EGHT - Earnings call transcript Q3 2020

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Operator

Good evening. My name is David, and I will be your conference operator today. At this time, I would like to welcome everyone to the 8x8, Inc. Fiscal Third Quarter 2020 Earnings Conference Call.

I will now turn the call over to Victoria Hyde-Dunn, Head of Investor Relations.

Victoria Hyde-Dunn

you. Thank welcome quarter and conference XXXX XxX's call. to afternoon, fiscal third earnings Good

are Executive Verma, Gatoff, me Vik Joining today Chief Officer. Chief Officer; Financial Steven and

During highlights with performance. will today's third our quarter business call, Vik of begin

this, guidance. these taking and your Following financial forward we After will on prepared provide our Steven results look questions. remarks, to details

may products We we started, just as today risk you forward-looking about statements on forward-looking plans this financial cause them. put forward-looking get our factors on the and as a from performance discussion undue call reflect our update statements strategies. made our risks Before these as with to XxX's as today, no uncertainties well and not to actual Any have business, materially analysis and reports we vary forward-looking its includes SEC. that caution or in they statements as of reminder to that growth and future described reliance filed duty our involve statements results the

GAAP. measures some that comparable with U.S. with available were reconciliation measures will together on which call, our some this in earnings principles comparisons, our non-GAAP closest release is year-over-year are prepared on measures addition, accounting or accepted presentation press Relations in of deck, accordance not financial generally to be with PowerPoint the discussed In provided A website. GAAP cases, and Investor

Vik. over the turn to With call me that, let

Vik Verma

remarks revenue channel led results topics: very strong three Building financial aligning execution with in results. in Thank to our global you, profitability. continued Victoria. operations and and Good I'm which our focus strong QX, like you growth both to QX financial us and for afternoon pleased very performance, continued my I'd and on joining success on thank QX results, for today. improvements

including success with strategy owning Turning momentum for of pipeline needs the both want and is XX% innovation The the enterprise our over migrating mid-market of platform and go-to-market included communication are in single increasingly QX growth CPaaS. to a Key growth in strength Sales broad-based the all was execution both clear segments. financial stack suite, global drivers outlook. in of global investments robust contact and grew we total each our validation across customers cloud we've technology their year-over-year center and product Service revenue seeing customer high work performance results. Customers years QX of revenue and product they are to to last exceeded platform. with end integrated and with our and are succeeding. leader. The strong few made

Series ARR X Avaya year-over-year, last were quarter. Total bookings solutions. enterprise replacements, X top of Series over now our base our from of XX% grew bundled represents grew organic our installed platform XX who year-over-year. Four XX% for opted up wins XX% XX%

continue our many enterprise was with also And theme $XXX,XXX. quarter broaden with the greater XX common of the than to new a integrated our deals We in record for successes closed these ARR customer platform. base

and bookings customers. to technology bundled the of power compared new our validate This year were than selected $XX,XXX single of XX% greater with fact, continues ARR CCaaS ago. customers In UCaaS that platform our XX% our one from to as

also of XX% Channel achieve of this total to grew Contact growth to deals. execution new of was with overall solutions. Channel drove as It strong of center year-over-year. bookings to XX again as I'm helped see particularly XX% our represented growing quarter to Channel mid-market growth top in the accelerating channel X center pleased bookings QX our XX% year-over-year. including last ARR our new XX% contact bookings XX% year-over-year compared quarter. quarter. compared market in our XX% XX% adoption bookings last of

contact included center, importantly, contact More deals technology all as the scalable of which top criticality single platform. of center a having demonstrates our part of XX

scale meetings customer represented X TCB bookings. Series Avaya with that a little manages environment UC collaboration seven firm and notice. insurance contact flexible a One including a total with experience requirements solution both adjusting included on-premise complex was messaging. XxX digit such replacement. for X,XXX user a included contact win that XX% more business of center up than voice, center must of with more logos and Their mobile seats an New single This deal video and

their was Another enhance offer distributor selected modernize replacement customers. A management over large a was with tight and as series was options for win communication seven center biotech looking omni-channel The Avaya integration XX customer of contact with North American collaboration throughout and workforce its and Canada. on-premise capabilities. digit industrial as to contact workforce centers to TCB U.S. well center its

capability purchase leading rental the center XxX added initial seamlessly. bring deliver contact A to drive experience doing large replacement rentals, for customer and seven vacation unforgettable This X across can additional property context Series contact for platform. into including to service true industry provider. to to vacation largest be deployment, digit to vacation to pleased the on-premise digit guests. wanted process. center seats American's see Wyndham driving so, to so to is systems example revenue mid-market enterprise business TCB a customer UK North on-premise TCB its A based Vacasa, with important was remain operate land norm our the multi-channel Mitel and they've In Wyndham rentals and customers. X the homeowners XXX continues I'm After expand sites was XxX of continue center over Vacasa management recent management of a is to seats. its mission, Series that its and great expansion a X our win seven X,XXX with a platform also communication chose the replacing Series It

platform. or register early X software. adoption from without been just XxX Turning to or easily download audio another Video room and Series device in join launched stands onto need and service standalone very users mid-November, any to and to has product schedule free Meetings Released video enabling point innovation, encouraging we the as start HD conferencing entry or the

