Copperleaf Technologies Inc

TSX:CPLF

Earnings Call Transcript

[Operator]

Good afternoon, and welcome to Copperleaf's Second Quarter 2023 Results Conference Call. [Operator Instructions] This call is being recorded today, Thursday, August 3, 2023. Your host for today are Paul Sakrzewski, Chief Executive Officer of Copperleaf; and Chris Allen, the company's 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. Reconciliation 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 plans and make strategic decisions. Such key performance indicators may be calculated in a manner different than similar key performance indicators used by other companies.And with that, I would like to turn the call over to Paul Sakrzewski.

[Paul Sakrzewski, executive]

Thank you very much, and good afternoon, everyone. Thanks for joining us to discuss Copperleaf's second quarter performance. I am very excited to share an updated progress in 2023 and some of what we're looking forward to for the future. On today's call, I'll make opening remarks before passing it over to Chris to provide a detailed review of the financial results. Following our prepared remarks, we'll open the call to questions.Firstly, a review of our second quarter results. In the April to June quarter, Copperleaf delivered 26% growth in annual recurring revenue and 23% growth in subscription revenue, demonstrating continued momentum in the context of our ongoing transition to SaaS. We also continued to grow our client roster with the addition of several strategically important new clients. In the second quarter, Copperleaf welcomed Societa Gasdotti Italia, or SGI, Italy's second largest gas transmission operator as our first client in Italy. Copperleaf Asset will enable SGI to create optimal asset strategies incorporating both financial and nonfinancial metrics in a streamlined investment decision-making process to maximize value while minimizing risk. This in line with its corporate objectives.Additionally, Copperleaf also secured our first client in Ireland and our first oil and gas client in Europe, validating our strategic investment in these geographic regions and our planful approach to introducing Copperleaf solutions to new industries. Additionally, in Q2, San Diego Gas & Electric, SDG&E, announced their decision to roll out Copperleaf decision analytics solution to their entire enterprise. SDG&E began working with Copperleaf in 2020 to support asset investment planning decisions for its electric transmission and distribution businesses.With this expansion, SDG&E will implement Copperleaf portfolio and Copperleaf value across its electric generation, gas transmission and gas distribution lines of business as well as their facilities and IT functions. The SDG&E enterprise worldwide rollout is a perfect example of how Copperleaf start generating value for a client in one line of business, which then becomes known as a standard of excellence in value-based decision-making and then progressively expand across the enterprise.I'm very proud of the progress we've made as a team in the first half of the year, generating good growth despite continuing uncertain macroeconomic conditions in most of our markets. We continue to see temporary headwinds like enhanced client sign-off requirements, limited client resources and RFP delays, which we expect to continue through the second half. Our focus is on continuing to improve execution while charting our path back to profitability. And I emerged from Q2 with a renewed conviction that we have the right operating model, the right leadership and the right strategy to drive long-term growth.Face-to-face client engagements continue to accelerate in Q2. In May, the Copperleaf Community gathered in Vancouver for our 2023 Copperleaf Global Summit, the first in 2019. We were delighted that the successful return of our marquee event, which exceeded expectations, attracting clients and partners from around the world who attended the event to share their asset management journeys and their Copperleaf success stories. The Copperleaf Community continues to grow in diversity with the continuous addition of new clients from around the world in an increasingly diverse range of industries and the 2023 Summit provided an incredible forum to some of the world's leading organizations to share information and learn from each other's progress.The emerging need to incorporate ESG measures into the decision process is a common discussion point, and in particular, climate resilience was a recurring theme at the Summit across all industries. As part of this discussion, the regulatory landscape was also front and center as regulators are asking for more investment in climate resilience and greater transparency on the outcome risk, reliability, environmental and social impacts from proposed portfolios of investments. Partners were also a key feature of the 2023 Summit, and we saw a step change in the number of partners in attendance and also the active participation of partners in the client case study presentations.This highlights both the progress we've made with the build of our partner ecosystem and the importance of properly engaging with our clients' trusted advisers when it comes to introducing our innovative new product into their established digitized landscape. Partners are a key plank of our global scaling strategy, and we've been gratified to see concrete progress resulting from the focus and resources we've recently dedicated to building our ecosystem. In March, we announced that we signed an Endorsed Apps agreement with SAP. In June, we achieved premium certification status, and we're now live on the SAP Store with Copperleaf Portfolio for SAP. This is the official trigger for joint go-to-market activities with SAP, which have now started in earnest.Copperleaf continues to focus on innovation and extending the competitive advantages of our solution. During the second quarter, we released version 23.2 of our product suite, which included, among many new features, a material enhancement of our GIS integration and interoperability where users can improve their decision-making and their storytelling on their asset management plans by directly visualizing their Copperleaf Asset results in ESRI's ArcGIS systems. This improvement showcases Copperleaf's ability to attain complexity, generate value and clearly visualize information to aid in more effective value-based decision-making across the enterprise.For the remainder of 2023 and into the future, we expect our growth to be driven by an increasing recognition that Copperleaf is the leading brand in asset investment planning software that makes value-based decision-making at scale, a practical reality across the enterprise. Sustained industry tailwinds, such as the increasing needs of our clients to practically manage rapidly developing ESG agendas, acceleration of our ability to bring innovation to market in the form of new products and enhanced services, leveraging our investment in sales and marketing, which are demonstrating positive results with increased lead generation and pipeline activity, and the expansion, of course, of our Alliance Ecosystem, which includes amazing new partners like SAP.In summary, I'm very pleased with our progress and the way that our new operating model is starting to perform. I believe that we're on track to meet our strategic goals. We continue to focus on prudently managing cash and innovating across our whole business with the aim of driving execution in the near to medium term, and at the same time, laying down a sustainable global foundation for future profitable scaling and growth.I'll now turn the call over to Chris to review our financial results in more detail. Thanks, Chris.

