Copperleaf Technologies Inc

TSX:CPLF

Earnings Call Transcript

[Operator]

Good afternoon, and welcome to Copperleaf's Second Quarter 2022 Results Conference Call. [Operator Instructions] This call is being recorded on Wednesday, August 10, 2022. Your hosts today are Judi Hess, Chief Executive Officer of Copperleaf; and Chris Allen, the Chief Financial Officer.

Before we begin, I am required to provide the following statement respecting forward-looking information. During the call today, the company will make forward-looking statements that are based on assumptions, and therefore, subject to risks and uncertainties that could cause actual results to differ materially from those projected.

The company undertakes no obligation to update these statements, except as required by law. You can read about these risks and uncertainties in regulatory filings that were filed earlier today.

Also, the commentary today will include adjusted financial measures, which are non-IFRS measures. These should be considered as a supplement to, and not a substitute for IFRS financial measures. Reconciliations between the 2 can be found in the company's regulatory documents, which are available on sedar.com, or on our website. In addition, commentary today will include key performance indicators that help evaluate the business, measure performance, identify trends affecting the business, formulate business plan and make strategic decisions. Such key performance indicators may be included in a manner different than similar key performance indicators used by other companies.

And with that, I'd like to turn the call over to Judi Hess. Please go ahead.

[Judi Hess, executive]

Joining me today is Chris Allen, Copperleaf's CFO. On today's call, I will make opening remarks before passing the call over to Chris to review the financial results in detail. Following our prepared remarks, we will open the call to questions.

Strong tailwinds continued to drive growth in the decision analytics market in the second quarter of 2022. During the quarter, we successfully added new marquee clients and our existing clients expanded the use of our platform. Against this backdrop, annual recurring revenue increased 26% year-over-year, and subscription revenue grew 21% year-over-year to CAD 9.5 million, demonstrating the strength of Copperleaf's solutions and the significant value we provide to our clients.

As we have discussed on prior calls, there are multiple tailwinds that are driving our strong backlog and record pipeline, including extreme climate events, a global pandemic, the energy transition and geopolitical uncertainty. These factors have made the decision-making process even more complex. In this atmosphere, critical infrastructure companies are challenged to safeguard and evolve the resilience of their systems. As a result, operators are executing multi-pronged strategies, pursuing decarbonization and a 0 carbon grid, ramping up renewable resources, protecting assets from climate-related events, defending against cyber security threats as well as continuing to reliably deliver service to their customers.

To meet these diverse demands, critical infrastructure owners need a robust decision support solution to help them develop plans that will reduce vulnerability, enable innovation, ensure reliability, deliver on their strategic objectives, meet cost targets and alleviate resource constraints while remaining agile in the face of continual change. In recent months, the macroeconomic outlook has become more uncertain with increased geopolitical headwinds, supply chain disruptions and inflationary pressures. While the end market demand for our solutions remains robust as critical infrastructure owners continue to make near-term and multi-decade investment decision, we are not immune to these macro forces.

Recently, we have seen reduced IT resources at some client organization brought on by a tight labor market that have caused some deal delays. In addition, the lingering effect of exclusively building prospect relationships completely remotely has recently been mitigated with the return to in-person meetings and conferences, which provides stronger support to accelerate our sales and business development activities. Both current and prospective clients remain committed to adopting and expanding their use of Copperleaf products, driven by our exceptional solutions that deliver a high return on investment, optimize execution and enhance risk management. We continue selectively hiring to drive our growth, but we'll allocate capital prudently with ample consideration given to the uncertain economic environment.

The progress we have made hiring sales and enablement professionals over the last 2 quarters, and our increasing partner traction are important investments that will enable us to maintain course to achieve our long-term growth objectives. With a deep pipeline, a strong balance sheet and marquee reference clients, we continue to expand our leadership position in the emerging decision analytics market.

