Buried deep within WalkMe's recent Q1 2024 earnings call transcript lies a seemingly innocuous detail, easily overlooked amidst the flurry of AI pronouncements and optimistic growth projections. However, for the discerning analyst, this detail holds the key to understanding a potent, yet hidden, growth engine that could propel WalkMe to new heights in the burgeoning era of generative AI.

The clue lies in the company's focus on "account consolidations" and "application consolidations" within its largest customer cohort. These consolidations, while leading to a slight dip in the number of customers exceeding $1 million in Annual Recurring Revenue (ARR), actually mask a significant increase in the **total ARR** generated from this crucial segment.

WalkMe's explanation? Big expansions.

This hints at a compelling narrative. Large enterprises, grappling with the complexities of integrating generative AI into their workflows, are turning to WalkMe as a trusted partner. They are not simply adopting individual WalkMe solutions for isolated use cases but are increasingly embracing the platform holistically. This platform-wide adoption is driving substantial expansions in ARR, even as the customers themselves might be consolidating their internal structures or application landscapes.

This trend is not merely anecdotal. The numbers paint a clear picture. While the number of $1 million+ ARR customers remained flat, the overall ARR within this cohort grew significantly. Furthermore, WalkMe's best renewal rate in six quarters, achieved during a period marked by the "biggest renewal quarter in terms of ARR up for renewal," reinforces the notion that large enterprises are not just sticking with WalkMe but are deepening their reliance on its platform.

The implication is clear: WalkMe is becoming the digital adoption platform of choice for enterprises navigating the AI transformation wave. As companies consolidate their technology stacks and streamline workflows around AI, WalkMe's ability to provide a consistent, contextual user experience across diverse applications becomes increasingly valuable.

This positions WalkMe perfectly to capitalize on the "copilot of copilots" opportunity with its new WalkMeX offering. WalkMeX, leveraging the company's deep UI understanding and proprietary AI technology, promises to seamlessly integrate generative AI capabilities into existing workflows, effectively "making AI real" for every employee.

The early feedback on WalkMeX, as reported by the company, has been overwhelmingly positive. Customers, eager to unlock the full potential of their AI investments, are lining up to pilot and deploy this revolutionary solution.

Projected Growth Driven by WalkMeX

If WalkMe can successfully leverage its existing foothold within large enterprises and position WalkMeX as the go-to solution for AI adoption, the company could be on the cusp of a period of explosive growth. Imagine a scenario where, over the next few quarters:

- **Net new ARR doubles, as projected, driven largely by WalkMeX adoption and expansions within the large enterprise segment.**

- **Net retention rates climb back above 110%, reflecting the increasing stickiness of WalkMe's platform.**

- **Customer consolidation trends continue, with the number of $1 million+ ARR customers remaining relatively flat, but the average ARR per customer increasing substantially.**

This scenario, while ambitious, is entirely plausible given the trends observed in the Q1 transcript. It points to a future where WalkMe, far from being a niche player in the digital adoption space, becomes an indispensable platform for enterprises navigating the complexities of the AI-powered future.

While WalkMe's journey hasn't been without its bumps, the company seems to have found its stride. The combination of financial discipline, customer-centric focus, and a groundbreaking AI strategy could well propel WalkMe to become a Wall Street darling, exceeding even the most optimistic analyst expectations.

WalkMe Q1 2024 Earnings Call Transcript

(Relevant excerpts)

""...We improved our quality of service in every aspect from support to service quality through our customer success organization. And this also shows in our large customer space. We now have 42 customers paying us over $1 million in ARR, and we're seeing customers in that cohort expanding with us. Our DAP and over 100k ARR customers, although we did not demonstrate an increase in number of customers, and some of it was due to account consolidation in our system and some app consolidation on their side. But overall, the total ARR for both segments grew as we continue to see big expansions..." - **Dan Adika, CEO** "...With that, I'm very proud to introduce WalkMeX. WalkMe’s new Gen AI contextual copilot. It's a completely new experience for the employee in the enterprise. WalkMeX allowed them to use Gen AI capabilities in the flow of work on top of any workflows... We're basically making AI real for everyone..." - **Dan Adika, CEO** "...We've started using WalkMeX internally, and it's showing improvement in our support and IT departments. We're now exposing it to select few customers and exploring endless use cases together..." - **Dan Adika, CEO**"

Full transcript:

"**Fun Fact:** Did you know WalkMe was originally called "Make Tutorial Ltd." before realizing its true potential as a digital adoption platform? It seems even WalkMe needed a little guidance to find its way to greatness!"