[Chris Allen, executive]

Excellent. Thanks, Paul. Good afternoon, everyone. We're pleased to report that our second quarter 2023 results continued to deliver growth across our key financial metrics. Revenue for the quarter ended June 30, 2023, was $18.5 million, a decrease of 10% compared to $20.6 million in the comparative period, but driven primarily by the decrease in perpetual and term-based software revenue as our clients continue to transition to SaaS.Subscription revenue for the second quarter was $11.7 million, an increase of 23% from the prior year, representing 63% of Q2 revenue as compared to 46% of revenue in Q2 2022, again, highlighting our continued transition to SaaS. Professional services revenue for the second quarter was $6.7 million, a decrease of 6% compared to $7.1 million in the prior year, and this segment represented 36% of Q2 2023 revenue. And finally, perpetual revenue for the second quarter was $0.1 million, a 97% decrease compared to $4 million in the prior year, and this segment represented only 1% of Q2 2023 revenue.Our annual recurring revenue at June 30, 2023, was $51.2 million, a 26% increase compared to $40.6 million at June 30, 2022. As of June 30, 2023, our net revenue retention rate was 111% reflecting expansion within our client base on our strong renewal history. This percentage will vary period-to-period due to the timing of our large expansion contracts within our existing client base and the mix between perpetual and SaaS expansion deals.Revenue backlog was $107.7 million at June 30, 2023, a 16% increase from $93 million as at June 30, 2022. Gross profit was $12.8 million, representing a gross margin of 69%, a 19% decrease from $15.7 million and a gross margin of 76% in Q2 2022. Gross margin decreased temporarily primarily due to product mix and an increase in partner subcontractor costs for the quarter, plus increased headcount and product support related to our growing client base.As a result of our planned investments to capitalize on the inflection in the decision analytics market, we had an adjusted EBITDA loss of $10.6 million for the quarter compared to an adjusted EBITDA loss of $5.8 million in the prior year. Net loss for the quarter ended June 30, 2023, was $12.6 million or a loss of $0.18 per share compared to a net loss of $7.4 million or a loss of $0.11 per share in the prior year.We finished the quarter with a strong balance sheet with $62 million in cash and equivalents and $75 million in short- and long-term investments, placing us in a strong financial position to build on our advantage and further penetrate the investment planning and decision analytics market. With our strong unit economics, we remain focused on making thoughtful long-term investments that will drive accelerated growth through 2023 and beyond. As we continue to expand our reach, we're confident that our focus on operational excellence will drive best-in-class margins, expand our leadership position in the growing decision analytics market and accelerate our path to profitability.That concludes our prepared remarks. I'll now hand the call back over to the operator to open it up for questions.

[Operator]

[Operator Instructions] Your first question will come from Maxim Matushansky at RBC Capital Markets.