Meetings on collaboration launch Room with smart connect to XxX every This to interface to quarter. goal is our track easy an pairing this space technology to room We devices. intuitive to are conference huddle and video and bring solution

also acquisition purchased X of recently technology integrated webRTC become quality We long-term part been monitoring technology strategic analytics Callstats and has this Callstats.io. capabilities platform. our and Series a with from partner these

receive new XxX’s to contact experiences. announced contact Innovation including center, exceptional approach management customer outbound delivering Magazine, recently and enhanced Also, Award to XxX from at XXXX Customer center expanded recognizing capabilities. Looking we dialer, Experience honored Customer Pay Secure the TMC’s were we quality capabilities

Turning to CPaaS.

Pacific to continue a This outlets CPaaS retailer service. with multi-national leading large more traction build We consumer with customers will X,XXX the signing Asia than across use our SMS customer enterprise to region. delivery solution improve including food the

our service very We services, expertise CPaaS and are CPaaS we including our hailing deployed Southeast ride Asia. bringing CPaaS our on to services now production with in digital a companies and from customers have contract a initial to excited X fastest growing voice Additionally, largest the Series and of platform several offerings. voice of have capabilities portfolio one new

us and coupling Our opportunity customer technology and installed with contact with deliver the a platform. our base to differentiated we use can strategy single voice, penetrate up video of for expands center chat, our CPaaS case capabilities huge opens

to with like addition quarter. progress, I'd topic second strategic partners significant of the is new address continued particularly channel this The

community, As two channel. partners of types the agent and there channel aware, you channel are are referral different master in the VAR the

year the program our I grown mentioned earlier, new past of XX% over over has referral and dramatically consistently delivers As now bookings.

yet their reach of looking massive allows Our from installed to the directly VAR to instead communications are global but VAR from buy the customers infrastructure program to that service base prefer trusted provider. legacy of another us on-premise replace also

compelling for reasons. value VARs for a offers three XxX proposition

First Series thanks to X the platform.

and the offer are today in integrate solutions no only can to need standalone market additional We products. bundle with who the ones both

VARs Second access customers to as provision as exchange best-in-class portal, partner quote, to and order, marketing and independently XxX well content was certification, leverage manage which VARs can enhanced assets. partner

business advantages our finally with of and continue their existing model, led VAR motions. end these CloudFuel and community Poly. customer that can retaining in partnership to existing operate And ScanSource ownership was the reseller the foundational It to their selling leveraging

was to before, a cloud As access the replacement to XX over been seats VARs first ScanSource end Avaya the offered and month. ongoing XxX migration we opens available talked time and a program to comprehensive have gives customers have million user already frictionless hardware customer enablement has this and VAR up of for about and market community. CloudFuel initial this large CloudFuel acquisition. be to set training we expect undergone An

VARs for for this, the two our Charterhouse, reseller addition pleased VARs Softcat, news. including UK largest UKs, In program with VAR NSL I of to announce the Computacenter to prominent UK expansion and channel am

including homecare provider set the leading already with the have X on-premise Series initial solutions. a deals partners replacement We an of customer Mitel of UCaaS closed an both that these with and is CCaaS UK in

We're to continue on all APIs. contact across collaboration, one in cloud approach voice, work VAR basis video, global a platform see center community based our to excited meetings, us the with them to and for

cloud other are In across solutions, more for globally. today and communications, meet platform cloud migration seats needs right unified Avaya, and has a total meetings, ShoreTel, Mitel Cisco, video available center. XxX there leading XXX the to collaboration on-premise and contact than million business legacy

both we marketing generation. to appointments for and our minute are demand a globally Marge how business leadership global all responsible drive product marketing, and efficiency. Officer, as take to corporate improved Marketing execution like new Chief and I'd our Finally, discuss announced We recent including Breya communications to aligning and

where of sales acquisition capabilities Managing Second, life the business customer the costs. the to we customers Chief Sam out including EMEA. two and drive Sam cycle and for adding Officer eCommerce U.S. globally promoted and he over global and the the Wilson services, own flywheel professional deployment, years support. small built ran sales customer Director Sam of success and to Customer engine mid-market will customer reducing

Sales. executive broader on the America Homero I'm sales the expect front the to of have Commercial third our promotion Homero will appointment North Salinas both Vice-President and even from in able Homero team excited we is commercial Group be provide will run commercial reigns the leadership moving faster. to that and sales UK. take ahead for Our Sam to

steps operations. these In our took we global realign also conjunction to announcements, with

the UK, of a area Bay past a in spent energy with building and Singapore, global Minneapolis offices Sydney, offices and years Ramon. true lot in have over the and San in footprint Cluj, the Campbell We new several up time

where value understand our continued of and great see just but a streamline We're now customers we in product in industry globally also market can optimize really to starting to talent we analysts platform. We position the technology hire operations. innovation. not parallel, invest In and single a to

maintain invest the to true technology our to to continue leadership provide for long-term. will We differentiation

execution customers improving and the steadily it In our our enterprise market our customer a focused and quarter for making was us, by business on summary, we strong are and deepening mid-market We're relationship investments teams the with facing broadening business. momentum very partners. and across driven in global with

