Hello and welcome, everybody. Good afternoon here in Europe, and good morning to any participants in the US. Thank you very much for joining our earnings call on our half-year results 2023 today. I am Jörg Tewes, the CEO of Exasol. With me today here is Jan-Dirk Henrich, our Chief Financial Officer. As you hopefully have seen, we published our half-year report 2023 earlier this morning, where we confirmed our preliminary results that we put out earlier this month. Looking at today's agenda, I will start with our H1 performance and an update on our go-to-market and product offerings. Before JD, we'll dive deeper into the financial details and our outlook for 2023. Afterwards, we will have time for a Q&A session, where we're happy to take your questions.
Before we dive into the content of the presentation, let me briefly point your attention to our disclaimer regarding forward-looking statements. Let me now start with a summary of key points. Overall, we finished the first six months with an ARR development that was not as dynamic as we had hoped for. Although ARR increased by 13% on a 12-month perspective, this was below our expectation as we saw some deals slipping into the second half of this year. The good news, though, is that we managed to close some of the deals already in July, with the effect that ARR increased by EUR 0.6 million in that month alone. This surpasses total ARR increase in Q2 and gives us confidence that we'll manage to reach our ARR targets for the full year as our pipeline continues to grow.
I will touch upon our pipeline later in the presentation. With our new product version launched end of May, plus a refined market positioning, which will start to unfold in Q3 and Q4, we also expect to increase adoption and thus build a more solid base for future growth. While ARR growth was somewhat below our expectations, we managed to bring operational losses down further by 43%. This is a result of cost discipline combined with continued revenue growth. Adjusted EBITDA was at - EUR 1.2 million in Q2, after we reported a loss of - EUR 2.2 million in the 1st quarter of the year. This shows that we're on a good way to reach profitability in the second half of the year on a quarterly basis, as previously discussed.
Cash out went down by only - EUR 1 million in the first half of the year, which is a great achievement compared to last year's figure of − EUR 7.9 million, especially taking into account payments of EUR 1.9 million related to our stock appreciation program in the first half year. Overall, taking into consideration the additional liquidity generated with a capital raise end of June, our liquidity headroom is very solid going into the second half of the year. With net proceeds from the raise of EUR 6.8 million, which are not yet reflected in our balance sheet as end of June, since settlement occurred early June, July only, sorry, our liquid funds would have stood even at EUR 18.5 million.
Based on the deals that we see for the second half of the year, we're confident about our guidance and confirm the ranges we have communicated at the beginning of the year. As a result of additional cash in after the capital increase, we confirm our liquidity guidance and update the range, including that effect. Given the somewhat slower start of the year, we expect ARR, Adjusted EBITDA and liquidity to end up rather on the lower end of the respective ranges. Let me briefly touch upon our ARR development, which JD will discuss later in more detail. Overall, as you can see here on the slide, our net ARR increased by 13% to EUR 36.3 million.
Adding only EUR 0.5 million both in Q1 and Q2 is not what we aimed at the beginning of the year. As you can see, some of the slipped deals could already be closed in July, so that as the end of that month, ARR stood at EUR 36.9 million, which is more in line with what we had expected. Below our expectation was our new logo wins. This summed up to six new customers in the first half of the year, while we saw 14 customers terminating their contracts, which had a negative impact of EUR 0.7 million ARR. Some of these churns can be attributed to the overall economic situation. We also lost customers to competitors, primarily caused by the delay of our SaaS product offering from 2022- mid-2023.
It is important to note that churned customers continue to be typically rather small. We therefore have not reached a critical strategic position with those customers. As you will see later in JD's section, ARR loss from churn customers is on the same level as new ARR from new customers, meaning that we lost more small customers and gained new customers with higher average ARR. For those customers where we have already reached a strategic position, we continue to see hardly any churn. In fact, we currently have very promising discussions with several major customers about extending and expanding their contracts with us. We're refining our go-to-market approach to get more traction on new logo generation within customer cohorts, where we can make a strategic difference, which I will talk about in a minute.