[Maxim Matushansky, analyst]

I just wanted to touch on the factors that you were mentioning in the prepared remarks, in the past, you've talked about kind of the lack of resource constraints on your clients and perhaps a different prioritization of projects. I know it will be idiosyncratic on a case-by-case basis. But have you noticed any signs of that changing? And can you maybe expand on some of the other factors you mentioned this quarter in terms of the enhanced client sign-off requirements and RFP delays?

[Paul Sakrzewski, executive]

Sure. I'll pick up on that, Max. Thanks for the question. It seems to be continuing on a similar trend to last year. And it's not uniform globally. We're now a global company. And I think country by country, we're seeing differences. But on the whole, the economies globally don't feel like they're recovering substantially since last year. I think if anything, we're probably getting better at executing under those conditions, and that also is different per region.The enhanced sign-off and the extra process that you go through in the procurement process is more stringent under constrained conditions. That's kind of what that means. And we expect that at some point, that will start to free up. But at the moment, in particular geographies around the world, we're seeing that it's still fairly constrained and we're still sort of swimming uphill a little -- swimming upriver a little bit in that context.

[Maxim Matushansky, analyst]

Got it. And just it's great to see the new client wins in new regions and kind of expanding in oil and gas as well. I'm wondering how you think about the pace of wins in existing geographies as compared to going into new geographies? I know it's a small sample set. But are you seeing most of your wins come from your established regions? Or is it more balanced recently in terms of wins in your core sectors and geographies compared to the new countries or emergent verticals?

[Paul Sakrzewski, executive]

Yes, it's a good question. I mean, where you've got a bigger installed base, you see more upsell opportunities, and that's clear in the new regions, they're all new logo wins. So the tone of the business in those cases is just a little bit different, but it's probably pretty balanced. We opened up a lot of new geographies. So we've almost got more new geographies or at least as many new geographies as we have established ones. So purely numerically, I think we're doing pretty well. The good news is that those bets that we place down in those new geographies are starting to come to fruition. And we don't have as many places where we're carrying costs with our revenue. We've at least got that first client in many of those new places. And almost, again, by definition, we've got new account executives and new sales resources in those places, and it's great to see them starting to perform. So we're starting to get through that process where the outstanding geographies without revenue are diminishing and the outstanding salespeople without sales are diminishing as well. So everybody is getting runs on the board.

[Maxim Matushansky, analyst]

That's great. And just final one for me. I'm wondering if you can update us on the go-to-market strategy in terms of being successful in talking to customers regarding a more rapid start implementation of the Copperleaf software. Is that still primarily a marketing tool? Or would you expect to see more customers being receptive to that kind of rapid implementation solution?

[Paul Sakrzewski, executive]

No, that's definitely happening. I mean, we've talked a fair bit about the H2O solution for the U.K. That's been very effective. We've got a similar solution for the electric distribution market. We are getting better as well, I think, globally at phasing deals, particularly under constrained conditions, people do want to get started with Copperleaf that they may not want to do a great big monolithic deal that sees sort of many of those implementation phases compressed into one big upfront deal. So I think in the context of rapid start for the de minimis solution that allows smaller companies, particularly, or those that want to dip their toe in the water to get started. We've got packages for that, and we're evolving that strategy and the idea of phasing deal, diagnosing the part of the Copperleaf Suite that satisfied the most burning issue with our clients, getting started with that getting implemented quickly, giving the client that value and then moving into future phases, we're well down that part as well. So there are 2 slightly nuanced answers to your question there.

[Operator]

Your next question will come from Gavin Fairweather at Cormark.

[Gavin Fairweather, analyst]

Maybe just to start on the SAP partnership, can you just speak to the engagement level of their sales force now that you're kind of live within the marketplace and they could be comped for selling Copperleaf. And how are you thinking about the impact of that partnership on sales cycles for deals that they're involved?

