that can cloud the short term. And so the growth algorithm for us when you really think about it over time remains highly underpenetrated market that needs to digitize with tons of wallet share opportunity. We are more bringing the short term components of saying like, hey, It's an unknown macro environment out there and we have to be mindful of that.

So your point is that even if the industry grows slowly, you're gaining more share of that wallet, your customer count is, I don't know what it is, from $16000 but then it's dropping the bucket relative to number firms and so if you can grow horizontally, capture more of the customer base, while the customer base itself is probably not growing that rapidly. Is that the high level algorithm and then you have to your point the yield, you have certain basis points of the value of construction which you continue to gain share as you similar modules that the rough way to think about the growth algorithm for the company?

Yes. I think that's a good way to think about it.

Super high level. We'll deal into it another time when we speak talk to you. Congrats.

Thank you. We now have Matthew Broome of Mizuho Securities.

Thanks very much and congrats on the results guys. So I guess when you spoke about some customers being more cautious to sign up for those larger longer term commitments. Just so I'm clear, does that mean the question was coming from larger customers or was it – am I hearing that correctly or if you could clear that up?

Yes, no, I would tell you as we shared earlier, there wasn't any particular call out with respect to which type of customer, which segment of customer we saw that from. It was more of a reflection of we saw it in a small pocket of our customer base. Now it's worth reminding this was where this mixed signal piece really does come to play. Because we saw the share of our customers that grew their construction volume grow and represent a majority of our customers. And then we saw the share of customers that are downgrading also grow, which you can imply means the customers that renewed flat went down.

Okay. That that makes sense. And then I guess, how has activity been trending on the Procore construction network?

Yes. So by the way, it's an area that we're all very excited about. It is very much a big part of our connected strategy to bring everybody together on our platform. We are still building and we're still assembling trying to get everything coming together. There's no really new news to announce but you're going to be hearing more about it in the next couple of quarters. And it's something I'm particularly very excited about.

Okay. Perfect. Thanks very much.

Thank you. Appreciate it.

Thank you. Our final question comes from Jason Celino of KeyBanc Capital Markets.

Hey, guys. Thanks for fitting me in. Last question here on kind of that small portion of customers exercising the caution, given kind of the way your model works, if these customers do decide to true up later in the year, hypothetically they would pay more. So I guess can you just talk about like what the customers are evaluating and the puts and takes?

I mean you did a great job summarizing it there yourself, Jason, like that is the right way to think about it, right? Our pricing is based on overall construction volume of a customer that they're going to run through the platform. We will give customers volume discounts for signing up for additional volume. And so in an instance where a customer is proving to be more conservative, they're going to sign up for less volume, but they're going to pay a higher take rate. Which means to the extent they end up burning through that amount of construction volume sooner than their contract, they're going to end up upgrading in the middle of that cycle at higher take rates than they otherwise would have had they committed a larger volume upfront. And I think that's the benefit to our model and something that we're mindful of could be tailwind to us depending on where the world goes.

Okay, perfect. Thanks for the clarification. And then actually one quick one on sales and marketing. It looks like it was flat quarter over quarter and you're showing some really nice leverage. Just wondering if there was any hiring or sales investments that would got moved later? Thanks.

Our hiring in Q1 actually performed quite well. The other thing I'll remind you is we are – our broader hiring across the company not just in sales and marketing are very -- we're being very deliberate about who we hire, how we hire, when we hire and what we hire for. And that has been a trend that we've been on and a focus that we've been focused on since last year. So it's actually nothing new. And so we're actually seeing really good dynamics from a hiring standpoint. In fact, our attrition has actually performed really well in Q1.

Okay. Cool. Thanks, Howard.

Thank you. Operator?

Thank you. I can confirm we have no more questions, and this does conclude today's call. Please have a lovely day, and you may now disconnect your lines.