With VAR reach partner are and earlier enterprises announcements today's confidence. new the our with broaden the with announced strategic ScanSource channel partnership to partnership excited cloud to migrate Poly we global empower to and and

to to a the Steven. teammates commitment their near in Finally, $X.X world turn and call us rate I'd me term. around to revenue enable delivering the work, over the will like XxX in for growth let take With run positions my to future year thank strong partners moment our finish the and customers that, a us billion their for to hard

Steven Gatoff

like appreciate We to everyone. you joining afternoon Good review I'd three topics us. Vik. today. Thanks

by results for First, ending fiscal reviewing XX. financial quarter December I'll third our start the

And info exiting around go efficiency that taken through the I'll commitment we've are QX fiscal XXXX. year our third, QX for fiscal operating our up our share to that I'll with fiscal XXXX the and We'll support wrap breakeven. at actions Q&A. and full Second outlook improving

results exhibited revenue we at financial came coming the across QX for marks quarter of million million, in consecutive year-over-year revenue than finished Total to approximately million in in that high-end third the year-over-year. grew third was pre-tax and XX% outlook. Jumping $XX.X net Non-GAAP very strong This into $XXX.X have quarter better guidance. above QX, as also of revenue $XXX.X service our results up XX% the metrics. our delivered increase multiple an loss

of growing One again particular ratios strong continued market our our There platform our demand of success Vik were larger with and of differentiator new our XxX organic results. four go-to-market offerings results. coverage becoming from portfolio. customers strength, and full moving a And part CPaaS and global and bookings Two, in particular nicely be primary Three, and with to QX offerings large initiatives and pipeline that contact across that center existing contributions integrated centered drivers of strength mid customers a our financial gen four, execution in continue channel from platform market with quarter with growth our solid included a just mentioned. partners. of up into XX% both on purchases enterprise compelling our strong as

see the a and total million December $XXX and UCaaS where and the in metrics year-over-year business growth performance in of offerings. results combination growth can our and CCaaS of quarter, You at our strength our ARR operating and organic businesses XX% for solid came CPaaS contributions from the

up $XXX,XXX had from that success with year. customers XX closed that these customers quarter, than speaks the year-over-year and XX% ARR enterprises. represented new generating we're XX% XX% deals QX XXX large in than and of $XXX,XXX, seeing prior the to generating growing greater a the bookings greater of We growth ARR new record,

customer where XX% by the size small at year-over-year customers. XX% market growth above ARR XX% grew enterprise in another was solid QX mid-market quarter in growth ARR with of our year-over-year, growth at business and Looking

to and attractive We customers that mid-market on have CAC, continue enterprise higher lower time and focus value churn. life drive

our than more $XX,XXX the for and mid-market Looking XX% annual in customers. Average year for per in and economics XX% more customer per unit segment, year enterprise per increased service coming mid-market metrics. at enterprise in revenue our customers than $XXX,XXX at

product bookings. that customers up of more our contact X included, platform. making and seats our greater Series faster is is such purchase growing we’re seeing a seeing also We’re center contact our with proportion more And center

operating we’re And in at QX. efficiency XX% to Looking approximately in revenue QX in revenue versus at R&D in Non-GAAP improvements. of starting some deliver takeaway at The G&A came is QX. and of from flattened that out and sales QX XX.X% to expense marketing improved QX OpEx. revenue. XX.X% XX.X% of QX in in XX%

and we we our at look also from we will investments outset go-to-market, driving drive growth year, the product operating the efficiencies. as be As indicated of to and

every relationship which fiscal as expect current QX quarter. metric we begun expect every we’ve for in returns revenue. and improve will As we’ve forward. going discussed, improvement sales it a and this improvements efficiency a isn’t percentage delivering linear of some quarter But marketing continued we example, in And

migration the Poly. customer VAR mentioned, and QX training global program quarter, this first considerable Last interest. And we of Vik partnership notable and announced Also quarter garnering ScanSource as our development CloudFuel, and our is the million initial it campaigns, expenses of strategic partner partner deployment activities $X tools, portal, million approximately next-generation $X our with and to enablement marketing non-recurring over and of course QX on services. with

contributions half We’re expect with CloudFuel revenue track the new XXXX, fiscal attraction ramp. in on that other customer and partnerships to and first begins of modest VAR plan as beginning and

from from pricing sheet of on issuance QX issuance an strengthened Wrapping $XX balance our incremental our original past up in We further the this results. through market. the notes convertible million attractive very February, quarter some XXXX in

of steps our going success. why to drive heels talk now timing the on and past perspective, efficiencies bookings this and about we now forward let the we’ve operating the me growth the returns that of of made and With investments year that backdrop taken

for We continue to growth. prioritize investing

legacy As is we’ve to continue investing million VAR technology our value. to elements in investments front continued revenue strategy One, our innovation; platform unlocking the to drive by these three channel on demand several and players. communicated, gen go-to-market owned and with on-premise in growth investment three, and focused our the ecosystem engine; driving as hundred key another advantage core strong maintaining product two, seats stockholder

