EGHT - Earnings call transcript Q4 2018

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Operator

Good afternoon. My name is Chantal, and I will be your conference operator today. At this time, I would like to welcome everyone to the 8x8, Inc. Fourth Quarter and Full Year Fiscal 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers’ the will question-and-answer be After [Operator you. Instructions] Thank of Head Hyde-Dunn, Investor Victoria Relations. conference. your begin Ma’am,

Victoria Hyde-Dunn

Thank afternoon call. operator. and fiscal are you, Good Verma, Mary full-year quarter XxX’s Vik Financial XXXX and Ellen fourth Genovese, earnings Officer. Executive conference Chief With Chief today and me Officer; welcome to

website are remarks Securities to a are section Our actual are non-GAAP that remind to a provision reconciliations I results to prepared Q&A. XxX.com. available future the guarantees the this earnings Relations followed conference at call participants Investor Private in format of our of result like as of would during our Harbor of today will factors. our made will Reform These press XXXX. replay of The of call GAAP posted Litigation any accompany not performance, by Act be statements days. pursuant include could that website this forward-looking and release, Safe and differ statements the A variety materially this presentation, XX for call on all of

concerning XX-K information you now XX-Q, risk Additional Relations Investor find our available our and to With section like can the website the the and on SEC's which to turn on Vik. reports of factors most recent I’d over in website. those Forms is that, call

Vik Verma

welcome our quarter fourth and to and earnings everyone Good afternoon conference XXXX Thank call. you, Victoria. full-year

than growth came fourth million. million strong call. and revenue $XX.X full-year the year-over-year million year-over-year finish XX%. conference the the full-year to year. a to and quarter’s a higher We annual $XX.X $XXX.X last XX% the results quarter Revenue for quarter XX% by to grew revenue revenue we during million of revenue quarter service to fourth were for was $XXX.X in XXXX guided Our XX% fourth for to Total in grew great for

we see let share fiscal service as and market estimates IDC that penetrated. a the this than communications, cloud details gone that how market comment less quarter to market global and total is center the billion, me provide exceeds on the on contact our the of combined evolving. believe opportunity I year, XX% Before and collaboration, has we yet $XX

The to of a unique also solutions We span point. defining have for single we as want these seeing aggressively the We end deliver spend We dollars will increasingly sizes emerging are system from third the inflection seamlessly look category growth required intelligence what critical looking for cloud, communications. are the we forms billions in to owning of customers in a segments. innovation, that years, Customers investing strategy a of of of enterprise and believe next global market enterprises system result wave market, market all tens and and accelerate integrated capacity, cloud. for different believe complete of global single are engagement an system of communications of in of over us all the engagement which in to single our the suite that required reach in grabs. this for up our at shift of we engagement sales this of is few the technology are described is

highlighting past by year. proceed now full me and our Let some this accomplishments of quarter key

increased significantly we channel XXXX fiscal of course expanded sales programs. the our breadth the of direct Over capacity and

deals closed the recurring our quarter. enterprise example, one monthly or $XX,XXX sales customers large defined XX greater As with of teams revenue during as

a business deals provider is and million marquee teams members. and X the closed cloud and mid-market global a enterprise from faculty on-premise students win involved solution. analytics closed pain multiple One lack of with became intelligence global competitive large deals footprint, customer that providers. our deal point. very education this represented sales on-premise the after the process major the XX which is of provider integrated and XxX and new XxX RFP their This call enterprise number quality, in a large data XX,XXX XX% For customer They won a full-year, and increase rapidly choose new year-over-year. superior for growing over ultimately

two globally. great since for their are there customer is seats, fourth XXX this X,XXX lots While believe quarter our we Contact that expansion have closed additional initial analytics room is Virtual order particular only Virtual started. more Office They Center is and than seats we and additional about placed orders and of for the getting thing

were of new quarter, Channel our the three recent date. deals channel, which partner by have in we XX% Enablement the XX the to key quarter. our channel Channel bookings August, a U.S. top and in to Program grew A partners XX in enrolled from brought recommending launched a is in a win the apparel Turning X,XXX children’s a fourth takeaway bringing In played partners. will with large specialty in positioning ultimately seats value the XxX an was instrumental The an provider. space, XxX proposition to customer. following the end on-premise retail instrumental role partner competitive retailer our to XxX to and table, who move channel in

Bill platform in market, a our onboard. hiring was already five-star had with of Channels of upcoming capacity, he brief the in Bill with of to solutions. of Series After Alliances, reseller most a meaningful launch and was Corbin communities the be sales to with and our reporting Program solutions recognized has Subsequent rating experience XxX channel will continuing X the impact quarter me. channel our we and in to to decades period Partner end, build and investment Additionally, arrives announced leading and partner new directly XXXX been focus second CRN’s Guide. the referral the who the our integrated SVP has of comprehensive

It video able combining three Let to contact our and single into into of is me meeting, core technology X X capabilities. Series, is XxX is. the our a integration remind suite. provide seamless Series you center, what conferencing of By own

laptop, user number that analytics competition. a deals. CIOs that resolution want see one is to that second, the have encompassing to but our subtle a importance our why head like to not our platforms. customer in Applying completely designed place. and from isn’t enterprise; of suite, through First, dynamic This may of increasing more device, but to in first possible new this and growing This solution, span the buy deals from it on communications center, why the a mix or XX sound Series, which recognize all CIOs than the The integrated and ownership desktop, engagement XX, fair phone, is common combined insights. phone, these We as we third-party customers the depend in learning of of the intelligence. targeted impact where experience and path is X platform your our across system distinction forms of communication tablet. to all data a provide collaboration Series conferencing, machine a a customers. developed engagement any can a technology of reasons third, be and of of and of purchase combination solutions seamless that the propensity communications; in to referred mobile our of single contact contact forward match communication analytics center we X product win system business to forms on share responsiveness individual is for head of we capability just level critical a and spans system our enables