I would now like to briefly touch on a number of recent operating highlights. Our industry-specific solutions for the UK water market, Copperleaf H2O, continued to roll out in Q2 2022, with our team securing a significant new win at a water client during the quarter. Copperleaf H2O enables water company to establish a continuous investment planning and management process for the short term, medium term and the long term. We see tremendous potential for growth in this vertical, and are building a base of reference clients who can speak to Copperleaf expertise in the space.

Over a relatively short period of time, Copperleaf has become a dominant player in the UK water market with 7 clients, and we look to recreate this rapid start success with other industry-specific solutions. Our go-to-market model focuses on leveraging global consulting and services partners, who share our vision for exceptional client experiences and a technology-forward consultative approach.

Our partner ecosystem enables us to accelerate our expansion to new geographies and sectors, while reducing client acquisition costs and sales cycles over the long term. In the near term, we expect some period-to-period variability as we build and mature these alliances. Our alliance ecosystem currently includes strategic partners like Accenture, PwC, Capgemini, Mitsubishi Electric and Black & Veatch. And we will continue to expand this ecosystem over time.

During Q2, Copperleaf added a significant global energy and utility conglomerate headquartered in the United States into the Copperleaf community as a direct result of our partner strategy with Accenture. This win adds multiple companies to the Copperleaf community in the first phase of this implementation. Accenture will lead the deployment of an integrated solution comprised of Copperleaf Asset Investment Planning and the IBM Maximo Application Suite to deliver improved performance and risk reduction by optimizing asset investment decision from immediate corrective actions to the long-term investment planning horizon. This creates a model for future opportunities together.

In addition, our partner, Black & Veatch played a leading role in securing a contract with a large American utility, which gained Indiana Public Utility Commission approval for a CAD 2 billion grid modernization investment plan. The plan details how comprehensive investments in proposed transmission, distribution and economic development projects would deliver financial benefits to clients and the Indiana economy, while supporting greater use of renewable energy resources.

Using the Copperleaf solution, they were able to reduce the time to approval of this plan by 70%, while achieving 100% of the funding request compared to achieving only 75% of the funding request in the prior filing. We look forward to replicating this work alongside our partners at Black & Veatch to support our clients during the energy transition and the path to a more sustainable future. Our partner strategy is working. As we previously mentioned, over 50% of our bookings were partner influenced in 2021, and we look forward to driving additional business through these channels.

One of the benefits of our partner ecosystem is that they can bring us into deals, delivering bigger deals, delivering more client value and often expedite the process with warm leads. However, in the short term, introducing a partner can sometimes complicate the sales process as there are more parties at the table. We find, as these relationships mature, we have seen the sales process improve as we take those lessons learned on to the next opportunity.

Copperleaf Labs is another highlight this quarter. We continue to see strong engagement on the client-led discovery to shape our ideas and solutions. In Q2, we collaborated on 36 separate client engagements, which support our strategy of innovating together with the Copperleaf community. Through Copperleaf Labs, we are creating a virtuous loop of information exchange that drives the development of innovative solutions that can deliver increased value to our clients and ensures that we continue to unearth problems that our clients need solved.

Innovation is in our DNA at Copperleaf, and is driving our future. We continue to uncover new product opportunities by leveraging advanced AI machine learning and the next-generation technologies to address real-world challenges. We recently released version 22.2 of our product suite, which included more than a dozen new features, including native multicurrency support and new workflow visualization and process automation for reviews and approvals.

During this quarter, Copperleaf was granted 2 patents for our scenario functionality and our asset intervention bundling, which speaks to the novelty of the solutions that we are providing and strengthen our intellectual property position. Copperleaf decision analytics solutions address problems faced by companies across multiple sectors in the global economy. Although we are not immune to the macroeconomic environment, our clients were large critical infrastructure owners provide us with a degree of insulation, as they are making both current and multi-decade investment decisions in a more complex environment.