and bear pipeline north and and form north these our in because industry both website tangible to materials, referral spend. successes content investments the of and and year, seen getting program channel turning channel consistently onboard, of coverage, growth past right sales XX%, organic strong bookings spiffs growth compensation invested in We platform. bookings talent We’ve the master-agent partner technology of customers of increasingly new channel optimization. plans demand enablement our and invested we’ve numerous XxX single structures, gen search recognition program in the headcount Throughout and in XX%,

place, with And experience this bookings, that the traction, coverage, and pipeline XxX operations I’ve time a specific growth breakeven efficiency implement to and us was in the basis. targeted strong tenure on for now first through to in revenue and our my and global our at paths year right infrastructure so, both with gained this drive support further now non-GAAP execution, insights to our initiatives here

recently we go-to-market importantly and our technology operations Accordingly, took may so and not focus to drive only but continue success, that move also steps realign OpEx global our to on cost to efficiencies. COGS structure, and platform meaningful we

moving the from most to this for forward the for the was competitive strength Our structure build approach business foundation to our of about realignment longer-term. company

Specifically, dynamics. two action around recent centered our

out structure, drive the took across execute areas in our our deliver on company, how so we operating we we second, U.S. geographic centers business to cost spend the we globally through and efficiencies Europe Southeast overhead First, most in And and to offshoring shifted core initiatives focus from various growth. Asia. can that the and notably

offshoring doing this and out on functions I high now And headcount locations we Romania, Area, more we’re effective the in and to of quarter San talked than generating London the majority India. cost in with The being York that rich the the several Philippines last XXX still eliminated roles it. about talent areas is Francisco net executing functions. New Bay moved so, less were in cost and and non-revenue Minnesota,

COGS further expand added drive enable And provides We all expect to to G&A. from operating realignment will efficiency the to across this us approach support areas importantly, expense margin. gross

discipline, that we some in from our CPaaS operations readiness discussed, of and operations percentage and operational on continued spend efficiencies. to continue time over we incremental and fiscal VAR margin, organic quarter. anticipate Improvements a launch quarter growth cost full saw expected margin QX a XXXX the our pressure the QX current combination some mix While through of are higher where improving gross program margin in

communicated. actions as between achieve next on expect non-GAAP greater a and expected on with to our delivering continued more strategic will we fiscal costs, to Overall, call year breakeven look exiting path plan our we we’ve our I priorities you share thoughts in drive capturing these operational as commitment and organizational to and our increased May. efficiency They confidence on basis reflect fiscal and on XXXX next global forward alignment this talking earnings about efficiencies.

turn ending to I’d full what the and QX Taking for XX, year to and outlook XX, XXXX, March this all quarter that ahead path means into account, the financial share fiscal for March like ending fiscal our the XXXX.

QX For to we be XX% total of approximately to loss $XXX.X XX%. a service to $XXX.X range the of revenue growth year-over-year revenue fiscal And be of we the XXXX representing representing anticipate anticipate million. million growth. in to non-GAAP We in $XXX.X million, to be XX.X% $XXX.X anticipate year-over-year $XX.X million to range million, pretax

year-over-year the year and are on to guidance such The XXXX be approximately fiscal that pretax we full anticipate maintaining our $XXX continue XX% implications we are million. representing growth. revenue or total this of raising to service anticipate revenue to non-GAAP $XX our be guidance, that loss XX% pretax non-GAAP loss year-over-year revenue we approximately fiscal growth. million to And be We million, approximately $XXX XXXX anticipate full year

million over path more breakeven at passed than March in anniversary new working now seats. us technology And and launched XxX. here. next realigned global my wrap our to on-premise video and our well-respected one I’m and meeting our I fiscal now to XXXX. to program gen platform. We displace CPaaS XXX year up, drive we with when have excited helping We exiting leading pipeline added here Demand coverage. partners is to global support operations VAR a got consistently record cost and So we who just structure efficiency year I are

we open questions and call now now that, appreciate we’ll With your any the – the for support Operator? questions.

Operator

first question comes Your Turrin of Michael the Instructions] line [Operator from Wells with Fargo.

is line open. Your

Michael Turrin

conference tale, from terms start the a taking mentioned the maybe was it. also, for surprise this Vik, I coming week. no That similar you to competitive their at appreciate guess, for side. the commentary maybe Thanks side there. of XX in Hey, I’m question. telling I off, the wins legacy top to

perspective, acceleration what what just might migration terms from of continue? So be that in driving more can that your today, and confidence and give might you

Vik Verma

Yes.

exclusivity fully-formed customers. perspective, our the noticed key a is, we no is So that have platform. And have from Avaya’s Avaya, between there we and part

of to moment a solution, cloud have their Avaya started includes And go-to-market we contact the are around. So that started shopping able offering where customers center. we all a fully-formed and solutions, it

