Copperleaf Technologies Inc

TSX:CPLF

Earnings Call Transcript

[Operator]

Good afternoon, and welcome to Copperleaf Fourth Quarter 2013 Results Conference Call. [Operator Instructions] This call is being recorded on Tuesday, March 23, 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 medially from those projected.

The company undertakes no obligation to update these statements, except as required by law. You can think about these risks and uncertainties and 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.

The consolidation between the 2 can be found and the company's regulatory documents, which are available on sedar.com or on our website. In addition, commentary to be able include key performance indicators that help evaluate the business, measure performance, identify trends affecting the business, formulate business plans and make strategic positions. Such key performance indicators may be calculated in a matter difference than similar key performance indicators use my other companies.

And with that, I'd like to turn the call over to Paul Sakrzewski.

[Paul Sakrzewski, executive]

Thanks very much, and good afternoon, everyone. Thank you for joining us to discuss Copperleaf's performance. I'm excited to share an update of our progress in 2022 and some of the plans in the future. .

On today's call, I'll make opening remarks before passing the call over to Chris to provide a detailed review of the financial results. Following our prepared remarks, we'll open the call to questions.

Copperleaf demonstrated ability to deliver tangible return on investment to our clients to drive continuing demand for our solutions in 2022 and again earned us a 100% client retention for those companies that have already implemented our solutions.

Our dedication to helping our clients successfully optimize their investment planning and maximize capital efficiencies has earned us the trust of some of the world's largest and most respected organization. Against an uncertain macroeconomic backdrop, Copperleaf recorded a 26% increase in annual recurring revenue and subscription revenue grew 27% to $39.9 million.

Revenue for the full year increased 6% to $73.4 million despite a 60% reduction in perpetual revenue, which was driven by deal mix, timing and our ongoing transition to SaaS. The conversion to SaaS reduces the initial year revenue, which creates a highly visible future revenue stream.

Several factors we noted in Q3 and Q2, including deal elongation and availability of client resources impacted our Q4 performance, resulting in a closing backlog of $107 million in 2022. With progressive pipeline growth, thanks to the investment in the global go-to market and the continued development of our partner ecosystem, we're entering the year with the largest pipeline of opportunities in our company's history and giving us confidence on bookings.

With our best-in-class decision analytics solutions, marquee reference clients global coverage and strong client retention, Copperleaf offered long-term high-quality recurring revenue in the fast-growing division analytics market.

Our increased environmental, social and governance focused investments also contributed to revenue in 2022. Copperleaf's unwavering commitment to providing practical software solution to help manage ESG issues continue to drive demand, influencing nearly 1/3 of our sales in 2022.

We strongly believe the technology-driven approach to sustainability will drive continued growth as they become more crucial worldwide in such an environment, Copperleaf is ideally positioned to the proven solutions to meet the rising demand in the space. The Copperleaf's Community Client Forum is a thriving and expanded community with nearly half of our clients participating in client-led innovation with Copperleaf Labs during 2022.

Collaborating with the Copperleaf community enables us to stay at the forefront of the industry and find solutions that drive our business. Looking ahead to 2023, we're confident that we have the right strategy in place to continue our growth trajectory.

We started 2023 with a refreshed operating model that focuses on and bring dedicated resources to 4 key areas of our client-facing organization, partners and ecosystem, product management, industries and value engineering.

Let me share some more details on the first focus area partners and ecosystem. Our team has been working hard to establish Copperleaf as leaders in the industry, and we believe expanding our partnership ecosystem will help us amplify our position in the market and reach new customer segments.

Last year, we made substantial progress enhancing our system with partners continuing to influence most of their deals and contributing to our record global pipeline. Subsequent to the quarter end, we signed an endorsed app initiative agreement with SAP.

This relationship signals SAP's recognition of Copperleaf's industry-leading technology and the value that our combined solutions can deliver to organizations globally. I truly believe the cooperation between SAP and Copperleaf will provide our mutual clients with best-in-class capabilities to further unlock value in their business and achieve their strategic goals.