We continue to focus our growth in our core market sectors, adding new clients to our installed base and increasing the value we can deliver to our clients. And we welcome the return to in-person meetings and travel for conferences, business development activities and sales. We look forward to seeing more clients and partners face-to-face, which will help accelerate delayed deals and pipeline growth.

Copperleaf has a deep competitive moat that we've built over the last decade. The Copperleaf Value Model Library and the knowledge it encapsulates is coveted by our clients, prospects and competitors. Our community drives the network effect for both capturing knowledge and data. The Copperleaf experience is a true differentiator and is powered by our culture, which is unique. It delivers lasting partnerships with our clients. And together with our strong ROI has earned us 100% client retention rate for those who have implemented our solution.

We are the leaders in this emerging decision analytics market and continue to see sustained growth tailwinds and a large untapped market. We currently have a larger -- the largest sales pipeline that we've had at any point in the company's history, and we are excited about the opportunity ahead of us.

I will now turn the call over to Chris to review our second quarter financial results in more detail.

[Chris Allen, executive]

Excellent. Thanks, Judi, and good afternoon, everyone.

We are pleased to announce -- to report -- our second quarter results continued to deliver growth across our key financial metrics. Revenue for the second quarter was CAD 20.6 million, an increase of 23% from CAD 16.7 million in the comparative period, driven by an increase in new clients and the expansion of existing clients.

Subscription revenue for the quarter ended June 30, 2022, was CAD 9.5 million, an increase of 21% from the prior year due to the continued transition towards SaaS. Perpetual and term-based license revenue was CAD 3.9 million for the second quarter compared to CAD 3.5 million in the prior year. This was our first term license. And based on our current pipeline, we don't anticipate term licenses to be a factor going forward.

Subscription revenue represented 46% of our Q2 revenue, whereas perpetual and term license revenue represented 19%. These license revenues will vary period-to-period due to the size and timing of individual deals in addition to mix as our client base continues to transition towards SaaS.

Professional services and other revenue for the quarter was CAD 7.1 million, an increase of 33% from the prior year, and this segment represented 35% of Q2 revenue. Our annual recurring revenue at June 30, 2022, was CAD 40.6 million, a 26% increase compared to CAD 32.3 million at June 30, 2021.

As of June 30, 2022, our net revenue retention rate was 107%, and this percentage will vary period-to-period due to the timing of large expansion contracts within our existing client base and the mix between perpetual and SaaS expansion deals. Revenue backlog grew 9% at quarter end to CAD 93 million compared to CAD 85.5 million as of June 30, 2021. 2022 is following our traditional Q4 seasonality, and we expect backlog to pick up through the end of the year.

Gross profit for the second quarter was CAD 15.7 million compared to CAD 13.7 million in the prior year, representing a gross margin of 76%. The increase in gross profit was primarily due to growth in subscription revenue from the addition of new clients and the expansion of existing clients, offset by a lower mix of perpetual and term licenses and a higher mix of services.

Net loss for the quarter was CAD 7.4 million, or a loss of CAD 0.11 per share compared to a net loss of CAD 1.6 million, or a loss of CAD 0.10 per share in Q2 2021. And we had an adjusted EBITDA loss of CAD 5.8 million for the quarter compared to a profit of CAD 1.3 million in Q2 2021.

We finished the quarter with CAD 153.2 million in cash compared to CAD 161.4 million in cash at the end of fiscal 2021, which places us in a strong financial position to build on our advantage and further penetrate the investment planning and decision analytics market. In our experience, the critical infrastructure market is more resilient in a recession than many other sectors. And prior to going public, we responsibly managed our cash reserves through multiple cycles, while continuing to invest in our long-term growth strategy.

While we continue to see period-to-period variability that is inherent to our business, we have confidence in our teams, in our products and in the growth of our market. Considering our strong unit economics, we remain focused on making thoughtful, long-term investments to drive our growth, while reducing spend in lower priority areas and charting our path back to profitability.

Copperleaf is a leader in a large and expanding market for decision analytics with significant potential to increase penetration and attract new clients. In short, Copperleaf is uniquely positioned for success. That concludes our prepared remarks.