fourth deals quarter, deals, During overall. including were deals the top our about customer XX XXX combination X of

combined new XX% monthly than In of the came enterprise solutions. mid-market and recurring who full-year, fact, purchased more customers for booked from revenue from

third investment expanding represented Our total global our was the as footprint. in of XXXX. revenue of and Canada, markets International markets, focus defined outside US XX%

we in Itancia with year-over-year a exceptional XXXX, fiscal DXI into growth, Australia. Our saw France XxX expansion capacity the March, XX% We in increase in revenue. continued to with solutions sales UK in build announced our excluding and business

also cloud global customers. carrier invested transformational us leading world. the a year, XXXX as have we enterprise our network We and in and and larger summary, to accelerates investments among the around These technology, fiscal become and was In to customers transition as talent, XXX in larger have provider a in market the allowed enhanced countries infrastructure. mid-market global

pre-tax awareness customers total our growth, we any net rapid in that hiring, This organization fourth in investments grew organization represents in and lower recurring For now the of at the conscious together monthly approximately year-over-year than resulted And to in to more revenue from and and a We business monthly joined billing $XX,XXX was quarter guidance. the across recurring talent generation, talent a quality accelerate our accelerated of our than hiring revenue the instance, marketing in our in non-GAAP this greater Due awesome. quarter than revenue made brand is excluding XX% of the XX% service history. plan. decision time hired revenue. DXI demand all fourth income strategic has that with our levels spend

As achieve long will in make you term that we medium goal manage short are convinced and in business term. know, will long decisions shareholder gain that for term the we the to the

strategy XXXX our continue three like to which key strategy. would I Now, underpin elements beyond. for to share fiscal our and are There

overall expected. mentioned, First, at market more pace previously and rapid an believe adopting even previously our is we as inflecting cloud than

Second, we phone, pure-cloud for own contact collaboration. technology center, with our core only provider and are the conferencing,

engagement We insights vision also see communications engagement. transition what that associated cloud, refer differs has of and of but business our industry to the intelligence. of ultimately system will a the critically, maximize one cloud most integrated standardizing another This what call and company. industry of peers. will layer unlock in out with the been is and as adoption only of articulated seamless savings of will Third vision and unified solution analytics, a critical the to our all provide of we not which system The a cost on by system we a this the convenience from

business unit, customer based analyzing satisfaction of on And about the earlier, X X of can or the in modes patterns be that will agent integrated including XxX. the phone collaboration and also not relevant have mentioned interactions team Atlassian within I and other Consider over calls our Series suite communication X all Series could part on game enterprise. this of believe the that team solutions, Slack, for Spark, for an be instantly prioritized Cisco persona, valuable with a including Series think XX culminated Imagine platforms, gained a and we communication. platform frontline phone a changer email, integrates can strategy chat, be to support our impact recent just also calls, resolution by efficiency but captures time the collaboration how customer which this suite. has information and emails, is and As Stride. summarized if

our to Series elements As mentioned solutions. foundational X AI machine earlier, and learning are

led hires, Our commitment has including investments recently recent announced our acquisition to this and vision key several to MarianaIQ. notable of

vision We through technology System about to one Intelligence leveraging Series their also plan. informed This their both our X our and fiscal solutions. are has XXXX excited talent deliver of

XX% engineering, in concluded that customer what very are we While which market marketing, in are markets we of order expanding value along support. come we investments accomplished penetrated leverage which and opportunity, are and participating represents this decade opportunity. fully in deployment, and often. XXXX, we in in not are that are a to we proud uniquely In $XX business do the market fiscal sales, positioned creation once billion we have have a

market. engagement and making to long creation for of adopting the strategy integrated will believe intelligence value in strongly investments drive We strategy deliver that we the order are are this most We the this term shareholders. system to and our comprehensive,

revenue. as and say metric, most we in me will let Ellen for our the section, service provide exit detailed are revenue Mary quarter growth view revenue of for growth after that DXI adjusting targeting in fiscal XX% fourth approximately important XXXX, While guidance her service

our Our process of X solution market category the in growth our past goal XX%. is to suite, drive Series market long-term reshaping revenue and accelerating adoption

our are our Finally, greatest employees assets.

XX% by We fiscal have XXXX. over X,XXX approximately this headcount increase expect in to employees and

that, around for of proud in predicated to XxX. them and Mary the their leading the retaining, dedicated exciting call at is employees turn world over and to XXXX and success on employees XXXX With and an fiscal thank the and I Our am success talented our fiscal very look beyond. I’ll Ellen. hiring, forward passionate

Mary Ellen Genovese

the detailed and XXXX. by our XXX, and provide Vik. XXXX I performance guidance a full-year will of ASC for followed more review you, financial fourth-quarter impact of fiscal Thank

are XXXX under accounting XXXX fiscal Our fourth will quarter fiscal and full-year under historical standard. XXX the be XXX. ASC for Guidance

year from We ASC Investor table XXXX posted XXXX are starting adopting full outlook, retrospective impact on X, under have modified XXX website. XXX method our April which the fiscal the the on provided on and Relations a is

measures year-over-year. provided greater In our prior XX% was service comparisons. Adjusted Fourth XxX. XX% with recurring non-GAAP XX%. grew revenue XX% than performance follow constant are strong reconciliation In was non-GAAP the now grew approximately monthly for Service earnings billing currency, was year and fourth revenue Total revenue, customers, quarter addition, year year-over mid-market over revenue and ago GAAP year-over-year that year. increase compared service total for results XX% million, million XX% all to of release. of grew those A unless another from defined revenue in the as enterprise an quarter. indicated, $X,XXX to represents of the otherwise service in quarter, of press revenue $XX.X $XX.X with