Turning to product management. We've taken some significant steps forward. Copperleaf delivered 4 product releases during 2022 and released numerous new innovative features. This includes the Q4 release of Optimize Ready, which is machine learning backed functionality that helps clients improve investment quality and portfolio values by automatically analyzing investments in portfolios to spot issues and inconsistencies and provide recommended solutions.

Our technology is one of our key competitive advantages and by implementing a go-to-market model that incorporates product specialists and clear global product ownership. We believe that we will accelerate our ability to bring new products to market to deliver value to our clients.

At the time of the IPO in October of 2021, we estimated our total addressable market at $12 billion per year. Since that time, we've been extremely successful at extending Copperleaf's position in our established sectors and also in our efforts to penetrate new industry verticals in our TAM.

During 2022 alone, we signed our eighth client in the U.K. and had new sector success in air services, pharmaceutical, metro transit and mining representing substantial new referenceable global markets for Copperleaf.

Going forward, we intend to continue to planfully approach new market sectors where we are able to apply the required resources where it's clear that the scope for growth is material and where we know we can provide substantial value to the largest clients in those sectors.

Overall, despite some macroeconomic headwinds, we continue to see a healthy demand environment with strong demand from clients and prospects for decision analytics. Our pipeline has continued to grow over the past 12 months, which speaks to the strength of our value prop and the expanded go-to-market team we've been building.

In 2023, we expect our growth to be driven by sustained industry tailwinds, such as the increasing needs of our clients to practically manage ESG requirements, acceleration of our ability to bring innovation to market in the form of new products and enhanced services, leveraging our investments in sales and marketing, which are demonstrating early positive results with increased lead generation and pipeline activity expansion of our alliance ecosystem, which includes new partners like SAP.

In summary, Copperleaf remains well positioned for growth with best-in-class solutions, a deep sales pipeline, strong balance sheet and a growing client base. We've established the tools community and structure to scale the business and drive future growth and shareholder value.

I'll now turn the call over to Chris to review our financial results in more detail.

[Chris Allen, executive]

Excellent. Thanks, Paul. Good afternoon, everyone. We're pleased to report that our 2022 results continue to deliver growth across our key financial metrics.

Revenue for the year ended December 31, 2022, was $73.4 million, an increase of 6% from $69.3 million in the comparative period, driven by an increase in new clients and the expansion of existing clients. It's important to recognize that the 2022 revenue growth rate was impacted by a 60% reduction in perpetual revenue for the full year, driven by deal mix, timing and our clients' continued transition towards SaaS.

Perpetual and term-based license revenue was $5.1 million for the 12 months ended December 31, 2022, representing 7% of total revenue compared to $12.7 million in the comparative period, which represented 18% of total revenue.

Subscription revenue for the full year ended December 31, 2022, was $39.9 million, an increase of 27% in the prior year, representing 54% of 2022 revenue as compared to 45% of revenue in 2021.

Professional Services revenue for the year ended December 31, 2022, was $28.3 million compared to $25.2 million in the prior year, and this segment represented 39% of 2022 revenue. Our annual recurring revenue at December 31, 2022, was $46.4 million, a 26% increase compared to $36.8 million at December 31, 2021.

As of December 31, 2022, our net revenue retention rate was 110%, reflecting expansion within our client base and strong renewal history. 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 was $107.3 million at December 31, 2022, a 5% increase from $101.9 million at December 31, 2021. Gross profit for the year ended December 31, 2022, was $54.8 million, representing a gross margin of 75% compared to $54.9 million in the prior year.

As a result of our planned investment in 2022 to capitalize on the inflection in the decision analytics market, we had an adjusted EBITDA loss of $24.9 million for the year compared to an adjusted EBITDA gain of $2.1 million in the prior year.

Adjusted EBITDA loss in the fourth quarter was $2.0 million compared to an adjusted EBITDA gain of $2.3 million in Q4 2021. Adjusted EBITDA for the fourth quarter was impacted by lower revenue, which was partially offset by reduced incentive compensation.

Net loss for the year ended December 31, 2022, was $28.2 million or a loss of $0.41 per share compared to a net loss of $6.5 million or a loss of $0.24 per share in the prior year.

