“At the same time, we expect service revenue as a percentage of overall revenue to decline by transitioning more services revenue to our channel partners, resulting in overall margin improvement.”

In context

“ated dedicated farmer versus hunter roles across our sales organization to increase focus on existing customer upsell. This further sharpens our existing customer revenue ownership and accountability across our sales and customer success organizations. Now let’s review the income statement in a little more detail. Gross profit in the quarter was $39.6 million, representing a gross margin of 73.5%, compared to 77.6% in the year ago period. This margin decline is the result of two primary factors. The first is the negative margin impact from the change in revenue recognition I just spoke of. And the second is the increase in services revenue, our lowest margin business. Going forward, we are continuing to drive our sales efforts toward our fastest-growing revenue stream, our SaaS solutions. At the same time, we expect service revenue as a percentage of overall revenue to decline by transitioning more services revenue to our channel partners, resulting in overall margin improvement. Sales and marketing expenses were $24.2 million or 45% of revenue, compared to 35% of revenue a year ago. This represents an increase of $8.3 million year-over-year or 52%. This was driven by an increase in headcount and personnel-related expenses as we expanded our sales and customer success organizations as well as additional marketing spend as we invested in both our direct sales and channel strategies. We have grown our sales and marketing headcount by nearly 30% year-over-year with hires evenly distributed across our sales functions as well as marketing and customer success functions. This increase in head count has resulted in a $4.6 million increase in total compensation, primarily driven by salary and benefits. Programmatic spend in marketing is up $2.8 million year-over-year, pri”