So that already gives edge. us competitive a

quite see to come customers a started us. we Avaya few So to

developed that we has integrated think voice, The at And more the something is uniquely that’s do, and And platform CPaaS, to was video, what together. up all VARs. all can are it that relationships essentially and PartnerXchange about. ScanSource have has plus the I we called one even enable We’ve we positioned just ScanSource’s this we relationship the the VARs came second that UK. thing part all within actually because It the and interesting. contact the relationship center it’s is

model the is, the VARs provider. The service customer, the with VAR the have relationship typically not

has we’re the doing the it, their customers forward. is deploying what That And model. impediments which move been we supporting are to labeled is is the our So allowing is to products. obviously, traditional sell the it, whole with it’s of and one VAR VAR it selling But XxX. to VARs go VAR and the in essence, is this

market, consistently So which our bookings. working. growing. been routes in can that’s And I represents we referral see are as us over both to which master-sub XX% perfectly. channel, channel, now you working two referral of the the of essence, has now for have have And frankly,

legacy and customer. And selling partners to it we’re are they a and But are them there’s it slew channel them us. comprehensive channel ownership partners, we and of offer us cloud that enabling is we’ve go complete VAR the for to then are to they providing base supporting now what cloud, it done are solution. which they a selling their and for the have resisted And new whole wanted move the because of

the already the our from of of I we’ve and all I got having up thing. literally we’ve basically deploy. customers’ this online good think that And is of complete comprehensive as is Avaya perspective a all market – good said, able And been to platform a shaking thing. the So hundreds

And guys of so it migrate to what those easy, it good experience but something and it’s the we’ve takes we’re had at. isn’t

Michael Turrin

that was Steven, one through of detail profitability free that for of and flow, this bit some in some of get some I the useful maybe to relocation of and parse underlying detail. to of Maybe terms kind and you’ve Vik. target into assuming exiting That’s that there helpful? then of I’m Can more Thanks. stepped to margin we’re talk help you the terms little terms in was through step-up mix us towards headquarters, trajectory cash year we as certainly but those particularly, impacts, quantify CapEx efficiencies. commentary hoping can looking about next in anything Appreciate do clear. a some is related revisit the of that maybe impacting gross in

Steven Gatoff

straightforward. great take fairly Yes, I’ll the Sure. question. first. one last It’s

that our well, There $XX We had basically million cash we $XX in improved deal to million. pre-cash a negative Wavecell washes. few was items both were operating big acquisition QX. one-time QX. quarters. That those QX. obviously over of Our the of positive in apples-to-apples in negative flow, a had as And a That from convert was QX

$XX of and the also our office headquarters was One-time office, burdened space balance But build to your in change. out item for the this about the million point, new cash QX was quarter.

in that a over decline that in Code cash Without would that to big we ZIP improvement continue less improvement was $XX degradation. forward. million QX. to going And expect have the so And down been

in point One, the gross a CCaaS, your margin, had four core was three far about things. talked the UCaaS, will. in that bit there readiness, so more we a you if costs or QX VAR of little on mix To our and as

some of was there that. So element

also bit we We CPaaS than more anticipated. little a had

more we mix And full we if you had of but than more so a gross margin. on a there’s we quarters anticipated. worth, pressure a There shift, even was had a product will, was that revenue. bit One, also

see that degradation. a that down. a the of a So also was was on that all more drag. how little a you gross get And That to there. When margin brought drag services could up, you prof that’s the you bit add those economics

a we talked ahead improvement this just Looking that and of gross is we drivers forward, would more core moment not be I two And for that expect a and going on meaningful CCaaS structure. structure offer QX to there ago that margin about UCaaS, our favorable underlying QX, event. are see expansion we operating cost

deliver drive our all what So to the higher to drove ability just act that structure, some and we realignment, efficiencies our cost of CCaaS. margin backup to UCaaS, our on a gross levels

business theater about We the would an in CPaaS improvement of shift as a our as and mix to this an and as bunch from European in is voice. services margin higher both as bit well expanding others, with a as also a anticipate well the aggregate a the margins. rise the chat in U.S., the well one-on-one business, where as CPaaS CPaaS gross offering We’ve to past, like talked

the those roll months. coming and And more so dynamics, and product over more two as set out geography

expect contribution. We the from CPaaS see margin lift to

Michael Turrin

appreciate helpful. there. I question. the It’s for Thanks all Thanks. color taking the

Operator

of the Your line Stephens. comes Ryan next question MacWilliams from with

Your line is open.

Ryan MacWilliams

for Thanks taking question. my

increase initiatives the due congrats off, new And reaching I’m deferred come first in on XX% So million the the another on was revenue $X the more revenue to it and service positive also you growth hopefully CMO quarter, year-over-year increase bundled offering is milestone marketing What customers new and currently offering? bundled to under it with contact improved any your like center resonating have this about seems promote bookings. there. to

Vik Verma

one. take I’ll So that

for is part that the most concluding – I as The think that where people generally customers, now was me there contact you at is the things, $XX,XXX which both interesting statistic look of well we thing, for this couple most buying right, a together. our is you one is greater customers platform, are interesting as Everybody So big UCaaS most center than need us. main is and that a opening for ARR.