[Paul Sakrzewski, executive]

Yes. So we're really pleased to be up and running on the SAP Store. That's a big milestone for us. And we did forecast that we would be up and running on the Store by the end of Q2, which we thought was a well buffered time line. But the certification process was pretty in-depth, and we were happy to go through it and come through that with flying colors. There was a serious review of our cybersecurity and the quality of our software. So it was great to get through that. So now we're up and running, and that's the official launch of joint go-to-market and the internal SAP processes kick in at that point and they get triggered. So those things are ongoing.But in direct answer to your question, we have been engaged with the global SAP sales force well before we were up on the Store. So we have stolen a march on that and there's good cooperation. Our 3 regions, and 3.5% if you consider Latin America as well, are all engaged locally. We see the local SAP counterparts, they're all planning joint pursuits on specific named accounts. It is worth understanding that we do have to agree on the accounts between the 2 companies formally that we're going after those businesses together. And that process is starting.And the engagement that we've seen so far through participation or Copperleaf participation in some of the SAP events like the Utilities Conference in Basel. For example, the global Utilities event, that was absolutely fantastic. SAP positioning Copperleaf in their presentations. We had SAP representation at our Global Summit. So we're starting to engage in joint participation in each other's event. But we're also adjusting client work together in different parts of the world. We've already submitted a couple of joint proposals to clients and we do expect that to start to work in our favor. Early days, we're still -- even since we signed the agreement, it's only been 1 quarter. And since we were up and running on the Store, it's only been a couple of -- or a month or so.So it's early days, but the pipeline is starting to expand. We are chasing concrete opportunities, joint pursuits between us and those things are accelerating. I'm excited about the Copperleaf, SAP relationship, and I think it's great for them, and it's fantastic for us to be involved with such a player as SAP. And I will say that just the fact that we have been invited as the AIP partner for SAP through the Endorsed Apps process is a huge endorsement of Copperleaf and the value that we bring to clients. And between the 2 companies, we can bring even more value.

[Gavin Fairweather, analyst]

Great to hear. And then maybe just on the pipeline in your prepared remarks, you spoke about the sales force investments driving good pipe. At the risk of being early here in early August, I mean, how are you feeling about the ability to kind of prosecute a decent number of deals as we kind of move into the busy selling season later in the year?

[Paul Sakrzewski, executive]

Yes. I mean, Q3 and Q4, I mean, Q4 particularly is always a hill to climb. And I think we've talked this year about prolonged deal cycles and how we're a little bit more back-end loaded than usual this year. I think we're in a good position to do what we need to do. I mean, numerically, we've got good coverage on the accounts. I think we've got better scrutiny on deal health than we ever have before. We've added a bunch of processes around business and sales operations, which I think are taking us to a different level of being able to assess where we are in the account and then diagnose what we need to get -- to do to get those things done. Sales force is maturing. So on the -- and we have pipeline to cover the numbers.So all of those things numerically look good. And the question now is just time. We need to get ahead of it, manage time properly and make sure that we're starting to bring through those deals. As Copperleaf gets bigger, the execution challenge just around contracting and doing all the work and having coverage is -- it becomes more of a challenge, closing 1 or 2 or 3 deals at the end of the year, you're closing bigger numbers. And so making sure that we've got the right machine in place, and everybody has got the capacity to get that done is something we're taking seriously and making sure that we have coverage on.But yes, like I said, it's always a hill to climb. And for us, it's lumpy. One deal, one way or the other, makes material difference to our closing result, flavor of deals, whether it's a SaaS deal or whether one of those perpetual deals that we have forecast go to SaaS, makes a big number to -- a big difference to our revenue numbers, obviously. And you've seen that we have had a material move towards subscription and SaaS this year away from perpetual so far. So we'll see how things go, but we've got numerically good coverage on the number between here and the end of the year.

[Gavin Fairweather, analyst]

Got it. And then justly lastly for me, maybe for Chris. If I look at the cash operating expenses this quarter and kind of strip out the D&A and stock-based comp, it looks like it ticked down by about $1 million over the Q1. Can you just discuss whether there were any kind of onetime costs in the Q1 or whether you've taken a little bit of cost out of the system and how we should think about the run rate on that metric there? That's it for me.

[Chris Allen, executive]

So we are obviously managing costs pretty closely here. And I would say that's a combination of straight-up expenses where we're looking closely at all of our travel, things like that, our tech stack that we put in place as well as headcount, managing headcount very closely in performance. And I'd say, in general, the first half run rate is a pretty good indication of what we should expect through the rest of the year as far as the second half.

[Paul Sakrzewski, executive]

Thanks, Gavin.

[Operator]

Your next question will come from Todd Coupland at CIBC.

[Thomas Ingham, analyst]

I wanted to ask about generative AI. Obviously, lots of model training going on more broadly. And I'm just curious how that impacts priorities at your target customers, where it fits within your own offering, and how your products might evolve to include that.