points accelerated the line of XX.X%, are XX.X% compared the basis the year. margin and period X% fourth fiscal XX.X% quarter. two year. Turning the with to same as in at for quarter XX with prior was growing in in quarter with margin XX%. Service by defined Product the fiscal approximately last XXX XX compared market the in Gross total revenue was revenue XX.X%, to the we in has fourth small was growth now over past quarters our business, seats,

both negative primarily investment As we products as market. customer last one-time deplete Quarterly software marketing. planned inventory. segment additional of margin small results was place activities, due and down net XX.X%, of share, to expected, across margins loss and our Areas release points, X.X% same a our in negative capitalized of promotion by and primarily we business service the trended compared $X.X negative new of leadership seeing new accelerated our amortization following. our or a loss in the marketing $X.XX period million, of year, demand to basis per the the X.X% excess revenue. fourth increase successful XXX previously was quarter to hiring due included with generation of With in to sales sales Product

also product accelerated hiring development products. management advance of and for the We innovative our teams engineering new to

invested solutions. we new launch brand to demand and the X shows in and trade of targeted addition, In our advertising awareness, generation campaigns, support Series

As these market investments will capture opportunity. position increasing the to mentioned, us Vik

expenses, million, same the Moving period. quarter, revenue, primarily which on million, customer operating to expenses. marketing in XX% $XX.X revenue attributable and hiring of to and fourth activities. fiscal XX% compared increase Sales also accelerated or is with the include were costs, and of The $XX.X or deployment ago demand service in spend generation in year

strong development launch million, In addition, and we from observed an increase Research XX% in spend commissions the partners. revenue, our Series. were $X development increased the We significantly of support or of to tied performance increased of upcoming year-over-year. expenses to XX% channel and X

year both million. XX.X%, XX% compared of the per was on revenue, or an prior was grew and in above for our $XXX an over year. annual our $X.X the basis with on $XXX last X% in Turning million, of Net $XXX for of margin year XxX of period compared increase fiscal was over to $X million was year-over-year total XXXX of and customers $X.X in X% million, from of fiscal and prior an results income revenue. adjusted Service year. enterprise million, and of margin guidance below income fiscal posted range and to basis. revenue. full-year million of guidance guidance This revenue $XXX.X Pre-tax the million, mid-market total of revenue also the represents to XXXX million share, year. Service net million. or above adjusted and same our unadjusted of represented XXXX. and an or XX% $X.XX XX% service X.X% with the XX% was range $XXX an for XX.X%, revenue Service revenue $XXX XX% in XX.X% Gross increase XX.X% full-year

system team most intelligence observed platform, underpenetrated to is large we invest are and the this market concluded strategic capital strong deliver around integrated take we positioned the revenue place our With engagement adoption comprehensive, we which and accelerating to the customer of market leadership As integrated and growth made we a a to accelerate that inflecting. uniquely in decision advantage in of market. our additional

our with rate were and approximately reflecting XXXX, million Our taxes X% XXXX. at the was for million XX, non-GAAP Cash, investments $XXX equivalents, $XXX effective at fiscal of March fiscal cash cash tax XXXX. compared end

As part of Jose sheet. our of have we restricted on the million balance approximately new lease headquarters, for $X our now San also cash

$X current at repurchase quarter and million, shares common Company’s the approved total from of the flow operating Cash average million During million full-year, stock price $XX.XX X.X currently the including We expenditures, be repurchase revenue. share fourth of opportunistic. will in of $XX.X the quarter, about repurchased have per of we activities under for program. million under for were million was share share, capitalized X% an a $X.X authorization or in $X.X capital and software, available fiscal

XXXX, Series for and The X% expenditures, the was or For with in million including cash fiscal $XX.X XXXX. the or expansion was software, in operating of in compared $XX.X capital fiscal activities million, support new flow million, million including $XX.X year, of capitalized XXXX. solutions. due initiatives full Capital revenue, compared from to fiscal global product $XX were with revenue, for X increase X% expenditures

Now metrics turning the quarter. for to key operating fourth

from booked of XX% New and over total monthly enterprise recurring mid-market XX% increased bookings. year-over-year revenue customers comprised and

the the year-over-year same organic next for per had third deals The X% business of customer our on $X,XXX, compared revenue $X,XXX enterprise churn our ago. a was XXXX customer which grew a period. to Beginning in grew As churn revenue with made quarter. of an and mentioned very business fiscal year X.X%, in Gross earnings during provide average large X.X% quarters a same fourth and with we excluding difficult comparisons no DXI, basis, have year this the XX% number compared service metric. per same mid-market enterprise call, quarter quarter, XXXX ago and year. will to period revenue in period was when $XXX, compared $XXX Average longer last more monthly

positive across rates accelerating of a over will have more to retention. our a contribution to clients rate in existing the low churn the to and The believe churn is Annual our We quarter. segments discuss business compelling combination metric XXX% upsell across retention was to strong rates measure rates. success fourth continued low growth make and all

new In existing fact, book to XX% from approximately customers. recurring continue monthly of revenue we our

fiscal to Looking will growth sustainable to unified continue data contact ahead product we collaboration conferencing build XXXX, communications, suite. a revenue to analytics, our and invest accelerate advantage and center, with team

set Vik right initiatives earlier, and mentioned we believe have is place in market which the of As we strategic inflecting. a

While to repurchases, and shareholders the capital by we business acquisitions, taken have the for return believe growth, always to growth. revenue continue our drive in balanced a to we approach investing reinvestment including will share that we achieve for highest deployment