Net loss for the fourth quarter was $2.4 million compared to a net income of $0.1 million for the comparative period. We finished the year with $149.5 million in cash compared to $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.

With our strong unit economics, we remain focused on making thoughtful, long-term investments that will drive accelerated growth in 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. Thank you.

[Operator]

[Operator Instructions] The first question comes from the line of Dylan Becker from William Blair.

[Dylan Becker, analyst]

Nice job on the subscription front here. Maybe I wanted to touch on -- you called out the partnership approach and the SAP opportunity. I guess that it's probably not a material revenue driver any time in the near term. But is there a way that we should think about kind of the ramp opportunity here -- or what's that long-term opportunity can set with that partnership with SAP kind of given their long-term positioning in the EAM market?

[Paul Sakrzewski, executive]

Thanks for the question. I think I think the way to think about it is the SAP initiative is an invitation-only thing. We -- SAP scan the market for what we do. Selected us as best of breed invited at the end. And the reason they're doing so is because we fit nicely in an end-to-end solution from their point of view, they have software on either side of us in the stack, and we feel a nice gap there that they don't provide.

So when it comes to their go-to-market, I mean, SAP, I think, is still the largest enterprise software company in the world. We have access to their installed base now. They recommend us that the client needs and that provides us with a lot of leads, a lot of pipeline and also some trusted adviser status from their point of view to help us get closed.

So in the medium to long term, it looks really positive for us. In the short term, we need to ramp up, and they need to understand what we do, and we've got an education process around that. We expect the software to be on the SAP store early in Q2 and from that point, we start selling together in earnest into the installed base. So I think it's -- as you say, there's a ramp period there, but the medium to long term feels like a really material following win for us.

[Dylan Becker, analyst]

Got it. That's really encouraging. Maybe to stick with kind of some of the other prepared remarks, around kind of some of the new vertical traction. I think you guys called out health care, Metro is another 1 as well, too. There's a ton of R&D investment in health care in particular.

But how should we think about your guys is balanced between kind of model development and expansion into kind of new verticalized use cases versus taking deeper, going deeper in some of your more entrenched areas and delivering value and still kind of evangelizing some of those market opportunities as well.

[Paul Sakrzewski, executive]

Yes. It's a good call. I think just a slight -- maybe not a correction, but a clarification there, it's pharma and not necessarily health care but at this point. But 1 of the features of copper leaf is that expansion into new sectors doesn't see us doing remarkable things with the core software. It really is around the value model and the value framework. .

And that is a relatively small lift as we go into new verticals, and it's a feature of copper left that we can expand into new verticals without doing a massive amount of work -- so from that point of view, accessing new industries gives us more TAM, gives us more opportunity.

Now having said that, we don't want to do that in a way that's terribly ad hoc. We're very planful about which industries we go after we will be putting dedicated resources into industry specialization so that we speak the language of our clients, and we can articulate value to them in terms that they can understand.

And that does take resources. So -- we don't want to be everywhere all at once. We are being pretty planful about selecting our industries, and we believe we're doing that in a way that we can absorb and not detract from the work that we're doing in our core of core, which still is on a global basis, largely untapped and white space.

[Operator]

Your next question comes from the line of Maxim Matushansky from RBC Capital Markets.

[Maxim Matushansky, analyst]

I just wanted to touch on the efficiency of the sales force. You did a lot of hiring in 2021, and I guess early last year. And I wanted to ask about kind of the performance of those new hires and if the performance levels you expected.

I mean, I think you touched on kind of the lead gen and pipeline activity increases. But are those kind of investments performing at the levels that you expected? And if not, at what point, presumably in the coming quarters, would you have enough data to determine that success level?

[Paul Sakrzewski, executive]

Yes. It's a good question, Maxim. I think we are seeing the people that we've hired start to perform. I mean just to step back a little bit, we saw the inflection point in the sector, which largely we are creating for Decision Analytics in this space in 2021. And we went IPO, we raised some money. We started to build capacity. We never really expected that, that capacity would deliver a huge amount in 2022, but we did see good pipeline development. And in fact, we did see some of those new people close deals.