[Paul Sakrzewski, executive]

Yes. Thanks, Todd. I mean it's obviously a rapidly emerging area. And it's exciting for us. It presents us with opportunities. As things started to heat up in that space at the end of last year and early this year, we made a decision to embrace generative AI in a careful way, in a planful way. So we made it available to everybody at Copperleaf in a very safe and controlled environment, which gives us 2 things. One is the ability to use it for internal processes so that we're getting the benefit from an operational point of view from generative AI. And we -- the second thing is we have a small group of people working on how we incorporate generated AI into our products. Early days on that so far, but you can easily imagine the use of generative AI to start to help the occasional user from a natural language interfacing point of view. And I think that's probably most likely the first way we'll start to see it used in a concrete way at Copperleaf. But down the track, there are many implications of large language models and generative AI in what we do, which we only see as being a positive thing for us. It's a great tool for productivity internally, and we can certainly see that the functionality of those technologies are going to be just good for us, helping people to get much more out of the Copperleaf product.

[Thomas Ingham, analyst]

And just one follow-up. Does it pose a disruptive risk to the library of your own models, someone coming along and being able to recreate that for target big infrastructure companies faster than all the time it took for you guys to build up. How does it impact something like that?

[Paul Sakrzewski, executive]

Well, I mean, you always have to be wary of something like this. It's usually kind of positives and negatives of puts and takes. But quite honestly, I think the -- one of the key benefits of our library is that those models are not just clever, they're tested in battle with large organizations with regulatory bodies. And one of the biggest things about that model library is that you can have confidence that those models in the library have been used in battle by big companies across the world in different regulatory environments. And I think that's something you probably can't replace in a hurry. So -- and I think we've iterated those things over time.So as we use them, we improve them as we see different use cases around the world, we incorporate those use cases into the thinking associated with the models. And it's also a combination of the different models. It's one thing having a library of them, but it's another thing bringing them together into a coherent value framework for a specific client and knowing that they're all going to work well together and then have the software back up to make sense out of that at scale across the enterprise. So it's a combination of different things, which doesn't lend itself to a pure large language model or a generative AI use case. So we see it as much more of a tool and an enabling piece of technology than it is so much of a threat to us.

[Thomas Ingham, analyst]

Appreciate it.

[Operator]

Your next question will come from Stephen Machielsen at BMO Capital Markets.

[Stephen Machielsen, analyst]

I just want to circle back on the pipeline. Are you having any -- is there any change in the -- I guess, the tenor of conversation between new logos and expansions in this more constrained environment?

[Paul Sakrzewski, executive]

I'm not 100% sure I understand the question, Stephen.

[Stephen Machielsen, analyst]

Okay. I guess to rephrase it. Is it the new logo conversations that are more difficult in this environment? Or are there similar difficulties with, say, expansion conversations with existing clients?

[Paul Sakrzewski, executive]

Yes. Look, it's a little bit of both. It's not so much about our solution or what we can bring. It's capital constraints. It's capital and resource constraints on their side. It's obviously easier to talk to our internal -- to our installed base. I mean, they are convinced at least of the -- not only the value of the solution, but the ease of working with Copperleaf as a company and the previous experiences they've had, but they're all constrained is what we're seeing, and they're just going through the prioritization process, and we just need to make sure that we're at the top of the prioritization chain.I think we're getting -- we're in a better position than we used to be from that point of view because we've got a pretty good global footprint of people now, so we can be in talking to the clients more often and more consistently in their own environment and in their own languages. But I think we're in a better position to make sure that we're prioritized, but it's both. It's not so much about Copperleaf or technology. It's more about the resources on their side.

[Stephen Machielsen, analyst]

Okay. That's helpful. Going back to the SAP partnership. I guess in the first few months, are you noticing that you're seeing more opportunities from clients where maybe you wouldn't have been able to get a foot in the door? Or is it just an entirely new set of opportunities that are being surfaced?

[Paul Sakrzewski, executive]

Yes. I mean our principle is that it needs to be incrementally additive. There's no point in getting SAP to do the work that we could have done ourselves. There's obviously a speed aspect to that. But we want this to be incremental. But with the best will in the world, Copperleaf does not have the same global footprint, global coverage or necessarily the brand recognition power that SAP does. So obviously, they bring new industries that we haven't yet entered, new geographies coverage that we haven't yet got covered, and there's also just that accelerative aspect of being able to have a trusted adviser in a larger technology company like SAP vouching for our solution.And it's not -- nothing that our products work well together. This isn't just a 1 plus 1 thing or a go-to-market play. We really do add value to some of the asset management stack of software, which SAP has multiple solutions in and they certainly add value to us. And I think over time, we'll be able to come up with innovative solutions that really extend it. So it's not just a 1 plus 1 equals 2.