XXX, X, would providing to to fiscal for XXXX. I XXXX, us applies Before impact the starting like cover guidance which April from ASC

modified under will data present elected to which numbers, new the revise fiscal the XXXX approach, retrospective we supplemental but use reported have not comparison. previously information for We means rules and

difference ASC ASC and First, between year-over-year XXX revenue XXX. and we do material not our expect to a growth

life. ASC XXX, of and a certain marketing be will the rather this million to lower portion ASC change expected operating result that XXX sale. capitalized The estimate sales of significant expenses $XX Under over of it fiscal due under we million commissions will to expenses. primarily of than between capitalization time XXXX customer in our Second, impact the and commission be expense recording the decrease sales non-GAAP to at $XX will a amortized

from adoption capitalization X, million retained estimate of $XX commissions million April due the years. that $XX will as XXXX prior between Third, of to increase we the earnings and

standard reminder, and no free accounting a is flow. an impact cash has on this change or As new our operating only

X have strategic product. selling into guidance, I platform the reminder, Before the deemphasized DXI’s in and DXI Series integrate EasyContactNow standalone XXXX speak decision technology fiscal as fiscal early to our a our we XXXX, core to new made

to product this fiscal decline approximately revenue by We in XXXX. XX% expect

to Now moving on our outlook.

to expect range million in the to of total service $XXX in range the under million, fiscal For of in $XXX non-GAAP service DXI growth XX% the increase; of $XXX XXX, XX% approximately million. loss representing million XX% to to year-over-year guidance revenue the representing of our XX% $XX to range ASC to year-over-year range XXXX excluding pre-tax approximately XX% revenue we increases; in revenue $XXX $XX the XX%; million, full-year revenue, million

full-year to guidance, the guidance. addition introduces In quarterly Company new

in ASC For $XX the XX% XXXX quarter of first million XXX, approximately $XX to to revenue of service the XX% under increase. range year-over-year we representing million, expect

to we the revenue for fiscal your the color growth non-GAAP I'll additional DXI help the Excluding loss with add of million. some pre-tax XX% in of to XX%; you range to expect in revenue, $X million range full year. service $X models

exit fiscal growth in quarter We be are revenue. to after targeting service XX%, for approximately fourth of revenue DXI adjusting XXXX

to core the is defined business, our growth. Excluding micro X service quarter business year-over-year revenue in X seats, and as already DXI XX% exceeding revenue, the fourth

full-year points. expense as X We expect percentage by growth, non-GAAP operating to increase XX a of our to percentage approximately revenue,

We net to approximately expect a development to revenue, as XX% capitalization, percent XX%. of research and software be expenses, of

includes of and expect to approximately We marketing XX% a XX%. be and revenue, percentage expenses, customer to deployment, as support sales which

We San Jose be administrative moving of April XXXX. new to Lastly, in into anticipate a as general our percentage office and approximately expenses, revenue, XX%.

the incur non-cash we which charges accounting this starts on of $X.X work will of corporate we build-out million. While headquarters, current new approximately our quarterly quarter,

non-GAAP We since are from will the exclude this we building. occupying income not currently

and capital excluding new tenant million, $X full-year with be associated million to expect expenditures improvements between our $X We facility.

current the between million our We We million. taxes expense to capitalize $XXX,XXX Due certain against quarter. cash software valuation assets, allowance to be United each jurisdictions. foreign and States deferred tax reflects $XX approximately expect tax our the in to expense estimate full development tax $XX to

to offerings million closing, which customers, are enterprise and year global XXXX. to market we mid-market inflecting, To and productive we recap, and it we a average very top-industry expanded has busy opportunity our talent, expect our full cloud on In footprint. we shares approximately seeing hired is large be We year. the strengthened clearly been XX a for

excluding in to For have a revenue fourth we target service plan quarter business our of XXXX our exit full-year guidance and DXI. XX% the in fiscal achieve approximately place growth

demand pipeline track generation We with assumptions. fiscal bearing first targets quarter we fruit targets. fiscal cohorts are XXXX pipeline validating Our and QX met with fourth our our fiscal QX demand our on generation are and initiatives currently quarter

for initiatives and XXXX for these believe capacity channel our this sustainable position investments Our said, targets. sales we our customers we invest We our also to as will growth growth. our time are plan believe beyond expected are the ready accelerate is now we us fiscal right revenue to that meeting and for continue that, value to operator, build With shareholders. questions. With

Operator

first Tim Horan with Instructions] Oppenheimer. [Operator question Your comes from

is open. Your line

Tim Horan

you color guys. bit process more was over did on quarter and real little accelerate to much? you spending see the What Maybe the the Thanks, what give the market in really so drove What catalyst? edge? thinking a throughout the

Vik Verma

Yes.

in going we I'm is has bring make sure unconstrained then hire we we’re So, to and numbers. the as that the the and can a in me able Particularly getting got world-class hire up to onboard now, did pretty really that we this the chatting and we're the talent market In to finding a to completely see the talent much capability and anybody for capacity been this major brightest, them I that the go top tier refresh which think, you've et it. constraint biggest on-boarded ability and the significant cetera. is we I past, that opportunity. taking for to while about best have market feel bringing why And the been kind

a So key for me was catalyst. that

as Second team core of development over can technologies hire have years, management that already think combination to companies management companies make here roof. and also it, next market up under I'm you have monthly take you and basically often, of essentially this opportunity. acquisitions that And public engineering uniquely and a large has They been I sales, the the don’t large on best XXk the equivalent more saw team a more the it to level. particularly In year-over-year. feeling that XX% comfortable two the we're find two it. revenue now, really and the able brightest, that I starting part as now really in now turn is you well which public come just It's ourselves really one billion as enterprises positioned. And to as you in is about of time is go indicated, is $XX QX, along we organic deals, which for increase very et of gas the that through cetera. inflect. a see if critical I That recurring

game Series be us X is think to for I going a changer.