So early days, but we are seeing some good performance out of the build of the sales force. Execution is -- 2023 is all about execution and making sure that all the capacity that we've built into the go-to-market team is contributing. And we'll see that absolutely happen this year.

The pipeline that we've created is good coming into the year and cover that target. And we are confident that we're going to have a good bookings in ARR here. So I think they are performing to schedule. Last year, we saw the market and the macroeconomic conditions turned a little bit against us, and that was a little unexpected. But we are executing to plan, and I think we've hired well and the team are doing well.

[Maxim Matushansky, analyst]

Okay. Got it. That's very helpful. Just switching to the rapid start and kind of the success that you're seeing in the U.K. water market. I'm curious if there's any other logical kind of pockets of geographies and sectors where you can have similar success? And was there something unique in terms of the regulatory framework in the U.K. water market or some other facet of the situation kind of just particularly in that segment that led to relatively quick adoption? Or is there other areas that you might be able to kind of have that success as well?

[Paul Sakrzewski, executive]

Yes. I think we're already seeing this in a couple of different places. And it's not necessarily just limited to geographic trends. There definitely is a the U.K. water market is a regulated and well-regulated sector. They're failing forward looking on the topic that we present around value-based decision-making and capital optimization. And so it's a good path for us.

And we've built a solution there, which suits the regulatory market and the buying pattern to the clients in the U.K. very well. We've done similar things in the distribution transmission, the power distribution transmission market in Japan, where regulatory conditions are changing similarly.

And we've got a good pattern there where we can rent and repeat solutions, and we've got a good track record there as well. But all of these things do tend to have global implications. Those pockets of best practice tend to be followed by industry practices in other countries. In the power sector, people are looking to the U.K. to their standardized asset risk modeling, the CA model, and that's been good for us.

We've managed to codify that and take it internationally. The experience we've had in the U.K. water sector is starting to have traction elsewhere because people do look to the U.K. as a best practice market. And so it's not just market -- industry by market. It's taking that knowledge -- the fact that we've actually coded that knowledge into our value model library, and we can shift and lift that and apply quite quickly to clients in other geographies who are walking down a similar path. It's another 1 of the industry advantages that we have.

[Maxim Matushansky, analyst]

Great. And final 1 for me. You had a strong improvement to your EBITDA margins this quarter, which has helped kind of the quarter-over-quarter absolute declines in operating expenses across the board. You mentioned the part of this is reduced incentive compensation. So I'm wondering kind of what level of expenses we should expect going forward? And how much of that decline was kind of that reduce in compensation?

[Chris Allen, executive]

Yes, I'll take that one. Thanks, Matt. Yes. So just as we said in our remarks, a lot of that -- the Q4 specific drop that you see was focused on the incentive compensation. But as we said throughout the year, we did cut back on hiring to a certain degree, based on the macroeconomic environment.

So as far as your question on what to expect for 2023, I think you can start to look at what the run rate was at least starting going through Q3 at least and more or less carrying that forward. Obviously, as we've explained, I think, in our prior quarters, we are largely planning on holding headcount flat through 2023. We believe that the hiring that we've made in 2022 sets us up very well for that.

We have put quite a bit of infrastructure in place in 2022 is now a new publicly traded company. And as well, as we saw last year, there were sizable salary increases there where it was inflation that had to be taken into account. So all of that will come into play with regard to our expenses next year just as far as run rate expenses on the headcount that we've got with those salaries and increases baked in?

[Operator]

Your next question comes from the line of Thanos Moschopoulos from BMO Capital Markets.

[Thanos Moschopoulos, analyst]

Chris, just to expand on the OpEx discussion. So was there a reversal of previously accrued incentive compensation in Q4.

[Chris Allen, executive]

That's correct.

[Thanos Moschopoulos, analyst]

Okay. That's why Q3 about run rate. Got it.

[Chris Allen, executive]

Correct.