communication unified as number a those both if solution to and you ago this are year center And the customers, we XX% at seeing XX% jumped that So trend. from of year. up look our people buying one contact a

their complete way, for used to by had is buying where And with contact because but one another UCaaS be frankly, both they’re they’re tends able with to going vendor customers’ the contact their a and for makes simple. confusion to a center But Avaya this go because of it – they’re teamed and so has platform very comprehensive other created develop the up pre-existing center. go there that’s vendor trend, us lot a that particularly And in communication been unified center solution. vendor, contact being to offer relationship and own and

of with VARs they VARs, play support, effects we started we particularly seen a customer, few and either training, to of but what the closing VAR of first customer then or deals enablement, that with play of the the where we’ve and long the CCaaS a to pretty is, there. UCaaS from VARs, we we’ve play close with standing a upsell our regard And role own able closes role much and the report relationships had because have they’re do

customization well experiences, the thing allows as allows which interesting CPaaS customer. uniqueness a for services of is and VARs for more customize to the level The as them then

as conferencing was is of that ability to contact It that the us add interesting can I is a in all as that this from is where as finding we engagements was said, video through is differentiated. center with hugely becomes with thing, concept have are happen we to level are perspective, wanted customers customization the The what CPaaS most it mix, resonating. forward platform And video to context then So what there game one center CPaaS finding that, combined well APIs bought of increasingly an that our a addition of basically number an as interesting quite, added video but move quite changer. trend heartening. to

relationship or of customers So customer’ will exclusive as And compete competed, concerned, approximately Avaya ability which think either there, I’m have plus cost deals they’ve one – we already think is increasingly to migration their over. be because that. have for we And there XX,XXX out as demonstrated those have VAR about effective. our through that we bullish migrated is directly is that between every channel. I master-sub a I every and But I every through have them, far one seats Avaya by our the is I’m compelling channel of no as offering, intent we and

from that And a so very position. be perspective, in we should positive

Ryan MacWilliams

in Perfect, acquisition, or growth thanks. calendar your XXXX And on Thanks. helpful. for margin for meet particular The traction any video? out there And one that this have any revenue is the you APIs, seen expectations you laid color, voice higher at Wavecell any Steve.

Steven Gatoff

Sure.

generally are with CPaaS we So, the speaking, business. pleased

open thing to But the framework is I the the floor. around pieces of has high-five importantly, candidly obviously engaging the biggest us The center think into customers what and contact the the video, integration important most and helpful API that’s how with and nice. more the offering probably technology. revenue voice is our been we’re

adding They’re more that growing the more adding So, to we’re customers. and happy performing. importantly, U.S., in They’re the so coming with and with it’s countries. Most the business, we’re how is. pleased where UK region. nicely They’re

Vik Verma

CPaaS differentiator valuable, case. our increasingly element, is very platform for use as I’ll a core simple add give you another because a

imagine, So if are with customer a center. contact you a

your massive is That’s which taken they the a you for vacation cut center get conferencing addition by a to basically a be as keys, – you’ve area of So, company is is you’ve unique link, as customer can the and our rental products. which call into turned bundled a a ability contact to that unified packaged gets hugely engagement is like opened agent differentiated. huge on and that thermostat we something example you’re – a That how look turn change CPaaS, well are customer send a and to and the a instantly, where phone camera, browser into Wavecell where and solution, point around center they of how and why or customer’s seeing particular that then look web video can or huge they saving. the customer can traction an in productivity the a it communication, and bought we service go with

Ryan MacWilliams

Great. Thanks, questions. Thanks guys. for the taking

Operator

comes the next Tim Horan Oppenheimer. Your of from question with line

Your line is open.

Tim Horan

guess the VARs and kind you when terms of Thanks. will now anyone is you be unique, and else really How of percentage maybe, things? what they VAR conditions the little is think are, of the more of guys can bit you support just control? a do XXX%, time thanks, given you great spend Vik, I level Do do of relationship side market up – channel relatively same with and quarter that the think? running on your and that, enterprise the VAR that. you a at Well, and think

Vik Verma

great a question. Okay,

plus month. initial And customers of so VARs the set have the So, million ScanSource and will and fully their early this distributors in control their just and be will approximately of and they XX seats enabled control and Avaya minus. market trained, end-user days, first we ScanSource out VARs the

UK, VAR regard top you are With UK there several relationship seats million grabs. are with VARs. for the Avaya know, signed two And that a seats to that as are we

deals have them with of Some with end-user the – closed already customers.

quarter of a VAR. One our last through was deals closed larger

So, think we approach the some been market. to that move are of the starting And the to we see has VARs to cloud. as impediment non-trivial a to

the if They’ve the phenomenal. become choice. and think channel great it, appreciate to and we subreferral and about of job relationship more vendor So, the a is we’re more us you master for done starting

Intelisys I think top just recognized for recently their vendor. both others, us few being and

the we and to essentially significant using provider. then and to a trusted there’s of kind moved the the end deal go of opens is master dealing customer end-user where is their basically the and with front, – VAR market to our to now provide channel partner CPaaS service What up the to their ability they’re that VAR able much provide be customers. only the be an because for value their end-user to been the we same customers both more providing forward, not the end-user the basically and to VARs customization VAR to or is, with out ends customer, entire enable set additive don’t service but Us that of the services up can and exchange, ability enabling with through that VAR portion go think for very to to the have want subchannel, interesting they used going the

and XX% one building which now as believe We very is go odd master to we we So, bookings. unique well to market. platform, ways by subroute, have our can of go I is working indicated, two this the very