[Stephen Machielsen, analyst]

Okay. Fantastic. And I guess my final question, in your -- in the press release, you mentioned you're executing on a go-to-market strategy and strengthening the global sales force. Could you give us a bit more color on what's involved in that? Is it more investment in processes? Or could you conceivably be adding headcount or filling gaps somewhere?

[Paul Sakrzewski, executive]

Yes. I mean it goes back to our strategy, I think, where -- we saw an inflection point in the market. And this was prior the macroeconomic issues that set us since we IPO-ed, but we certainly saw an inflection point in the market. We expanded just coverage, just the ability to ensure that we're not flying in and flying out, large enterprise software sales doesn't really get done on that basis. So we've got good local coverage in a lot of places. That took a little bit of time to ramp up. So people don't just arrive at Copperleaf or any enterprise software company and be immediately effective. So it always takes time to ramp, and we're getting through that now. But there's additional aspect to this. We've talked a little bit before about our global growth offers. So in addition to good global account coverage, you also need product specialization, industry specialization, really solid value engineering to make sure that we're articulating the value of the Copperleaf solutions in ways that our clients can consume, in ways that are relevant to them and their businesses specifically. And we need the ecosystem.So if you bring those 4 things to bear and you've got very good local account coverage, you start to build a matrix approach and next-generation approach to approaching those clients and covering the market. And once you have that in place, that minimum viable footprint that we've invested in over the past couple of years, you can then add capacity fairly quickly. So we have good capacity to prosecute this year. And certainly, we can take that capacity and prosecute a good deal of next year. And as we see this market starting to recover, as long as we've kept that minimum viable footprint in place, we can accelerate very quickly with the addition of capacity underneath that minimum viable footprint. We've got good leaders in all of those organizations, so you can start to add capacity underneath.

[Stephen Machielsen, analyst]

Okay. That's good to hear.

[Paul Sakrzewski, executive]

That's what the GTM looks like.

[Stephen Machielsen, analyst]

All right.

[Paul Sakrzewski, executive]

Thank you.

[Operator]

Your next question will come from Robert Young at Canaccord Genuity.

[Robert Young, analyst]

How should we look at the pro serv down year-over-year? Is that just the capacity issues on your customer side? Or is it some seasonality or vacations? Or is it -- like is there any sort of leading indicator there to read into?

[Chris Allen, executive]

Rob, I'll start with that one. So we did enter the year with lower backlog than we would have liked coming out of 2022. The macro certainly played a role there. But then just as we've said in our press release and as we mentioned today on the call, there are resource considerations here as well. So even deals that were booked and implementations that were due to start, there were either slow starts or there are being delays just due to resource client -- or client resourcing issues.

[Robert Young, analyst]

Okay. And like is there any opportunity -- maybe I'm reading too much into partner ramp, but is there an opportunity to fill in some of those gaps with partners? Or is that just way too early to be thinking about that?

[Paul Sakrzewski, executive]

No. We're working with partners, and they'll inevitably be part of our professional services landscape. Largely, we still do these things ourselves. We've had a few things, and you're aware of Mitsubishi Electric in Japan. They work as a partner implementer. But largely, we do this ourselves at the moment, but we're introducing more partners into the system, and inevitably, they'll start to take up some of that services burden. We'll always maintain a professional services organization internally. We'll probably stream it down to Copperleaf specific high value-added services over time and use that to ensure that we've got good scaling but we're keeping the skills necessary to do high value-added service work specific to Copperleaf, to the clients in a way that we're -- and of a quality we're comfortable with.

[Chris Allen, executive]

And I'll just add on to that, Rob, as well that, of course, through the rest of the year, we're obviously looking to bring any services for, whether it's partners, more direct services, bring those services forward. And quite honestly, when we look at the potential bookings for the year, the services bookings are good. It's just a matter of revenue recognition on those services, right? As Paul was indicating earlier, it is quite a back-end heavy year. And then with these delays, it's just a matter of when those implementations get started and when we can recognize the revenue on them and they just happen to be late this year. So we're not seeing a lot of intra-year revenue.