To illustrate the reason why we remain confident with respect to our ARR goals this year, let me share some of the pipeline details with you on this slide. In total, you can see that we have net ARR opportunities for the second half of roughly EUR 7 million-EUR 9 million, which translates to a pipeline coverage of 1.5x-2x the remaining gap to the lower end of our ARR guidance. Most of them are related to existing customers looking to upsell their contracts, including a few key deals in seven-digit amount range. Since upsell opportunities typically have high conversion rates, we are confident to secure a sizable amount of these. New logo opportunities have started to pick up. We're currently in ongoing discussions with about 25 new customers.
Not all of them will be converted into new logo wins, of course, but it's a very solid foundation when it comes to increasing our customer base for future growth. There are a couple of initiatives to speed up winning new logos we have already started, which will help us to create more momentum. One is our accelerator program that we launched with our new product version, end of May 2023. One key learning we took from this launch was that while it was an important milestone in upgrading our technology platform, we need to further sharpen our go-to-market approach with a more product-focused addressing, approach, addressing specific use cases. Based on these insights, we're currently strengthening our offering with more focus on productization in the areas of BI, so business intelligence acceleration, AI, artificial intelligence acceleration, and data warehouse automation.
We will be adding additional PR and marketing activities around these areas in September to bring these and drive these approaches to market and generate opportunities and new logo wins out of it. What does that productization mean specifically? Let me dive deeper and share some of our thoughts here with you. The first area is our BI acceleration offering that solves the so-called spinning wheel problem a lot of companies are facing. Most companies these days use BI visualization tools like Tableau or MicroStrategy or Power BI to execute and visualize business intelligence tasks on their existing enterprise data warehouse. Over time, data volume and parallel usage increases, which leads to performance slowdown. Very often, queries that used to take seconds turn into minutes or even hours.
This is where our BI acceleration product comes into play, that allows companies to accelerate their existing BI stack without replacing their legacy system. The second item is our artificial intelligence acceleration offering. Data science and machine learning models are instrumental today for getting the maximum out of data. Exasol helps customers on two fronts to accelerate their AI journey. The first one is speeding up the data preparation curation phase, which typically eats up more than 80% of a data scientist's job. By fast data queries and transformation processes of our analytics database, this work can be made faster by factors. Secondly, customers can upload their statistical machine learning models into Exasol's in-memory engine and bring their models directly to the data warehouse. The advantage is that they can run those models on billions of data rows, empowering them to operationalize AI at large scale.
We are currently working on a new offering that makes it even easier to integrate Exasol into other artificial machine learning tools throughout the Exasol AI Lab. The third offering relates to data warehouse automation. This has, in our view, great potential as we reduce the complexity of setting up a data warehouse, which can take months and requires a deep technical understanding. With our new product offering, Yotilla, time and technical expertise is very limited, is a very limited requirement, as most of the processes will be done automatically in an easy-to-use web interface. This new product, Yotilla, currently lets Exasol customers automate the generation of their data warehouse process. In the future, we will also support other data warehouse products, such as Amazon Redshift and Snowflake.
Building on all of these new offerings, we already have partnered with several technology companies, and we'll and will even expand our partner universe. This will help our customers to easily accelerate their data journey, be it BI problems, AI adoption, or data warehouse automation, and it will give us a much more focused market entry. Looking deeper into our BI, our business intelligence acceleration, there are basically three different major use cases our customers use us in today, with increasing hurdles of entry from left to right. The first one on the left side is the easiest and quickest way to make inroads with new customers. It is the BI acceleration, where customers have the so-called spinning wheel problem I already mentioned. For most companies, this is quite an urgent problem that they want to fix fast and at low incremental effort and cost.
In terms of our go-to-market approach to new customers, this is the most promising way to enter, and this is why we will continue or start to focus even more on that approach and start our land and expand strategy from there. Quite naturally, companies do not only have slow data analytics problem with only one use case. Most of the time, it is a problem across the whole organization. Therefore, the next stage is to introduce an even broader consumption layer as the so-called gold standard and connect different silos within the data analytics stack in enterprises. This neither requires ripping and replacing existing legacy systems, as Exasol is able to connect different data silos in one database. Both of those options have a high priority in our go-to-market strategy, and we see a lot of growth potential focusing on these easy entry points.