I'll now hand the call back over to the operator and open it up for questions. Thank you.

[Operator]

[Operator Instructions] And your first question will be from Dylan Becker at William Blair.

[Dylan Becker, analyst]

Maybe to start with Judi. You touched on kind of the maybe the macro backdrop. I understand that the long-term capital planning here might be a little bit less impacted by some of the more near-term dynamics. But given the volatile nature of commodity prices, some of the budgetary belt tightening that may be taking place, how do you think about the platform's ability to unlock that better visibility in decision-making during a time where, again, that seems to be being pushed to the forefront.

[Judi Hess, executive]

Yes. Great to hear from you. So in terms of that, I think that one thing that actually plays to one of Copperleaf's strength is our ability to manage and help people in cases where resources are even tighter in their businesses. So when you look at Copperleaf, one thing we help is we help people understand when they have scarce resources how to create those plans and how to find the best spending approach in the near term, in the immediate term, in the long term to be able to meet those requirements. And when resources are under compression in terms of not having as much, this is actually a favorable scenario for Copperleaf planning solutions.

You can imagine if someone has no constraints whatsoever, which some people believe that they sometimes have no constraints, which I don't actually believe myself, but in a more open environment, right, they think, oh, well, we don't really need a solution to really figure out exactly what we should be doing and when and how to deliver the highest value for every dollar we're spending. But in these types of environments when you have to make more complex decisions, I think that, that is something that Copperleaf really excels at.

[Dylan Becker, analyst]

Yes. Absolutely. It makes total sense, especially, again, given the justification of that quantifiable ROI and that's what the platform can deliver. Seems like a perfect timing scenario. Maybe kind of building off of that, too, you touched on maybe some of -- I think you noted the capacity constraints from end customers impacting some of the implementations or deals being slightly elongated. Can you walk us through maybe some of the conversations you're having here? How those customers are maybe prioritizing those internal resources and allocating these assets? It seems like it might be something that's more kind of push-and-pull timing in nature versus these deals completely falling out of the pipeline. Is that the right way of thinking about it?

[Judi Hess, executive]

Yes. Absolutely. That is exactly the case. So I can give you just a couple of examples that come to mind in this particular case. We're recently working on a deal. It hasn't closed yet, just saying, and I'm not going to identify it or anything, but we were working on a deal, just to give you a little bit of a color on this. And it was between our project getting the priority because of the limited resources they have in their IT groups and their organizations versus a different application. And it's our job to make sure that our clients understand we are a priority and what we can do in the ROI, we can deliver these clients, which is so critical. And in the end, in this particular case, our project got prioritized over someone else. So I feel sorry for the company. Theirs got delayed until 2023 or beyond. But our project was given that priority. So we did a good job there in making sure that the client really understands the ROI and what we can do for their business, and that's what we need to continue to do because there are these tight labor market situation with our clients.

The other thing that's kind of interesting as well is there was one deal that we were -- we've been working on since -- in the first quarter. We still haven't closed this deal. But the reason why is not because the deal is going away. The problem was that this company would not allow this deal to be let until there was an identified resource that can drive the project from the client side. And so just as an example there and a little bit of color, they recently found a resource, thank goodness, and now they're moving ahead to finalize this deal and stuff like that.

So you can kind of see the different push-pull that's happening. Given the ROI that we can deliver and what we can do in our clients' environment and especially the environment today, which is so much more complex, there's so many more factors, there's supply chain issues, there's a lot of things happening and inflationary pressure as well, which is reducing what clients can actually take on and deliver, we are really something that is very important to them.

And it's our job to make sure that those clients understand that. That's our responsibility. And hopefully, we're doing a great job of that as we go forward. But there are these tight dynamics. I'm kind of hoping that in the next little while with some of the announcements that you're hearing about reduced hiring plans or even some layoffs in some tech companies, but that might help build create these resources and reverse this trend in our clients of not having enough resources to do some of the things that they need to do and that they see as very important.