Operator

Your next Will question from Baird. comes Power with

Your line is open.

Will Power

Great, thanks. questions, I enterprise. of guess, maybe starting a on couple

guess coming you the competitively I that new out enterprise bankruptcy? of part you that then, out revenue about think, is, And I called if the seeing. indicated could talk head. just you XX% year-over-year. I what Have just second buyout channel any you're grew wondered you seen of a renewed activity from

channel enterprise in even are ramp channel of you think, top of expect, accelerant piece do to I further? type I deals doing what specifically was kind the of that the XX really quarter. just And What guess? you

Vik Verma

Okay.

basic So, QX. is of as channel the monthly was and here revenue, weeks. defined than XXk and is is XX% X.X, head growing that's for is greater of business haven’t series coverage. just ran that billion and like likes channel think a board, they thing our he seen us done on is product, comes checks they $X there takeaway at now alliances deals The has about XX% just that recurring is revenue interesting, has been He CenturyLink enterprise, and X our Bill which not that channel part as us, there. The a I of of he of great that enough

significant I untapped and believes in he can do channel potential for which so, be to huge opportunity, there us. is And that

that to to which generation see Second, chug, chug, marketing it’s team, team, can start to her chug, is starting Rani [ph] starting and and demand the you plan. is engine beat

and So, seeing like to for combined struggling. get us that now providers becoming we you of more where seat And is and starting those two a more we on together, market what more the are to then what’s we that of feel are untapped is starting top table. at legacy more are lot things interesting will the

private, coming this seen have bankruptcy, going recent people disruptive. out of You all of acquisitions, people is hugely

And often. that people and $XX brought larger billion in for we I constraint even our that. is see enterprise about as that’s we it, have when and international off. not cloud [ph] leverage We channel that sales help can been has market we starting And right right have why fact larger and as said is leverage of for me, -- as that people opportunities think customers the you which and biggest counting are so along that and us, brought first, take the the the coverage. can come very going to don’t see

I people across board, product in is the solid the our most industry. comprehensive acknowledge would think

get hire constraint. the Our sales basically ability to people, been word our out that’s

feel on is perfect we this time gas. turn where the the with the place you team So, in

Operator

next Your question the line comes Marshall from of Morgan with Meta Stanley.

open. is line Your

Meta Marshall

just I you raising to benefits like Because it much you of out, -- is sense of of the where to benefit see investments? not are the OpEx if expect are in just how ‘XX to timeline when something expectations, months a of given you you those see sense a kind kind raising expect increased would fiscal that? get assumptions, wanted of would of XX

Mary Ellen Genovese

Meta. Absolutely,

investments from today lot months A towards are almost QX, XXXX from to come fiscal will XXXX. could be Normally pipeline sales build QX you they an absolutely going probably they’ll be QX, for right? these continue XX a mid-market we cycle for could anywhere XXXX to of building cycle are to geared us enterprise into understand, pipeline and help on three or up anywhere because six months. be and three As pipeline months A to sales can QX. months,

believe for [ph] going we be revenue as So, it we growth past definitely that provide growth. will just with to satisfied XXXX. the And are XX% companies, not

to improve We continue on to that. want

So, this XXXX. about tuned. stay is But all

Meta Marshall

or mentioned out a clearing normal tick should just follow-up on margins. as just just gross how service Is this margin that about that? quarter. And inventory you down that or a then, gross think maybe seasonality we of kind just is There small some things in

Mary Ellen Genovese

Yes.

did was inventory and very excess two thing are depleting newer that a generation which team well both issue was things. inventory. excess one-time the was as small promo that on business there So, a One successful, our that as for we

in subsidy saw a had margin you So, the than you past. higher

thing which ongoing, under margin. other is is The service an

we from expect mentioned amortize points last basis release these start to as costs engineering As we products -- our to we market. we quarter, engineering software initiatives for to XXX previously service had now capitalized as about increase

Operator

comes Your of next Nikolay with of Bank from line the America. Beliov question

Your line open. is

Nikolay Beliov

said, be your to You by XX% this correctly? going headcount Did I fiscal company increasing hear total you’re year.

Vik Verma

Yes.

Mary Ellen Genovese

Yes.

Nikolay Beliov

and just I the enterprise, off you to wanted the one in XX% Mary, understand of Okay. recurring mid-market and monthly of that’s from revenues X% metrics year. gave. the growth last minus

last large comment trying as the I’m understand trying I’m just scale don’t comps to to just to look So, it year. about slightly tough your mean, better. understand comps I me. tough

Mary Ellen Genovese

have look fantastic we been XXXX have sorts XXXX Yes. had like to whale No. you quarter at QX I outrageously fourth an enterprise deals. we quarter the back it comp. would where you But understand where look four a difficult how in it, fiscal very go to had large doesn’t when -- of

So, ‘XX didn’t QX very our very though was look good it also to QX XXXX. even compared phenomenal good, of

last going see numbers. think, actually in and to up mid-market the But, well But is acceleration this it mid-market in you’ll real our So, all I bookings, XXXX as was see good we and bookings. enterprise behind as now that you’re fiscal go QX is from us start quarter. and to into not

Nikolay Beliov

this us, customers, that’s XX,XXX-plus correct? And guess, right? That’s metric, new new help I of growth brand the a gave you the more XX% why metric, to

Mary Ellen Genovese

right. exactly That’s

Nikolay Beliov

the year? comment the throughout of trajectory metric that on Can you

Mary Ellen Genovese

comment in of we that to is actually from that time period many time, or that could know, period you nine will something lumpy mid-market be some over way, deals wanted the as enterprise with others on. by of in But, months immediately, some the enterprise. can And times, it it investing wanted could And been these we be year. have by the it large thing deploy a quarter-over-quarter. and not enterprise deploy deals, That’s over and on other to

than business thing growing the and today. at. market the market. small that So, that the is other market way, we both Gartner faster are will we with to is says both continue doing which is And smaller grow, And line our enterprise do now in what our nice that business we in was growing expect than by cases, mid-market the growing

Operator

question comes Your next with Dougherty. Zack from the Turcotte [ph] line of

Your line is open.