When it comes to replacing the whole legacy system with the Exasol database, we're using a selective and opportunistic approach, but put more focus on the first two items just mentioned when it comes to new logo generation. We currently have some large customers that have replaced their legacy system with our database, but replacing legacy systems usually comes with very lengthy sales cycles and significantly higher initial customer acquisition cost, and there are easier ways to build momentum in our customer base. As a summary here, as you can see, we're focusing on, on the left side and then moving over to the middle, to the consumption layer, and then being opportunistic about moving to the right side, the enterprise data warehouse. Finally, let's give you some more color on our AI, or artificial intelligence, strategy and the current market trends.
Getting AI ready when it comes to data analytics is actually a very important but difficult task for companies today. There are a lot of powerful tools in the market, but oftentimes they are building silos with no deep integration to their data warehouse and business intelligence tools. Exasol acts as a great enabler to solve this problem and converge, and converge, merge the new exciting machine learning technologies with the more traditional business intelligence processes. By bringing ML models to our powerful and scalable in-memory engine, customers can optimize their data forecast, predictions, and decisions, and even let BI dashboard users leverage these capabilities quite easily.
Exasol is already investing a lot in smooth integration into the AI ecosystem, just some recent examples are the support for Hugging Face, Meta's large language model, Llama 2, Ibis, and our latest technology partnership with Veezoo, a ChatGPT-like self-service analytics tool, where users just type in questions they have to their database. With that outlook, I would like to hand over to JD for more details on our financial results. Thank you very much.
Thank you very much, Jörg. Let me now provide you with an update on the 1st half of the year from a financial perspective. As you will see, we were able to achieve a continued improvement in our profitability and cash consumption, despite the overall slower growth performance that Jörg talked about. Let's start with the review of our subscription metrics in the 12-month rolling perspective. As Jörg mentioned, we ended the first half of 2023 with a 12-month growth performance of around 13%. Within this space, upselling to existing customers continues to be the dominant driver of growth. In general, we observed a slowdown of the gross upsell rate to 117%, down from 123% in the year before.
This slowdown occurred dominantly in our stronghold region, EMEA Central, as we will see in some of the next charts when I go into the regional breakdown. ARR churn in value terms remains relatively stable at 6% or even at 5% when adjusting for some extraordinary churn and downsell related to customers in the Russian market, as you can see in the green bubble on this page. However, we continue to observe an elevation in customer churn rate, particularly in EMEA, with smaller customers consolidating their tech stacks or exiting certain data use cases. As Jörg mentioned, the delay in our SaaS offering also played a significant role.
As a consequence, while gaining 10 new customers at an average size of roughly EUR 80k, we lost 24 customers over the past 12 months at an average size of EUR 55k. Accelerating new customer acquisition is and remains, therefore, the primary focus of our efforts, as Jörg has already pointed out in his section, including the thinking around how we are planning to do that and what's already underway. Now, if we look at the ARR growth by region, it becomes apparent that the observed slowdown in our global growth rate is driven by a slowdown of our core region, EMEA Central. This is where the upsell performance weakened the most, with current net revenue retention standing at only 108%.
On the positive side, we see a clear recovery in the growth performance of our US business, with 12-month growth standing at 32% as of mid-2023. The net ARR retention rate there is likewise healthy at around 124%. With several large upsell opportunities scheduled in EMEA Central for the second half of the year, we are confident that net ARR retention rate in our core region will see a recovery until year-end. At the same time, we are confident that the momentum of the US business can be continued and further built on. Now, looking at the EBITDA performance, all this translated into in the first half of the year, we are satisfied and happy that we were able to continue to improve our quarterly profitability as planned.
Both half-year EBITDA and Q2 EBITDA were roughly 45% improved over the comparable period in the prior year. This was achieved largely by continued top-line growth at a de facto constant overall cost base. The further efficiency improvement in the personnel structure, implemented in the first half of the year, compensated negative effects from necessary salary increases and inflation adjustments for our employees. Marketing spend is overall at significantly lower levels compared to last year, as often talked about already, due to the termination of sports marketing activities, which helped compensate the rising IT infrastructure costs, which you see here, which are mostly related to higher electricity costs for server operations. As you know, we limit our EBITDA adjustments to effects caused by IPO-related stock programs, as well as costs related to financing measures.