[Operator]

Next question will be from Koji Ikeda at Bank of America.

[Koji Ikeda, analyst]

A couple from me today. The first one on the billings. According to our model, billings came in pretty strong, close to 50% year-over-year growth. But just really how to think about the strong billings growth against the slower revenue growth in the quarter? Is there anything specific to call out, maybe deals closing really, really late in the quarter? Or I noticed the license revenue was pretty great in the quarter. So is that part of the reason why the billings outperformance or kind of the delta between the billings growth and the revenue growth in the quarter?

[Chris Allen, executive]

So I'll jump in on that. Yes, it has largely to do with the perpetual and term license that you see there in Q2. You'll notice that our ARR came up 26%. So we are seeing good bookings. And as we've said since the beginning of the year, 2022 is shaping up to be a pretty typical year in the sense that we will see Q4 seasonality where we typically see the bulk of our bookings.

[Koji Ikeda, analyst]

Got it. Okay. And then just one follow-up for me. So I was wondering maybe, Judi, if you could comment on what you're seeing out there, maybe from a pipeline or an end market demand or conversations that you're having with customers out there that's giving you confidence, not necessarily for the next 6 months or 12 months of growth, but the ability to drive durable 25%, 30%, 35% growth over the medium term?

[Judi Hess, executive]

Okay. Great. So if you look at -- well, first of all, we see our pipeline growth. And even if I look just recently at the top of the funnel, we -- especially with this return to in-person conferences and things like that, that has really started to even develop even better top of the pipeline growth than we've had in the last 12 months, I would say, even though it's been very good, it's even accelerating further.

So when we look at that, we look at some of the numbers, we look at the things and the key metrics that we track in our pipeline growth and that future. And we do have the largest pipeline we've ever had in the history of the company. We are also seeing all geographies and continue to produce. And there is definitely traction in all our geographies that we see.

I'd say the partner aspect that I mentioned in my prepared remarks as really something that's really starting to work. We're seeing that across the board with our partners and the interest and what we can do in terms of really making a considerable ROI difference in the businesses of our clients, which is really also growing demand.

And when I look at that from a durability perspective, we are just penetrating some of these markets and we have so much runway and greenfield runway left. When you really look at what's happening in these clients, they're trying to do these things with spreadsheets and in some cases, they have 80 spreadsheets spread around their organization, and they're trying to understand how they can be more effective doing -- taking advantage of digital technology to be able to improve this.

And I think the Black & Veatch example that I gave, where you can reduce the planning time that it takes you to get there, you can get the money that you're requesting because we can help you justify in a major way why this is the right scenario and what value it's going to deliver to your organization.

And all of these things that we start seeing and even in sectors beyond our current existing classic infrastructure sectors, there are other companies that are talking to us and wanting to get involved in what we do and understand it.

And even from the ESG perspective, we're still getting that. And it's interesting, when you look at the ESG perspective, they come in, they start talking to us in these other sectors about ESG. And before you know it, you're starting to talk about business as usual as well. So they need help there as well, and that leads you into that entire play for Copperleaf. So I think it's really the long-term proposal for Copperleaf is just tremendous from my perspective. And I continue to see when interacting with the market, our clients, our existing clients and new prospects and our partners that this has a very, very sustainable and durable growth into the future. Absolutely, for sure.

[Operator]

Next question will be from Thanos Moschopoulos at BMO Capital Markets.

[Thanos Moschopoulos, analyst]

Judi, just to expand on the macro and to clarify a point, other than the dynamics that you mentioned regarding the constrained labor market, is there any other changes you're seeing in customer behavior in response to the macro or nothing else to call out in terms of the negative sense?