[Thanos Moschopoulos, analyst]

Okay. How should we think about licenses in the business going forward? I mean, I guess, licenses are going to be maybe a random number, obviously, is customer anything specific. But would your expectation be perhaps that is this 2022, maybe going to be the high watermark and just license we'll probably lower in subsequent years? Or could it expect back up to what we saw in 2021, depending on the model.

[Chris Allen, executive]

I'm assuming Thanos, you're talking about perpetual licenses, right? .

[Thanos Moschopoulos, analyst]

Yes, yes.

[Chris Allen, executive]

Yes. I mean our deal flow doesn't run into the hundreds and thousands. So every 1 or 2 really shifts needle quite substantially. So I think there's still some fluctuations left in it. Last year, we saw a pretty substantial reduction in perpetual licenses, which indicates it follows the general trend towards that, and we believe that, that will just continue over time.

But year-on-year, there's still going to be a fluctuation. So we have to look at our pipeline and try to assess what we think is likely to go perpetual and what's likely to get that. We've got indications on that in terms of the track record of the country and the capitalization rules inherent in the industries in the country. So we make our best guess.

But over time, we're definitely heading directly towards a SaaS environment, but we will see ups and downs. And like I said, 1 in 2 deals really shifts the eagle for lease pretty substantially year-on-year.

[Thanos Moschopoulos, analyst]

Okay. As far as the spending environment, is it pretty consistent in recent weeks? Or have there been any changes of note in terms of sales cycles, approval processes, customers scrounge a the kind of stuff?

[Chris Allen, executive]

Yes. It's always hard to put a trend sort of coming out of the environment that we came out of that we feel like things are freeing up a little bit, but it may also be a factor of well, a function of the fact that we're getting in front of clients live, again, I've been able to do some travel and get in front of some people and sit down with them and talk them through.

And I think when you're a large enterprise software company, that face-to-face is still important. So I think we're probably seeing the effect of a bit more face-to-face engagement. We were able to meet up with all of our clients over the past 4 or 5 months. We had our 3 industry summits in all of the 3 regions in addition to our Virtual Summit last year. And so I think that's been having an effect.

But generally speaking, I am probably seeing some freeing up and a little bit more confidence in our client base to move forward.

[Operator]

Your next question comes from the line of Gavin Fairweather from Cormark.

[Gavin Fairweather, analyst]

Maybe just to build on that recent discussion around things freeing up. I imagine that you have a decent amount of kind of bottom of funnel deals given some of the macro influences that you saw throughout 2022.

So are you seeing those deals are now kind of resuming and increasing pace here in the first half? And could that maybe shift the seasonality that we see in '23 and make it a bit more front-end weighted if some of those delayed deals are moving along and closing.

[Paul Sakrzewski, executive]

We would love to see that as well, Gavin, but I think we can expect another year that runs according to most of our clients annual cycle, their financial year. generally speaking in this industry, you see a heavy Q4 and the second half is generally heavy in the third I think that we'll probably see something into that pattern as well this year, we're putting best efforts into generating linearity quarter-on-quarter because it doesn't suit us to have massive Q4 is either for all kinds of different reasons.

But it is the shape of the industry, and it's the way that enterprise software is kind of almost to the client base to buy -- so I don't think we'll be able to unilaterally shift that, but we can mitigate it a little bit. 2023 is still going to be -- remain largely back-end loaded.

[Gavin Fairweather, analyst]

Okay. Got it. And then any other trends you'd call out in the pipeline that you've noticed kind of by region or vertical or deal size? Anything that's worthwhile highlighting on the call here.

[Paul Sakrzewski, executive]

No, I can't think of anything material that would shift our thinking. Anything material enough that would make us change our plans or anything like that No. I feel like we're doing well in our core sectors. We've introduced some new sectors. And every time we introduce a new reference client in the new sector, it gives us the ability to go out and generate pipeline. So we're still at that point where our global TAM is largely white space. So nothing that would shift our strategy.