As such, the Adjusted EBITDA shown on this page does not include the approximately EUR 300,000 of cost associated with the capital raise conducted end of June. While not part of the formal adjustments, I would like to point out two additional non-recurring effects that have affected our mid-year results. First of all, personnel costs, as shown here, included roughly EUR 600,000 of severance payments for changes we made to the management level in the company. Among others, this included changes in the key functions of Chief People and Culture Officer, where we have a nolly- new colleague coming on board, strengthening our team, as well as a new Chief Marketing Officer.
This negative effect of EUR 600,000 was offset by a EUR 900,000 positive one-off effect in other operating income, which you see on this page, impacting the gross profit as you see it here. This impact is related to research subsidies that have retroactively been granted to us by the federal government for the development of our technology. Earlier this year or late last year, we noticed that we are applicable for these programs and started the application progress. This program promotes innovative products and grants a subsidy of 25% of personnel costs incurred for entitled projects under the guidelines of the program.
For the years 2020 and 2021, we have thus been granted a net subsidy of roughly EUR 900,000, which is calculated from the gross subsidy minus the costs of applying for the program. As we continue to push innovation, a decision on an additional application related to R&D activities in the year 2022 is expected in the second half of the year, which, if fully granted, could provide up to an additional EUR 900,000 of one-off effects in the second half of the year. Overall, Adjusted EBITDA, as shown here, was therefore positively impacted by a net EUR 300,000 of one-off effects. While we do not formally adjust for these effects, I nevertheless wanted to point them out to you.
If we look at our personnel structure, I think I've mentioned in the last quarterly calls that for this year, we are planning on average with roughly 190-200 FTE. As you see on this chart, we are in this target range quite nicely, having had 190 colleagues at the end of June on board. This puts us in a good positioned to handle the negative impact of the delayed top-line effects that Jörg talked about. Sorry. Looking at our cash performance and the EBITDA to cash flow reconciliation, we can see that the adjusted EBITDA of -EUR 3.4 million was accompanied by a net cash burn of only EUR 1 million.
Taking into account the final one-off payment of EUR 1.9 million for the IPO-related stock appreciation rights program, cash flow from operations was even at a positive EUR 900,000. Even considering the fact that the start of the year is always strong in terms of cash, due to the nature of our customer contract, this was an unusually strong cash conversion. This was largely achieved through a significant improvement in our cash collection and overall working capital management in the context of an overall adversarial market environment where payment behavior has worsened quite significantly. Cash performance, as shown here, does not yet include cash impacts from the R&D subsidies that I mentioned before, the EUR 900,000, since we are still awaiting payout of the first tranche of subsidies by local finance authorities.
With this cash consumption performance, liquid funds stood at EUR 11.7 million at the end of June, and as Jörg has already pointed out, this did not yet include the proceeds from the capital raise we conducted end of June, since a settlement of the increase only occurred in the first week of July. If we include those net proceeds of EUR 6.8 million, which is the gross proceeds of EUR 7.1 million, minus the EUR 300,000 cost for the raise, if we include that, we are going into the second half of the year with a cash endowment of EUR 18.5 million.
With the changes in our product and market positioning and building on a solid cash endowment, we're confident to show you a continued path towards the targeted break-even and growth acceleration in the quarters to come. At this stage, I also would like to take the opportunity here again, to thank all of our shareholders that participated in the equity increase for their trust and support. I likewise would like to thank our colleagues at Hauck Aufhäuser Lampe, Warburg, and Heuking Kühn Lüer Wojtek for their excellent support in making this transaction happen. If we take all this into consideration, where does that leave us in terms of outlook for the rest of the year?
As Jörg explained, ARR performance in the first half of 2023 was not to our satisfaction, but with the opportunities in the pipeline and the changes in our market positioning unfolding their first impact, we, however, remain confident that our ARR guidance can be achieved by year-end, albeit at the lower end of the indicated range. With respect to our EBITDA guidance, we are likewise confident that its lower end will be achieved, provided that some of the large upsell opportunities that Jörg mentioned close early enough in the second half of the year so that they still can unfold meaningful revenue impact in the P&L. This also holds true for our cash guidance, although the timing effect plays a lower role compared to EBITDA.