[Judi Hess, executive]

I don't -- we don't see that right now. The biggest thing we do see is this constrained labor market, at least that's affecting us. I mean they might have other issues. I would say that the supply chain is obviously an issue, but that -- again, that helps us as well and even inflationary pressure can help us as well, which sounds a little bit weird. But fundamentally, if you think a bit about it, if they can't get their supply chain on time and they can't get that -- those supplies to be able to run the project that they're trying to run, they need to rejig their plan, and they need to be very agile about that.

The other thing that one of our clients told me on the supply chain side that is a benefit from Copperleaf perspective as well is that they using Copperleaf to get a better and sooner visibility into the supply chain. And that's something that's very important for them to understand and start working on those challenges upfront, right? So if they can see out in next year or the year after that or in 2 years, what they need on the supply chain side for long-lead items, this is really, really helpful for them and really helps them as well. So we see that as well. And of course, inflationary pressure in all businesses is increasing costs, shipping all kinds of things. So when we look at those and we look at our clients having to deal with that, that means that they're in a more constrained environment, which again plays to Copperleaf strengths.

[Thanos Moschopoulos, analyst]

And then as far as the labor constraints, is that a global phenomenon? Or is it primarily in North America where you're seeing that amongst your customers?

[Judi Hess, executive]

I would say it's global, maybe a little less pronounced in Europe, but it's definitely global.

[Thanos Moschopoulos, analyst]

And then just finally, the win that you highlighted with Accenture, would that be your largest win with Accenture today?

[Judi Hess, executive]

Oh, that's a good question, Thanos. It's certainly one of the largest wins with Accenture. Absolutely, for sure.

[Operator]

Next question will be from Gavin Fairweather at Cormark.

[Gavin Fairweather, analyst]

Just on the sales team. You obviously added a ton of resources in kind of late Q4 or early Q1. Can you just speak to kind of how the onboarding is progressing, how the team is performing and how you're thinking about the path towards more normalized sales force productivity?

[Judi Hess, executive]

Yes. So yes, we definitely added a lot of sales resources in Q4, Q1, absolutely, for sure. So of course, that puts a burden on everyone to bring, or the organization to bring people up to speed and to make sure that they are getting trained and they can be productive within Copperleaf. And that takes a lot of effort from our sales management as well as our other teams on product management as well as our technical sales team to be able to support sort of new sales executives.

What I would say is that we're starting to see some great traction in a number of these team members that we have hired. And so that continues to deliver, but I must say that it does take a while for someone to get up to speed on Copperleaf and develop those reports, of course, with relationships with clients.

One thing that has really helped us in a major way in the last little while is previously with the pandemic, everyone has been remote and even the discussions from a business development perspective and sales perspective has been kind of Zoom-like environment. And now we really are seeing at least our clients, and I don't know it about beyond our clients, but I do see it in our clients where they are accepting visits from people and in-person meetings and we're able to do some in-person conferences and things like that.

And I think people are getting a little tired of the webinar to some extent and having that in-person can really help to accelerate a deal. So I think that this in-person, which we just found in the last -- really in the last quarter is really helping us and helping the enablement and the training and the traction that our new sales executives and sales teams are being able to manage now, which is really fantastic.

I mean I would have been more pessimistic if we were still stuck in that Zoom world or whatever because it's hard for someone to create a relationship over a web or a virtual environment. It's much easier to go and walk the halls and talk to people and go to dinner and have some real interactions to build those relationships in a stronger way and really get the understanding of that and learn. So I think we're seeing a lot more travel, and I think it's a very positive thing. At least that's what we felt.

[Gavin Fairweather, analyst]

That's great. And then just for my follow-up. You've been speaking a bit more and more about pharma and kind of chemicals manufacturing is an area where you could expand into. I did see that you're hiring a European account executive for this vertical. Is this kind of on the cusp of becoming emergence? Maybe just speak to this vertical in particular?

[Judi Hess, executive]

Well, Gavin, that's what we're hoping. That's what it seems to be. We've been doing some proof of value or proof of concept with companies in these spaces. And as you know, on the chemical processing side, we did sell a solution to -- last quarter to Idemitsu Kosan, and that is chemical processing as well as refining. So you can see that our solution does have traction in some of these other sectors.