[Chris Allen, executive]

Yes. And I can just add on to that and agree with Paul. I mean we are seeing continued very good growth within our pipeline over the last 12 months. And it follows the pattern that we have been seeing, which is continued steady growth within our core sectors, electric utility, natural gas, utility water and now continued expansion in some of the new sectors that we're starting to penetrate transportation, right, with rail, now getting access into that metro transit area, highways.

And yes, some of the others like oil and gas and obviously, water is a big one, if I haven't mentioned that already. So a lot of that -- more of the same, I'd say, again. .

[Gavin Fairweather, analyst]

Okay. Great. And then just lastly for me, a nice increase in the backlog this quarter, maybe just zeroing in on professional services. Can you just speak to the backlog there and whether you can maintain kind of the current pace of billings or grow billings in the coming quarters despite maybe partners taking on a bigger role.

[Chris Allen, executive]

Yes. Thanks. So yes, I mean, we did see a big jump in backlog in Q4, which is normal. The year-on-year was only 5%, considering some of the delays that we did see. But no, we definitely feel like we're well positioned to execute on the services revenue this year.

As Paul was indicating, we do see that even with the delays that we did see in 2022 I'll just comment that some of them absolutely slipped into Q1. We're making good progress on a couple of those have already closed. So there's good business there. But when we look overall, as Paul was saying, the tendency is for those not to just slip into Q1, they follow their budgeting cycles, which typically means that it goes pushes through to Q3 and Q4.

So we'll probably expect a similar profile to what we've seen historically. And that means that, that's when the deals will drop, and that's where we'll start to see services revenue pick up, so that will probably be later in the year. Bottom line is we feel that we've got the capacity in hand to manage the services revenue for 2023.

[Operator]

[Operator Instructions] Your next question comes from the line of John Shao from National Bank.

[Meng Shao, analyst]

So Paul, you mentioned geographic expansion in your prepared remarks, how easy it is to penetrate into a new country? Does it require a lot of like product modification and training each new area? Or is more of an easy sale process?

[Paul Sakrzewski, executive]

I'd love to say it was an easy sale process. I haven't heard those words in the taste for quite a while. But look, I think we're getting better at it. Our references work well across borders. So we've got good references in the electric utility market in transmission distribution and generation. We've got good references in water. We've got good references in gas and oil and gas and now transport and transportation in road and rail.

So those references really do translate well at Copper leads into new geographies. in the new geography, people will generally want to see something in their geography. So getting that first sale even in an established industry is a lift and takes a little while. And generally speaking, we've got new account executives working on that because they're a new person in that market and they're generally speaking, a different language to the rest of the business.

So there are those things to overcome. But generally speaking, once we get our first reference, we've got good references internationally behind that. So once we're local and international in that sector. things start to flow from there. But it is something we need to take seriously because the early days of a new market do require support from the rest of the business, which, of course, if you do it at scale, takes resources.

So I think one of the good things is we've been on an expansion process over the past couple of years. I think for 2023 is the consolidation year. So we can take a little bit of a rest from all of that hiring and scaling and HR work and and just make the geographies and largely the sectors that we're in successful.

[Meng Shao, analyst]

Okay. And on the SaaS transition, I understand this quarter, the license revenue was lower, just partially because of the transition to a recurring model. So my question is, when I look at your SaaS revenue growth this quarter, much of the growth is coming from those existing logos moving to a recurring model versus how much is coming from new logos?

[Chris Allen, executive]

I'll take that one. Basically, the bulk of it is coming from new logos effectively. The only other component for the SaaS increase would be expansions, but that's largely existing SaaS clients adding to their solution rather than any active conversions from perpetual to SaaS.

[Meng Shao, analyst]

Okay. And my last question is on the SAP announcement. Should we expect more of a similar announcement down the road with other ERP vendors? Or is this more of an exclusive relationship with them?

[Paul Sakrzewski, executive]

There's nothing exclusive about the relationship. We already innovate with products in the stack from other vendors like Maximo and the other ERP vendors as well as a whole bunch of other technology partners in and around our space. So there's nothing exclusive about it. I will say, though, that the ability for Copperleaf to support these large partnerships is limited.