Since the first contract year is typically paid upfront, the liquidity target is usually only affected by delays in ARR if deals slip into November and December, and hence payment of first invoice might potentially occur in 2024. Overall, though, the ingoing cash buffer for the second half of the year puts us in a good position to handle such a potential scenario. We therefore maintain our financial guidance for the year, adjusting our liquidity guidance only, though, for the EUR 6.8 million of proceeds from the capital raise. This concludes our financial update. We look forward to meeting and interacting with you through our different channels in the second half of the year.
Aside from the usual quarterly webcasts and roadshows, you will be able to meet us in person at the Meet the Future conference in Berlin, as well as the upcoming Equity Forum in Frankfurt. With that, thank you for your attention, and we look forward to your questions.
Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one. If you wish to remove yourself from the question queue, you may press star followed by two. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. Our first question today comes from Robert-Jan van der Horst from Warburg Research. Please go ahead with your question.
Hi. Yeah, thanks for taking my question. I have actually a question on the outlook and more general on the market sentiment, because I remember that last year, it was quite difficult, because a lot of customers, of course, due to the looming recession, kind of cut the, the, the budget quite a bit and therefore lowered the project volumes in the second half of the year. Do you think this will be different this year, especially considering that the gap, even to the lower end of the target, is quite a bit higher than the increase we, we saw last year?
Maybe just give me an idea of how the market environment looks to you right now and where the confidence comes from, that we will see a significant increase in, in, in the second half of the year. Maybe just if, if that is possible, give us, give us a little bit more color on those components and the, the, the volumes that you expect from them. Thanks.
Yeah, JD, should I start, and maybe you add some, some additional thoughts to that question?
Sure.
I think in general, specifically here in Central Europe or in the German-speaking countries, we're not necessarily seeing an overall uptick. I mean, we all read the news, specifically Germany, I think is lagging right now in recovering from the dip I think that the economies on a global basis went through over the last 2-3 years. Since a significant amount of our customer base is actually here in Germany, there's certainly pressure that we're seeing and hearing from our customers on the cost side. Now, it still holds true that data analytics and business intelligence, and also now artificial intelligence, play an important roles for enterprises, they continue to invest in that segment.
I think we, we, also for the second half of this year, overall, I, I think we're, we're still in a, in a market that is not really enthusiastic about spending more. I think that's maybe more of a general comment overall. When it comes to the specifics of our business, I think there are. It depends on the customer, the customer segment that they're in. I think we are what we shared with you is that we have several large customers that's been using us successfully over quite some time, where we are in the process of extending basically our footprint. That's why we are actually bullish about our own ability to achieve our target on the ARR side for the remainder of the year.
I think it puts a damper on, on, some of the new business, new logo business, and also how do we grow initial, let's say, seeds into larger businesses. That's, I would say is, it's kind of a, a double, mixed message right now. JD, anything you want to add to that?
No, I think I would just build on that. I think there is a little bit of a differentiated picture between the general market sentiment and the specific pipeline that we're working on. You know, referring to your specific question, Robert, whether we see deal sizes being downgraded, I would say within the specific opportunities that we now work on, I don't see that effect as much. I think if the economic situation plays into them in any way, we rather see that customers try to put the effective date of the upsell maybe back one or two months, that doesn't typically affect the signing process. This is the only effect that I would potentially see.
In terms of the overall value, I, I don't see a huge effect at the moment on our specific pipeline for this year. The overall market sentiment, I agree with Jörg, particularly for the Central European region.
Okay, perfect. That was-
Interestingly, I think for the U.S., the picture is quite different.
Okay.
I think, I think, both for the market sentiment and the customer discussions that are going on. I think obviously we, we, we work on the same challenges to improve our go-to-market approach there just as much as in Germany. Jörg, I, I, I think you would agree, if I say, if I look if I reflect on the reviews we do with the U.S. team and how the customer interactions and discussions are going, I think there's less of an economic environment sentiment playing into discussions.
Mm-hmm. Yeah, I agree.