And the Idemitsu Kosan project is going very, very well at this time. And we expect that to continue to drive the growth in these areas. And as well in pharma and some of these other manufacturing processing, where we are -- our new markets team is talking to a number of these potential clients, and we certainly expect that in the next little while, we'll be seeing some of these deals manifest themselves.

[Operator]

Next question will be from John Shao at National Bank.

[Meng Shao, analyst]

I just have one related to the FX. Given the exposure to the European market, maybe just help us understand how the FX has impacted your business from the revenue and OpEx perspective. And when I think about your contract with the customer in the European market, that denominated in USD or in local currency?

[Chris Allen, executive]

Yes. I'll take that one, John. So we have a couple of currencies for Europe. So we accept both in British pounds as well as euros. And really, as far as FX goes, recognize that the majority of our clients are buying fast, and those are at least -- they're typically 3- to 5-year contracts and at least 1 year purchase upfront. So basically upon purchase, the currency has locked in for effectively a year.

The only thing that could experience some fluctuation beyond that would be services, which is built over the implementation. And really, our hedging strategy is -- our biggest resource is headcount. And so keeping cash in those foreign currencies to fund those salaries and our operations is what we typically do and we monitor FX rates, where we have a surplus of funds and we can make gains by converting it to CAD , we'll do so.

[Meng Shao, analyst]

I appreciate that color. Another question for me is maybe just help us understand the revenue trajectory for, let's say, partner-influenced deals versus to our typical internally sourced deals. Is that more back loaded versus the front loaded with professional services revenue?

[Chris Allen, executive]

I can jump in on that one. We see both deals fairly similar as far as that loading, that allocation. I wouldn't say it's tremendously deal, whether it's partner influenced or direct.

[Meng Shao, analyst]

Okay. And the last question, I think, is more to Judi. Just -- maybe just help understand where you are today in terms of your hiring plan, let's say, compared to 2 quarters ago?

[Judi Hess, executive]

Yes. So in terms of our hiring plan, I think we're doing -- I think in the previous 2 quarters, I think we've done a great job of being able to hire and get people in place around the world. We've been pretty successful from my perspective. So I think we're on plan to where we had hoped to be at this point. There might be a few delays in some special areas. But overall, I would say that we've hired to plan so far.

[Operator]

[Operator Instructions] And your next question will be from Todd Coupland at CIBC.

[Thomas Ingham, analyst]

I had a question on the staffing at customer issue that you called out. What has that done to the -- your typical 18-month cycle? Like how far has that delayed that by?

[Chris Allen, executive]

I can jump in on. Go ahead, Judi.

[Judi Hess, executive]

Okay. Go ahead, Chris, if you want.

[Chris Allen, executive]

No. Go ahead.

[Judi Hess, executive]

Anyway, I would say that it has had a bit of a delayed effect, which is what I mentioned. But when we look at our typical cycle, we have -- we don't have a ton of data points. So we're trying to extrapolate from the data points that we have. And I think that when you look at that across all our deals, it's delaying, but it's not delaying in a huge way, but it is, specific deals that might move by, let's say, weeks or months or quarters depending on the unique situation at those client sites. So it's very specific.

[Thomas Ingham, analyst]

And do you -- like we're sitting here now, you're calling out normal seasonality for the year, so a strong Q4. But given this issue, is that subject to this not carrying over and impacting in Q4, so that seasonality perhaps that you're expecting gets pushed into 2023? How much of a risk factor is that?

[Judi Hess, executive]

Yes. So I think that anything is possible, but we are definitely seeing, what would I say, I wouldn't say that, that's happening everywhere. Let's put it that way in terms of this talent challenge. But I would say that in services, it is impacting us a bit in terms of delaying services revenues. And I -- but I don't see it -- I do believe that in Q4 in the last half of the year, we certainly believe strongly that we can deliver the deals that we are expecting to deliver from our planning perspective and what we see.