[Robert Young, analyst]

Okay. That's helpful. Okay. And maybe last question for me, just maybe a little more around SAP. You mentioned that you've been identified as the solution -- SAP solution for AIP or asset investment planning, I assume. Like, is that an exclusive arrangement? Or are you just the only vendor that they can find? Or am I overstating that?

[Paul Sakrzewski, executive]

No. I mean, it's certainly not an exclusive arrangement, but with an invitation-only program. So they scanned the market, we were the invitee and we're partnering with them in the AIP space. I don't want to -- there are certainly no guarantees in life, but SAP tend through this program to select best-of-breed and work very closely with that company to ensure that they can provide a full-service stack of software without necessarily having to reinvent everything themselves. That's the tenor of the program.

[Robert Young, analyst]

Okay. And what you were saying in the prepared comments about the premium certification and the passing this very stringent code review and the security requirements. Is that a higher level than you were expecting when you were talking about getting on to the SAP Store? Or is that a different certification or a higher level? Or is that really what you were tracking towards before? And then I'll pass the line.

[Paul Sakrzewski, executive]

Look, I don't know that we necessarily expected -- knew what to expect on the way through that certification process. It was an external like a third-party body that does this stuff for SAP. It was extremely stringent. We just went into it with the confidence that we are first class enterprise-grade software and that we would pass it. And it was stringent. I'm super proud of the way that the Copperleaf team responded to all of that. We got it done in reportedly record time. It felt like forever for us, but certainly, SAP have given us an indication that we did pretty well through that process. It certainly didn't cause any wholesale changes to the software or any cause for concern or causing us to try and upgrade something to meet the standard. It was just the certification process.

[Operator]

[Operator Instructions] Your next question will come from Dylan Becker at William Blair.

[Dylan Becker, analyst]

Maybe Paul, starting with you on the -- I think you guys noted that Copperleaf Summit being held for the first time in a handful of years here, kind of starting to align with the sales force maturation. I guess could you elaborate a bit on what the value of these in-person events can mean as you're starting to build awareness for the broader solution set. And again, I think there was a number of -- or a mentioning of the partner attendance as well there, too, and how that's maybe helping you incentivize or push them to kind of start building out their own internal practices outside of again the large SAP relationship currently.

[Paul Sakrzewski, executive]

And that last comment, Dylan, was about partners?

[Dylan Becker, analyst]

Correct.

[Paul Sakrzewski, executive]

And to build their practices?

[Dylan Becker, analyst]

Partners and customers, right? So bringing those 2 together and kind of bring awareness to the ecosystem, yes.

[Paul Sakrzewski, executive]

Okay. I'll try and cover the gamut of questions there, and just let me know if I don't hit everything. But the Summit is our marquee event. It brings together everybody into the room, and it is a client uses Summit, so it is about people getting together and talking about their Copperleaf experiences, presenting their personal use cases. It's really centered around clients coming and presenting what they're doing. So it's a platform for them to come together. We have different tracks. We use it as an opportunity to introduce anything new that we've developed or to test out ideas of things we might like to develop that have either been innovations coming from what we think or innovations that have been sparked by customer requests.The partners are there largely in support of clients. So many of these partners are ones that we've actually had joint implementations or cooperations on with the clients that are in the room. And they often come with clients. And like I said, we had multiple presentations or client case presentations this time that were done in conjunction with the partners. So we're starting to get to that point where it's kind of a triangular relationship between us, the client and the trusted adviser. And obviously, then you bring in the independent software vendors like SAP on the other side of things, and it becomes a more complex ecosystem.All of that is very normal for enterprise software. We're not, by ourselves, at the client's digitized environment. We've got software on both sides of it, and you've got SIs making sense out of the entire stack and weaving things together in end-to-end solutions. So it takes that whole group to be able to provide a proper unified solution to the client. We take away a lot out of those discussions, watching our clients talk to each other about similar issues often across industries and across geographies really does give us a lot of [ fodder ] for going away and innovating. Our product development group met with a lot of the clients as a separate session to test out some ideas with them. So it's great. And we do have some selected prospects. We try not to overdo it, but we do have prospects come along clients -- prospective clients who really benefit from seeing those presentations, seeing the live case studies, being able to question the people that have been using the system for quite a while.We're really blessed to have an installed base of clients who are happy to do that and to engage with our prospects and reference for us and help us to solve problems for those people. So it's all of that in a compressed few days generally in Vancouver, and we haven't had one since 2019. We had a few -- we were timid about trying to bring everybody together in Vancouver last year because we wondered whether we were far enough out of the pandemic. So we did a couple of things at the end of last year geographically, just out in the region, thinking that if one got canceled, then you still have the other 2/3 to do. We managed to get all 3 of those done, but there's really nothing like bringing everybody together in Vancouver in May to talk Copperleaf. It's one of the highlights of our year.