Okay, perfect. That was very helpful. One quick follow-up, maybe. Considering the product launch in May, have you already received first, first customer feedback there? Is this helping with your marketing approach, and is it actually, you know, creating maybe, maybe new, new use cases and, and opportunities that weren't feasible, let's say, at the beginning of the year?
Yeah. So first of all, if you recall, we launched at basically at the very end of May and early June, and we got some good feedback. We also created some new opportunities. But to be honest with you, obviously there's summer time and vacation time. What we're doing right now, as we also shared here on our slide deck, we take some of the learnings and we're going through the next round, the next push in early September, when basically both here in Central Europe as well as in the U.S., potential customers are back in their seats or on their desk. The learning is really that the PR that we...
The press release that we made requires sharpening in terms of the product, productization, as we explained it on our here in our presentation. That's basically what we're currently doing. Over the course of the next four to six weeks, that also resulting into additional convert messaging towards potential customers in the market.
I think Jörg, if I might add, I think one thing that has become clear from the feedback since the, from the feedback since the launch and the discussions we had, is that it was an absolutely crucial launch for us in terms of bringing the SaaS offering up to speed, and bringing also our core product, the Exasol 8, up to speed. Also, you know, Jörg mentioned, talked about the customer churn that we saw over the last couple of quarters for smaller customers, and the fact that we, over the, over the last 12 months, we did not have a SaaS offering there, and that our core product was missing some of the functionalities that we launched in May, that played a key role.
Yeah. Aside from the fact how fast we will be able to accelerate new customer acquisition, it was a very important launch. I think that helped our teams in the discussions now with customers to get the customer churn rate back to where it belongs, even though the ARR churn rate is still stable and low. Obviously, we also would like to keep the smaller customers and build on them. Yeah.
Okay, perfect. That was very helpful. Thanks. I'll go back to the queue.
Ladies and gentlemen, for questions, please press Star and One. The next question comes from Nicole Winkler from Hauck Aufhäuser Investment Banking. Please go ahead with your question, ma'am.
Thank you, and hello, Jörg. Hello, JD. One quick follow-up question on the, this year's outlook. You already mentioned that in July you were able to, yeah, to gain larger contracts. Can you give us some, some more details around it and the magnitude of this? Are they in the range of the new ARR of the first half or even above?
JD, you want to take that?
Nicole, I'm not sure whether you refer to the kind of average ARR per opportunity of those. Are you referring to more detail on the 600,000 or like in general, on what's happening in Q3 or what we expect to happen?
No. In general, on Q3 or and in July, and you, you stated that in July you already secured more ARR, and in which, Yeah, what is the magnitude of this? Is it... Yeah.
Yeah. That was, that was actually, yeah, that was actually an upsell with one particular customer, which was actually in the EUR 500,000-EUR 600,000 range, which slipped in the, in the second half of the year. Yeah. But that gives you a sense of how much of an impact a, a big opportunity can have, when you talk about a reference date kind of metric like ARR. Similarly, there, for the rest of Q3, there's a range of I think 2 bigger deals, we are discussing in the U.S., for example, and I think in a total, three to four bigger deals in EMEA Central, which where the discussions have moved into Q3. Yeah, so... This is, this is kind of the ranges we're talking about.
Depending on how many of those close, you'll see a significant uptick in Q3 compared to Q1 and Q2.
Great. Maybe one question regarding the repositioning in your partnerships. Do you have any more news, for example, about the partnership with AWS in the U.S.?
Yeah, I mean, actually, we're working well with AWS in general, and both here in Central Europe, in U.K., Nordics, and also in the U.S. I mean, just to give you one example, we were presenting, I think it was last week, our U.S. team presented at an event. There was an energy summit where there were 110 AWS customers in the energy segment, a global event, and we got invited to that event and presented to those 110 customers, AWS customers. I think that's a good testament on us making progress in the U.S. We just got invited to also present at a similar event for the gaming industry.
I think, ultimately, what we want out of these partnerships is obviously to gain momentum, to find more customers, and actually, we see good support from, from AWS.
Great, thank you.
The next question comes from Miro Zuzak from JMS Invest. Please go ahead with your question.