And I would bring us back again to the in-person nature of talking to our clients that has made quite a bit of a difference. And I would bring you back to the one example on prioritization. So the key thing is that we need to keep our projects prioritized above other vendors project, so that's going to be a very important thing. I think we've been successful with that. I gave you one example where we saw that directly, and the client even told us that we were prioritized above this other project and yet it's so important. But that's our job to keep those deals in this year.

[Thomas Ingham, analyst]

Okay. That sounds good. And then on the EBITDA line, you came in, I think, better than what most people were expecting. You're talking about pausing hiring. You more or less put the staff in place now for your growth plans. So is the takeaway message that expected burn rates could very well come down because of that? Could you just give a little more color on that?

[Chris Allen, executive]

Yes. I'll jump in here. So first of all, we are not pausing hiring. We are still growing throughout the year. So we are still in growth mode. Really, what the messaging is there is we are always fairly prudent with our investments. And so we took a look across all of our regions and all of our departments and really scrubbed the headcount through the rest of the year to ensure that we can deliver on our 2022 commitments and that we're well positioned to execute on our 2023 pipeline.

As Judi was just mentioning earlier, we did do a good job of hiring through the end of Q4, through Q1, through Q2. So we have built up a good amount of headcount and those expenses will run through the rest of the year. We do anticipate adding additional heads throughout the rest of the year. What we have pushed off is more at the end of the year, so it won't have a tremendous impact on expenses for 2022, in fact.

[Thomas Ingham, analyst]

Okay. Appreciate that detail. Two more quick ones for me. There was a reference in a previous question about 50% billings growth year-over-year. And I don't know if that's right or not, but I was attempting to see that. Can you bridge us to that number, if that's actually right?

[Chris Allen, executive]

I'll need to go back to my numbers here. And I'll get back to you, Todd.

[Thomas Ingham, analyst]

Okay. And then the last question. You called out the lab having a lot of engagement this quarter. What would you say are the top few priorities that you're seeing that clients would like to see, if you can talk about it or at least the general areas where innovation is likely to happen?

[Judi Hess, executive]

Yes. So obviously, you don't want to signal to everyone what we're doing in general. But in a general sense, we see, I would say, there is an area around reporting to create even more reporting and dashboards and things like that and really get information on the system where clients are really engaging and that's really exciting. And we're making sure that we're building those types of things that can really drive that. In addition, we're bringing out another ML application this year, and there's a lot of engagement around that and understanding and making sure that we are able to really deliver value with the ML applications that we're dropping in and the excitement around that.

And then I would just say that in general, we want to make our solution more effective. And one thing that's a really big part of our solution, obviously, the optimization and all those kinds of things are critical. But I think scenario comparison is something that is what clients are really, really looking at, and we're really working with them to understand how to better compare scenarios so that they can even get more significant justification of why they're selecting one scenario over another. Those are just a few areas that I can think of off the top of my head, to be able to continue to drive the innovation in our solution going forward. And of course, there are some other applications that we're looking at as well. But overall, I would say that those are for broad strokes. Those are the things that clients are engaging with us.

The other thing is on Copperleaf Labs, it's also a bit around trying to understand how they can use our solution more effectively and sometimes, that even, of course, drives additional features and options and modules that they have not purchased yet as well because some of the things that we have can solve those problems. So when we're working on that engagement in Copperleaf Labs, they can understand better how our solution can deliver needs that they think we need to build, but actually we have those solutions and then that can drive additional installed base, increases into the installed base.

[Operator]

And at this time, we have no further questions. Please proceed with closing remarks.

[Judi Hess, executive]

Thank you very much. So first of all, thank you, everyone, for joining us today.

We are excited about our ongoing business progress and the tremendous opportunity that we have in front of us here at Copperleaf. And we look forward to providing future updates as the year progresses. Have a great day.

[Operator]

Thank you. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.