[Dylan Becker, analyst]

Sure. Yes. Yes. I know that makes total sense. It sounds like a very important, obviously, engine for you guys. And maybe you kind of touched on it in the [Technical Difficulty] actually. But emphasizing kind of the customer success side to getting everybody on the same page there. It looks like we're seeing nice traction on the expansion side. Again, how valuable is that in these discussions with those customers of getting a deeper understanding of that strategic road map that gives you guys maybe a further sense of pipeline coverage or pipeline visibility as you think about, again, the ability to expand within that existing base as well?

[Paul Sakrzewski, executive]

Yes. It's a good question, Dylan, and thanks. It's -- our NRR is obviously pretty good when compared to pretty much any benchmark in the market. We retain clients and our clients are happy to keep on the journey with us. Like I said, we're getting into a mode of phasing. Looking for the first thing, diagnosing really carefully what the first step, the highest value first step is for our clients, getting that done and quickly so that they get the value faster and then applying that value against the rest of the agreed road map of rollout, which can be 2, 3, 4, 5 phases of rollout because most of our clients do need pretty much everything we do.And so getting that agreement upfront with new clients and getting in and talking to our existing clients about having an agreed road map and forecasting out what their requirements might look like, obviously, gives us a lot of predictability around those expansion deals. So -- but it takes dedicated resources. So again, the go-to-market requires client success managers who can walk that line between being focused in a very white-gloves way on ensuring that our clients are getting everything they need and they're getting to success, and they're using the software and they're getting value. But also sitting down with them and saying, "Look, you've got an opportunity to put a road map in place to consume more software and articulate the value of that." So they need to be able to almost get into that trusted adviser status and be able to sit down with the clients and build out those future road maps. And I think we've got dedicated resource around that now, and it is having a good effect.

[Dylan Becker, analyst]

Got it. That makes perfect sense. Appreciate it.

[Paul Sakrzewski, executive]

Thank you.

[Operator]

Your next question will come from John Shao at National Bank.

[Meng Shao, analyst]

I just wanted to get more understanding on your perpetual license throughout this press release. You mentioned that you're [Technical Difficulty]

[Paul Sakrzewski, executive]

Sorry, John, we're getting 1 out of every 3 words.

[Meng Shao, analyst]

Okay. Is it better now?

[Paul Sakrzewski, executive]

I think so.

[Meng Shao, analyst]

Okay. Just wanted to get an understanding of the perpetual license revenue. Chris mentioned, that was mainly due to the SaaS transition. But is there anything to do with the timing of those deals, given that they can be bumpy sometimes.

[Paul Sakrzewski, executive]

Yes. I mean, we had a big Q2 last year. You can see by the size of the reduction year-on-year Q2 to Q2. We had a big Q2 from a perpetual license point of view last year. This year, we've had a substantial reduction. And it's -- we don't necessarily get into the exact number of deals, but it's only a couple of deals that make that swing. So -- and timing is obviously an issue as well. If that deal lands before the 31st of -- or the 30th of June, it's in the quarter. If it lands on the 1st of July, it's in the following quarter. So those single deals make a material difference to that license performance.

[Meng Shao, analyst]

Okay. Got it. And other question for me is any update on your customer churn, are you still a minimum around 0?

[Paul Sakrzewski, executive]

Yes. Thankfully for now.

[Operator]

There are no further questions. So I will turn the conference back to Paul Sakrzewski for any closing remarks.

[Paul Sakrzewski, executive]

Yes. Thank you, everybody. Great questions, and we appreciate everyone joining us today. We are super excited about our ongoing business progress and the tremendous opportunity we have in front of us, and we look forward to providing future updates as the year progresses. Thank you.

[Operator]

Ladies and gentlemen, this does conclude your conference call for this afternoon. We would like to thank you all for participating and ask you to please disconnect your lines.