Unidentified Analyst

Hey, guys. Zack on for Catharine Trebnick.

quick the channel. Just on one or two

you XX the program. channel said partners you So, since expanded enrolled

are also partners role this of at Just global having in contribution are point of footprint? playing wondering and expansion revenue your of serious what channel kind those to many how

Vik Verma

Bill faster revenue a And Channel channel critical we and actually rest channel expansion of that’s particularly pretty from before growing quite team. -- our had from is Actually quickly, global bookings and the the of role, for footprint. than core.

on broad, channel And will Channel quickly how me relatively other we accelerate. late So, in key that and some huge to Bill starting folks brought it’s is fascinating for how be on to already line. coming us. -- the started is is it quite

see business, And internationally. you channel's indicated, expect of healthy as actually beyond to we very bigger that accelerate booking and a will So, is that. channel become bigger I our portion clip, and growing a particularly at

Unidentified Analyst

Great. And then, follow-up. a just quick

simplified from It deals sales bookings well QX, coming If color drive you feels channel how pretty and as to on give selling have that XX continuing? Do that help see you is will I channel. which feel you you further. of know, top as advantage said kind Series the the even XX% and that up that you any X a in product were can that the big there. about

Vik Verma

Yes.

been about has is look I last I an So, we of have you just think things. evolution. to to game-changer. we me encourage think actually earnings And Because talked at think it. have I I about X and call. what also couple a my This -- done.

We XX from have smashed through one conferencing, telephony, collaboration together XX. contact into product center, common suite

simple can provide through you a XX. for If phone, it we want

based take analytics common contact And center you you particular can of the can this where you a by issue. persona, buyer customer way, get solution on want XX. machine when AI call alerts and one entire have persona, parse and where an rooms cetera, is creating persona, enterprise type particular details, customer analytics, et and with recordings, basically speech complete data If a a making data layer learning the you for it

think, So, think spend contact center, where as are companies, a this of us in of of don't it time the soft We'll accelerating a work couple Quality the you has Rocket to launch I simplicity have But the the X And four, are in simplicity, trying and again, engine, in amazing, And acquiring launch on it, for telephony collaboration of is think, that to now we quality culmination I overall And is recently, The timeframe. for over start the been essence on well fundamental. solution. amazing contact June-July for as Series acquiring that's acquiring up you figure we monitoring summer. analytics a MarianaIQ. check a Sameroom are center And most all five a speech June we track just capability together. you years for brought analytics. an them. out key.

create you as the of leverage what I video line allows towards. as that data between we've of system think one everything, And conferencing. engagement, been so to really So, That's it and intelligence. system you X well telephony center one simplifies blurs contact it working

Operator

comes Dmitry the next Netis William with Your from question Blair.

open. line Your is

Dmitry Netis

for Thank question. you very taking the much

was said our XX% I So, That's growth books, I quarter. back XX%. to going guys. XX% new mean on you now, the relatively last growth to bookings number,

does it like bookings of seem decelerated XX% bookings, total here. is your the which So,

understand So, channel channel dragging of also seems commission And in partner just exactly, people the channel? has going commissions, the like isn't quite some there been viewing mentioned. anticipation is I'm these as something to launch, on product of understand there try momentum the It as yet you've else or far the if to bring of there you the normalize you are inflation your you as woo try to it Is up of try channel. will feet is you it on, partners is it of new the as kind tick statements that. to target know trying name continue eventually side and pond, in will. sustainability them that there an How is you in think it to

Mary Ellen Genovese

Okay.

XX% let's take and -- mid-market on the first bookings bookings. So, one the mid-market -- we on the grew enterprise

remind fourth all, want third quarter of the that First call our to as growth last to earnings rate quarter. everybody fiscal we in our not do expect we mention same repeat that we did that in I had our in fiscal

a and thing. in came plan, strong, very of was ahead quarter fiscal third Our that’s great

recurring the perspective. with from quarter super QX think having also also XXXX our quarter which our strong fourth we just revenue. Our of our impacted that with good, But, XXXX, was been you quarter QX right? that the four [ph] was whales this in enterprise quarter. also fourth so growth here XX very saw pleased past deals fiscal fiscal two in our comparison Xk booked in large growth impacted of what we very a in year-over-year last rate fourth over monthly the If new had very -- I happened quarters are

have We very been managing well through plan. our

generation now And have we fiscal those all as We of to demand and pipeline accelerate. are ‘XX we plan are seeing in hitting going we that into targets. will start to from build a move we place expect detailed

now. we have get the our is share. large the much also to very ramping, going at a hire we are from our have you more fair very mean, a perspective And on and support. have team where than we pleased very, we hired market capacity. our here. channel we We we So are seat to And is we sales fourth sales this than had sales expect more in quarter what a table fiscal our I that have expected