So we need to take the ramp process and the enablement and partnership process seriously and not go too broad too fast because we could end up in a position where we've got channel conflict and in a position where we're not supporting those partners as best we can. So again, it's 1 of those areas that we're going to be planful about going to the places where we can do the most good and where we've got the most bank of buck for us and for the clients and also where we can provide proper support to those partners that they ran.

[Operator]

Your next question comes from the line of Robert Young from Canaccord Genuity.

[Robert Young, analyst]

Hopefully, you can hear me okay. Maybe first, I'll start up an extension last question. SAP is -- they drive a lot of activity within the SI and the services all the potential channel partners that you could be interested in signing up.

And so I'm curious if the SAP announcement created a bump in the level of interest you're seeing from potential partners, big partners like Accenture or an et cetera.

[Paul Sakrzewski, executive]

Yes. Thanks, Robert. It's -- we've certainly seen an uptick in interest in us from the SI partners particularly. I think people are recognizing that the asset investment planning is a burgeoning space. They are starting to -- the SI partners are starting to build practices around this -- they would like to provide end-to-end solutions, which include what we do, but also things on either side of us, which is what they do, their system integrators and they pull from different players to software from different places and they provide end-to-end solutions for their clients.

So we're seeing an uptick in interest, whether that's directly related to the SAP announcement, I don't know. But you can imagine that the SAP ecosystem, which is used to on selling and integrating SAP solutions often with other third-party solutions, they will be interested in us as well, and it will drive some uptake.

[Robert Young, analyst]

Okay. And then second question, in the prepared remarks, you noted that there was some issue around the availability of resources at your customers. I don't know if I heard that correctly, but if you could just expand on that. What does that mean? Maybe give us a sense of how that's impacting the conversion of the pipeline?

[Paul Sakrzewski, executive]

Yes. I mean most of our clients have got substantial runways of software that they're trying to implement, and they've got other things that they're doing as well. And particularly coming out from COVID conditions where they also were subject to the great resignation, and we saw a fair amount of personnel churn at our clients and also probably a reduction in capacity in conjunction with an increase in demand for implementation of software internally, it drove them to be cautious about closing new software deals and taking on more work.

So we definitely saw that. We do feel like that is easing a little bit, but it's still out there. Our clients are still implementing. There's a substantial trend, particularly in the SAP environment, while we're talking about to take their on-prem solutions and their perpetual solutions and convert across the SaaS. There are huge programs around that, not just at SAP, but at the other ERP vendors.

And that trend in itself is taking up a lot of capacity at our clients. So it's 1 of those things we have to speak to. We believe that you're better off starting with the decision first. and working out what data and what information you're going to need to make good decisions. So starting with copper leach drives you towards an efficiency around deciding what information you need to feed those decisions. So we certainly feel like we -- our clients will be best placed to go first with us, but it takes a little bit to convince them of that.

[Robert Young, analyst]

Okay. Okay. And I hope you said in the call a couple of times that the demand is strong, but the pipeline is strong. But I guess there's a bit of elongation of sales cycle and then there's this resource issue, I guess.

And so I would assume that the pipeline is getting -- it's not just a record level, but it's growing faster than it was before. Would that be a fair statement? If you still have the same amount of organic lead gen and then you have some elongation -- can we infer that the pipeline is maybe accelerating or going faster than that in previous periods?

[Paul Sakrzewski, executive]

I think annually, in dollar terms, we're adding more dollars of pipeline per year. But if you look at it in percentage terms, it's pretty steady. Chris, I don't know whether you've got a view on that, but we're certainly adding more pipeline in dollar terms than the number of deals that we have in the past. But if you can imagine, it just takes more to list our pipeline by 20% and 30% than it did before. And I think the added capacity that we put into the field and the partner and ecosystem starting to contribute is making sure that we can maintain pace on the percentage of pipeline growth year-over-year.

[Operator]

Your next question comes from the line of Valery Heckel from CIBC.

[Valery Heckel, analyst]

This is Valery on for Todd Coupland. My question is on the company's rapid start solution for electric distribution companies, which I believe was introduced last quarter. And I think the idea behind it is that it will help improve implementation time for regional utilities. And so I was wondering if you have launched this solution? And if so, whether you can share any early traction you might be receiving from clients?