Yes, hello. Jörg, hi, JD, can you hear me?
Yes. Hello, Miro.
Hi. I have 1 question, and it's a bit, maybe a bit, a strategy question, basically. I just noticed, like, the increased churn. I believe probably, and please correct me if I'm wrong, these were probably clients which have tried the product, and they, you know, were small, small customers, and they decided to go for another, another solution. I mean, given all the advantages of your product versus competition, mainly in speed of total in speed and total cost of ownership-...
given the fact that you're probably typically talking to a, a, like a, a, a technician or let's say a, a data specialist or an IT specialist who tends to decide, in a rational way, why do you think is now the overall uptake of the product, a bit under pressure in terms of, of, of new clients and, and growth? What is the biggest pain point? In the, in the cases that you lose, versus competition, what is the main reason why people still go for another solution instead of your solution?
Yeah.
Have you identified some, you know, like, weak, weak points or weak spots, so you say, "Okay, now, this is where, where, where we can take action and try to improve?
Yeah, let me maybe take this. We've identified several reasons why we're losing customers. Beyond that, let's say, more obvious reasons where customers either consolidate their tech stack or basically just stop certain investments due to financial pressure that they have, we do have identified several customers where we basically lost against competitors in cases where customers are have really been looking for a scalable SaaS product. I think we shared this here in our presentation. We've been dealing with some of the aftermath of us not having been able to deliver such a scalable SaaS product to the market in 2021 and 2022.
Some of these churned customers that we've actually took a very deep dive internally have tested us and basically found that the product offering that we had predominantly, that's, like I said, an aftermath of decisions that have been made in 2022, was not at par with other SaaS product offering. There's this type of customer that's looking for that scalable SaaS. Like I said, we've been that was something where we have been late to the market. We've addressed most of these concerns by now with the launch that we did end of May.
Most of these customers that we lost out of, I think these 14 that we've listed here, it's probably a third of these customers basically made this decision because of us specifically last year not being able to deliver customer needs and expectations.
And do you-
As I said, that's the. Yeah, sorry. Go ahead. Go ahead.
And do you think this is now like the trough in terms of, of, of, of, new customer growth as you have tackled the problems and, you know, improved the product? Do you think now, as of today, you can say this is like the trough, or do you think, you know, like, this takes a bit of time until customers will put their toe into the water again?
Yeah, I think it's, if you recall, there's this one slide that I, that we presented where you see these three elements, these three steps, right? The acceleration, the consumption layer, and the enterprise data warehouse layer. One of the key lessons actually for us, and for, let's say, me being with Exasol now for eight months, that the approach of replacing an existing, let's say, enterprise data warehouse, I think that's not our first priority any longer. What we're doing right now, and, and part of the reason why we're doing this is exactly what we're talking about here, the anticipated challenges in that scalable enterprise data warehouse, is to really focus on the solving that problem of the spinning wheel that a customer has in their existing data technology stack.
In a way, a focused and more sharpened go-to-market approach should also help us on a going forward to find the right customers. The right customers are those that, well, are not replacing their data warehouse, but they are needing a solution that basically supports the their existing data analytics stack. Also, the feedback. You know, we're talking about churn, but we've also talked to a lot of our existing customers where we're actually very successful, and the feedback that we're getting is actually, for those use cases, Exasol is, is extremely well suited and solves real customer business needs. What, what we're doing from a, from a marketing, from a go-to-market perspective, is to focus more on those customers and to find those customers that have that specific problem.
Like we said, it's customers that use a Tableau, MicroStrategy, or Power BI data visualization tool on an existing infrastructure and at the same time have scalability issues. This is where we come in, and this is where we can help accelerate data analytics and BI processes.
Cool. Thank you.
Ladies and gentlemen, as a final reminder, if you would like to ask a question, please press star and one. It seems to be no further questions at this time. I hand back to Joerg Tewes for closing comments.
Okay. Thanks, everybody, for attending our call, and I'm looking forward to updating you all. Hopefully, we have the chance to talk in person on a going-forward basis, and if not, I'm looking forward to seeing you and hearing you in our next call. Thank you very much.
Thanks from me as well. Thanks.