VAR, is it and We’re customization existing it’s But evidenced go now used wins. because which same have our relationships services. And provide unique in first enabling a business with. few trusted The the as signing. dealing we’re gets for and a they starting are they’re basically model to And for customer, do win-win the initial is really think VAR. the the the by the in to work win, to with maintain VAR that with always dealt that person to we I ability the

start we’ll think, see of but in first in impacts XXXX wins we’ve VAR early stages, to the channel. I revenue using already few had that FY our

Tim Horan

I expect And these relatively but they’re exclusive, are I primary know, the to exclusive, partner? not absolutely mean, do you be

Vik Verma

never expect give primary to exclusivity. I’m willing but never I be because exclusivity, the to partner, I asked for

partner. we And I platform will to positioned end that the perspective, from do as think So, that. uniquely but being said, single is up I our primary

Tim Horan

you. Thank

Operator

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

open. is Your line

Vijay Devar

churn and segment Mike you this Vijay generally, Hi, small about a across talk customer Devar business Latimore. is Could base? for in your

Vik Verma

Sure.

we’ve about of So, that talked for on is our primarily a before us function as platform. customers are churn legacy

by customers. X functionality customers is not Series. definition product of older so with churn on And lower generally for A

once are to who it’s Series Series, lower. X on We those they and have for X migrate customers, experienced

base so to by this we of end bulk moving the something been now over the the X moving starting to get calendar customers and our base our of migrating has customer we’re that year. more this to the around traction And year, legacy That’s X Series. is remainder of focus anticipate and our customer

Vijay Devar

still in your number? bookings this is And

Vik Verma

generate, When report will, business typically, three-year we is sign with bookings The is that number, customers usage-based their revenue infrastructure. not. period. part that business, but meaning they most over for is currently customers the the is business, some up. historically so UCaaS part and up where is organic and us are you is as contracts CCaaS become bookings. operational and is baseline for core that revenue We business, usage-based and reported It our of signing where if a not a very that it of CPaaS that’s committed a amount there

our the CCaaS report that bookings business. we core when UCaaS, growth is all XX% of So,

Steven Gatoff

the other. bookings. And part the migrations the is as way customers one to of by just reported will from not Migration be moving platform

Operator

line Needham question Valera the of comes Rich from Company. Your next with &

open. line is Your

Rich Valera

and of or mentioned, the there level anything they any incentives four two, deals? your those any to higher unusual you sort result one; require – five The deals standard partnership; relative you. CloudFuel incentives in deals? were Was Thank do of of of those unusually a

Vik Verma

will No, incentives. be CloudFuel. no with this The unusual key market quarter. to part in regard CloudFuel

matter unusual through that selling, and significant the are as out things takes VARs on portion VAR lower our So, the a is one support – works spiffs well quite we’ve like actually the initial wins yes, other actually the VAR a incentive in of and deployment takes fact, U.S. other quite been costs. a of because and had have perspective, it no also, have or from the on and incentives customer but UK we that

Rich Valera

points pulled more to wells, you’ve then since should about bit Thank basis from due Steve. about a in and XXX dropped which XXX to you. the I XXX Got alluded this, color first sort suggesting have given completely of on that other of my just Wavecell on drill another math, And Wavecell know you you be margin little it factors, margin, some by to. but gross it. down has

doing of of and any it, about we quarter be the be the thinking basis should wondering you’re it how on migration thinking or points third we I improvement. stuff of margin order the where gross the XXX from that say back thinking be I’m a sequential quantify in terms costs, maybe, through, bouncing cloud that in should was gross it, helpful. it of, you’re once you can improve some margin much would So, fuel got said you any very let’s you’ve way Thanks. of know just quantification help of

Steven Gatoff

Sure.

yes. is answer short the So,

structure the contribution. CPaaS QX, higher into two core XXs, we right, and that margin overtime, margin gross to a back of orders expect a of there’s more efficient the next improve quarter that. business not but for There’s there’s magnitude in We have a meaning profile cost sources

are in of with – a talk our And not we so orders target quarter be up. next model, forward. on the great do said, year QX, about where gross start we back if more now not our we out you look so that close from magnitude kind much. profile, then said earnings you of in would points but call improvement the QX, coming and basis suspect we when fiscal XXX I we’ll in Coming an if expect as margin client hopefully, trough

Rich Valera

basis Would would XX to XXX points be basis points reasonable?