Dmitry Netis

channel the partner commissions? on And

Mary Ellen Genovese

was second the part absolutely. you the the on And on had channel asked, second part that commissions --

year-over-year skin learn to a XX%, come That’s are Program. So, tech in is still partners. inflation, expect know and in all do The idea saying numbers a growth. implementation. products, as far whole than area. we the as as more have I learn Channel But fiscal Enablement see sell XxX, you as our on very as They revenue to for the get targeted; the by how the well of our we would that They year-over-year game. We -- increase support about they quarter. from it’s marketing to fourth in competitive very strong to the they I did sales had board; it’s channel said XX% we far are as how this comparison the have commitment the channel

So, have in they the game. skin

that we accelerate. to we so, still on have -- really are will we partner start do channel and believe And that strong partners board a channel

Dmitry Netis

on of I website. XXX, the Can the on would kind accounting be very think, the the on I goes, give at the the something and XXX you more bookings there on what one comparative service have ask at on Without you much the midpoint to calling basis? mentioned ASC us looking think, color us you looked for far of question I as able the are Thank growth XXX number basis. would is fiscal a it, for ASC XXX ASC? you ‘XX revenue But as like channel. a XX%

to And are XXX million, additional are you to million it investing there what XX of benefit XX So, on XX I for would like it the you basis? of a trying getting am million. yet understand equation, XX similarly, the does sound the just to side be million OpEx

to all-in, reconcile $XX the trying just you investing drive like million that in growth. that to $XX are accelerated million correct math. off it sounds am is OpEx So, to this I

Mary Ellen Genovese

Yes.

revenue versus small any the XXX we We on a might improvement ASC no service change margin perspective, ASC XXX, impact product the change slight material or the don’t there a a on versus XXX ASC is and -- that revenue. very XXX. revenue service XXX -- but ASC between On XXX see on ASC believe under ASC

to pre-tax be to non-GAAP fact $XX we will will $XX in to of $XX XX the that favorable a OpEx and amortized million between of it operating relates And next income somewhere expenses, capitalized five over favorable we do As expect years. million. million a have yes, yes, the

correct. the that less marketplace. we a we’re We your that position market very significant said well a as this. products, believe We X now of believe products than This And So, numbers capture that come had the current XX% as around in as Series are day. is our that don’t time, a we with inflecting. believe the our have really portion billion we right is every strong that in market $XX with penetrated are position to strong

wait. These fiscal for either rate long-term. I for to And and we’re mostly rates. mentioned into XXXX accelerate or our beyond growth investments continue the now exit accelerated accelerate growth to as are building So, it’s as before XX%

Operator

comes question next Your Mike of from the Capital. with Northland line Latimore

Your open. line is

Mike Latimore

two to of think mentioned. things wanted Just you

number seeing met you’re the market the I inflective believe mentioned also said, think, that your you you fourth for that you pipeline but at an quarter. I point, then

you was So, inflecting have I market, for been guess, that can sight, your more? number of you up just sort in might of pipeline out [ph] it think

Vik Verma

So, the around issue is capacity. around less the the market, more it’s

building us last year demand onboard. over six months. for in a generation started -- ago. capacity people team the as Rani joined bringing So, She example, about her

of put out -- FYXX. starting onboard kind talking with happen starting ahead -- been to for and weeks detailed together Bill X.X are we our they to stuff has that is he’s there. and for So, plan already plan of I’m about

Our issue market. is not the

-- of Our issue long why known a us part in I capacity and people time. here. even that you’ve is we’ve that’s mean for And had the the

We have in GRP always run way. the company a prudent, almost very [ph]

board, bring over now the up being to And that We and that is products the them able finding them people opportunity into are and time. need high to was and constraint we on take us people growth all are right time. this we we on-board we’ve onboard coming mode the are we an think, ability and built in market seeing this bring to got our past to the the we’re the have right

Mike Latimore

bookings last talk about the being just about qualitative this I sort you comp. bookings And quarter Any tougher commentary kind quarter, March comp? a quarter of of general know June

Vik Verma

We don’t better and -- better. looking I it’s mean,

bookings to to that going So, our continue over the is main make to that you’re to continue want accelerate. what think we long-term, is sure I see is the point why

QX we our a depending because kind fluctuation, to that telegraphed an big of of be we kind level they’re happen, call, last they couple where what we and predicted can the one bookings of to here expected. some see But on always exactly of and came how had earnings everywhere, in going quarter You’ll deals other. shift are we exactly to exactly

Mike Latimore

And you you said to market that explain small for or new last Is of of inventory, to a out that of the the Are market. a then bit sort little business sell? you version thing clearing like more? the, seeing that on just just come you like old the phones can want

Vik Verma

Exactly.

Mary Ellen Genovese

That’s exactly. Yes.

Vik Verma

longer, bunch if them It and out Yes. all to much There would generation of hallelujah. them kept out. next good that a phones the get have been was is we

Mary Ellen Genovese

able to were our solid generate monthly it to team. business We recurring Yes. some for small use revenue

Operator

next Sutton Hallum. from comes question Craig with George Your

open. line Your is

George Sutton

and we mentality. Vik, you. kind see market debate concept need take all Thank And the my much is to of I’d consolidation. a of perception this fragmented more of winner it’s

So, kind competitive curious to relative I'm just backdrop, your thoughts that a landscape. with the as a

Vik Verma

I've bought think consistent become it we Sameroom, So, interesting over bought will DXI, bought we here about which communications one way years, we of core Contactual, been why last it, asking it. platform, Rocket Quality But and you bought basically if we have I MarianaIQ. four now had end, in a the which vision is since the is

Ultimately, data. that platform. technology a I that on core that technology share is put where communication happens it’s form build on this somebody top that our your AI, our it's of I the and own all core then data? in particularly you communication their to I So, Any think roof. it data under worry company ML to ambitions. because of create happens it's have And about core time underlying hugely valuable somebody don't platform We control is not that stuff, that any because That's we critical communication What destiny. is having that can platform, one have of when does is real form you where don't interaction the about our huge. else's