[Paul Sakrzewski, executive]

Yes. And I think you're probably restoring. It's a little bit of an extension of what I was talking about before, the codification and the packaging up of the same solutions out of the U.K. market. It is driving good discussions, and we've been successful at implementing versions of the CN solution across different markets, including Japan and New Zealand and Australia.

It's a very efficient way for our clients to get into this space. They don't have to invent those things from first principles. They can put their value framework together largely on a mix-and-match basis out of our framework library.

Again, that's 1 of our good competitive moats that we've built up over a dozen years of collecting up all of this IP and making sure that we're capturing it and codifying it and curating it in our library. So it is working. And we've got campaigns around that with our global sales force, and we expect that it will follow a similar part to the rapid start solution that we have for water in the U.K.

[Operator]

Your next question comes from the line of from Bank of America.

[Unknown Analyst]

This is a on for Koji. So my question is on partner channel. You have already touched this topic, but just to be more clear, it looks like the channel is expanding pretty well. Could you please give us some color on what's the revenue contribution from Partner channel like this year versus last year?

How do you see it like moving forward, like how much of the bookings being driven by the partner channel this year? And like are there any partners have started to expand their copper lease practices?

[Chris Allen, executive]

So I'll start here and then Paul can probably jump in for the expansion. But generally speaking, it's -- so first of all, it's not a metric that we typically disclose going forward. What we have disclosed historically is, generally speaking, when we look at the bookings, roughly 50% -- over half of our bookings are influenced by partners in some ways, so either initiated by partners or walking alongside us as we co-sell together with them or even finders that come in.

So a good portion of our bookings involve a partner to some degree. And Paul, maybe you want to chime in on just the expansion of their property practice.

[Paul Sakrzewski, executive]

Yes. And I think there's a couple of things to it. I mean, like I said, I think the space is evolving to the point where the SIs in the major SIs and the strategy consulting firms are ready to build practices. They're ready to invest and build practices around these disciplines. So where at that inflection point that drove us to IPO and expand out the capacity that we've had, we're seeing that inflection point translate into partner activity.

We are going into 2023 for the first time with dedicated resources in our region around partner activity. And we've also created our global growth office that we talked about earlier in the prepared remarks, which effectively incorporates partners, industries, product and value engineering.

And that, again, is dedicated resource to coordinating growing and supporting our partner and network. So a lot of that expansion activity has gone into that sort of area where we can get good leverage and good efficiencies out of building those processes around partners globally.

And at the same time, we're seeing the market receptiveness tick up for us. We definitely will see an increase in the -- not just the go-to-market channels, but also those troffer advisers to advise our clients to what software to buy. And that's important for us.

Our clients love hearing from us about our software, and we're very proud of what we do, but it's very powerful for them to hear about our software from the trusted advisers that advise them across their entire software stack. And we're starting to see that occur more often.

[Unknown Analyst]

Sure. Just just 1 more follow-up question on the sales cycle. You already talked about the labor issue in some of the verticals, and that's actually extending the sales cycle. And you also talked about it's going to take some time to improve. But is there any like specific vertical that is really affected? Or is there any other verticals that you're seeing a lot of improvement at this point of time?

[Paul Sakrzewski, executive]

No. Again, it's -- we don't see all of the market in every geography, in every sector. But it feels like the world is climbing out of a resource hole, and it's going to take a little bit of time for that to happen. So I couldn't pick up on any specific trends in any industry or any geography where we think the green shoots are green as anywhere else.

But we are seeing a general trend towards improvement in that area.

[Operator]

There are no further questions at this time. I will now turn the call over to Mr. Sakrzewski.

[Paul Sakrzewski, executive]

Okay. If there are no further questions, I would just like to conclude by thanking everybody for joining us today. We're very excited about our ongoing business progress. We feel like we have a tremendous opportunity in front of us, and we look forward to providing future updates as we go through the year. And that I think we can conclude our conference call today.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.