We masters are the destiny. of our own

well Constraint I what all we of the under past in the of part why, as have as amount that's technology sales of public said the I got have, core turn the companies now, equivalent why So has which talent marketing at on of you essentially, is caliber one the right it and the we the of as people gas. roof. right having level. two been

George Sutton

the Last Relative at to are on of Connect, very side. -- question opportunity you me. data for Enterprise suggestive

at as progress really may if a any people In of company. you're fact, there. end data us I wasn't wondering today. making that saying one I'm think up There point characterizing any discussion

Vik Verma

are mean I a let’s that to announced start ago. made kind leverage We've we ability I common Company These customers of us coming relevant significant global most on other Actually, somewhere where gone parse a the AI, basically with key -- we something any that, global instantly. ones the the ML. have customer agent create about where X use inside respond those bought may we're rooms priority. week for progress basically is MarianaIQ Tier to from also of run-of-the-mill. to AI, need and This able senior I to interaction look very now interactions to in our are ML executive order it to to made And have more from very starting hires that

is the MarianaIQ I the right So Sameroom. with is ML are mean be company. there. to But is Quality Rocket to I've check going that's It's made on how I And having think that up up very a a going -- be I AI, game-changer. think data best combined two much, one this and acquisitions

Operator

from Instructions] Jonathan Kees [Operator Summit Group. next Your with question comes Insights

open. line Your is

Jonathan Kees

to little I a and my I wanted guess Great. tie things Thanks just dig for deeper questions. taking together.

in puts your to I to to and the and S&M brand spending there I'm maybe in of OpEx some the be XX% together are and in best the which thing -- that's that's that ‘XX. a is step And that are still back some ranges try more and awareness, see XX% lot the You to past? assuming I takes, do talked those going and OpEx most trying of of since am about year guess took the less fiscal areas? hiring hiring on is now you also And you capitalize. guess, kind pull gave you to where OpEx do all going going ask -- in you

Mary Ellen Genovese

Okay.

headcount be the So, will that on increased across the board.

in there well operations be It the in increase hire the and board. and fairly UK we Cluj here Okay? heads [ph] will a have our that will be will R&D significant our board as as in US We Jose across across significant facility San do facility. in our

we more there is, There side. and the Second a marketing be we will of to built additional. side, sales of to ready continue team we sales couple most and XXXX. out add for that have growth marketing capacity place will right the on in the that continuous We’ve sure But our team. certainly the ramp will will in again make hires of into acceleration fiscal

hire we also will We about in hire didn’t that we talk in G&A. G&A, will also but

team. We and build to continuing out team out building a are our HR legal

to very to the in being market, contracts we to with able review these up right place move necessary customers. very, to and As quickly do very continue it’s have enterprise

to us bookings us, revenue more from So, board. key business important new the key metric also is all to a are we revenue is is a board definitely said a us that a be service bringing very growth metric we us. with new across is it on metric time will the to to perspective metric Key deployment to -- but

our We customer will building deployment service be addition. out in team, customer

have best which company to looking bring our for inside be adopted continue to we to will customers. the technology, to the information We adopt to continue ways our our

across or have a still of generating that can minus We most and the now we spend but pipeline the focus we turn by So really and for have lot we the absolutely gen on now gone spend looking a where what we on us. for expect dials put on a in ones we in data working, the that that are really be what’s from generating plus the we actually board are and hiring demand best -- programs, are market perspective. from will that to will

very So, it’s targeted.

learning are markets. about a our lot We

a continue are learning to We then. lot we to which customers target or we and fine will the learning working are to are about that a about and able we tune lot not working selling and are campaigns be

build big right? new won’t So, You leads radar your we you to in but to jingles continue our see won’t ways see generate will billboards, invest pipeline. stations and on

Jonathan Kees

still you did at rate rate XXXX? just in then, follow-up. Are on accelerated from same channel a or bring fiscal And looking you what to partners

Vik Verma

just Bill and ran operation. He quote, big for and Significantly -- accelerated rate, of span channels we control. a the his and of and was mind Again, and then very and CenturyLink every space, the infrastructure simplicity investments right channel alliances to X the every Bill’s particularly X tip the on have time at is of in remember that Bill pop. knows is made his of head executive. person view bring in board very channel basically to X back in we provision with very kind with office senior we of are ability our the

I of to think make because I going you sure a changing. got going differentiated lot see I’ve matter lot a engineering to becomes am bucket, it. as you’ll think I so am be I of product, I a continues own game a work So, can a -- extent, some differentiated and to if put about And in fact level invest behind it it at macro it to

pop, Second, right we us, the who at have to it telling and channel invest are across continue board. of in are essence people channel in got who a in capacity going the can invest to us heck sales looking that a lot now because done we’ve then before

key of again, a that as years And those investments comfortable investment. feel three I because, for right making kind of that’s now. it’s we in So, lot of of core where us areas culmination

Operator

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

Vik Verma

at fiscal guys in we conclusion, look at the of the seeing upcoming excited about XxX, invite ringing forward XXXX. tune conferences. be Exchange. many the you Also, behalf we would York In we we opening and investor where Board, And to you. on Stock are XX, everyone at bell to team executive June to Thank management New of will you

XxX York and occasion the Company’s New celebrate milestone you to in us this history. Stock employees have important with a and to honored the are Exchange much. We in clients very Thank

Operator

call. today’s This concludes conference

You may now disconnect.

8x8 (EGHT) 24 May 182018 Q4 Earnings call transcript