Steven Gatoff

guidance some Yes. We just code. margin at per se, hope see haven’t that gross technically expansion to on you given would in ZIP least percentage but

Rich Valera

improved have of hoped, respect guide? point it. maybe, then rev maintained by flow there to loss didn’t with bottom despite why service the the line, improve line $X and there, million through can you improved guidance, raised should see just of Got revenue you, kind to the the you and would And is bottom there you anything that some the

Steven Gatoff

this part managing our was We lot, business. of three really, quarters the – We, a the decidedly invested this of first was a year. approach Yes. to

growth of And and really so back run it expense was healthy expense more returning a an anticipation rate. to

calling QX that we so is are marketing structure and demand QX target that QX of money candidly two we’ve in lot as of and product vocal go-to-market, of innovation big operating specifically, spending our a we out get been gen and and needed why on part on about technology. historically so to, those this our here and saw And areas which we to

our and it we forward. how process saw was this of And part go so thought

is line, to surprise us this have no bottom and managing to. there’s far we as So, been what so

Rich Valera

very Thanks much. Okay. Appreciate it.

Steven Gatoff

Yes, Good questions. sure. Thank you.

Operator

Dougherty. from of Your next question comes the Trebnick Catharine with line

open. is line Your

Catharine Trebnick

thanks and my taking question. quarter for Nice

drill Avaya the to into want back I opportunity. So,

integration. your do right? channel partners, in So, all my over but out hundreds systems, Avaya different as talking and remarks, various also there’s with the million you of question difference said implementations, in Different to seats has operating there to Avaya there, are, prepared XX

speed some plan So, that? what facilitate it’s if an this win version this you of kind do place version easy to up of to have in Thanks. over

Vik Verma

migrate Catherine. question, has to the phones, was even of great we And mean, how to all mean be just but easy they competitors Avaya. have Avaya quick of I saw a That’s of phones. over it would that know, they everybody about the SIP some series for why as other flavors press relationships you a multiple I Yes. through phones, have whole

is easy no there So, answer.

migration of we a So, tools lot as have built of part it.

As fall I few into three Avaya and quite a they replacements, indicated, or we Avaya have with customers and had buckets. four wins very broad

of by as that was the will Avaya migrate as with relationship be customers. so migration and some part our to the thing of which with as part existing very well able relationship And tools the of we series a VARs – clear ScanSource to our various processes, is develop

kind and that that two, of we features tried the highlighted that kind our prioritize on to have to able they is them made then area. Poly. important customers part roadmap, also are are with also so of three, product Avaya forward We sure in relationship to And of four move that

you and compatible. are phones where have instances, some not that in We’re legacy SIP

phone. literally phones, be ideas over make work the a so we get able with to for it transfer modern easy to basically those And a customer subsidized on the will very to poly to phone and

my and thoughtful towards but access them, we’ve process has because this So, working ScanSource, million ago, seats; systematically XX that our been Avaya and is year million very it, team of together year, half a we a XXX about odd put everyone through option. is a Avaya big, is after if Avaya, with Avaya that And what interest frankly, exclusive go have to you’re for very best customer in and relationship an look no it in intent is seat. to out is best your much you your

integrated the credible it’s of a have is of and platform our or them. very very we provide one are together, to and We we customers the of assembled every Avaya throughout contact the and and either those hodgepodge think through stuff with already conferencing intent our compelling built-in, one channel centers go not CPaaS and we a for since something master we after subchannel option video have particularly

Catharine Trebnick

All right. thanks, Vik.

Operator

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

open. is line Your

Meta Marshall

thanks. of kind I analytics to of better know question of platform Great. more bring kind of was drag, services. on, some those center just series a the just wanted on And the the to kind initiatives. of Wavecell and X on professional get taking professional contact due of just growth a progress sense that part to to is services or intent then investment second of

Just on Thanks. insight that? any

Vik Verma

Okay.

analytics, So, to to our provide Wavecell wavecell actually actually was have platform. we core customization – was

the web the at is look link, they literally to custom send on With camera their camera a becomes and house, a example left is the point help no, so be contact do okay, unique able and happy demo, agent you say, because I’m you vacation find were find call keys, and you house what and the I a browser now, you to keys. meet somebody the if company in example around a keys. set So, phone and a the use it it the going they and up can the CPaaS, for or to hey, of would would and their a is, kind I right, you go say, out to there’s no, to center really normal can’t rent somebody rental approach can you’re get presses your car

amount work satisfaction. you’ve and huge increased a saved you’ve Now, of customer

call call, the It did at or that where That’s the the like is of do. a it, end to phone one what did example. have I you like phone quick Also, It you you you not That’s to – analyzes a that send if but a and something call endpoints. link, the all WebRTC interesting no CPaaS the can bought, ability like Callstats.io, customer phone customization. that. intended as our technology for WebRTC. engagement Callstats adds for which solution. de we is is company actually minimis, flows adds which It an just is that revenue, overall for package addition our very

we So, analytics. it ensures end-to-end have that

UCaaS that webRTC did said, way I are customers to Wavecell I'll well. as one add be and experience to be to Wavecell added as Callstats.io something in that’s able using to personalization player a unique to significant just a and that. part. contact customization won't to and to lot as center, that's that say, add of our we’ve context and personalize of the my that center that’s is So customers a to we're But intended my we okay, it seeing core increasingly entire now, layer be both what and a

to regard take professional why with think I that services, don't you Steven?

Steven Gatoff

Sure.

some So ventures Flywheel economics higher the enterprise margin, power deployments the is mostly deployment us. some services, and those have professional services sure. fairly large of and between deployments. fairly are mid-market and FB high still of those making pricing enterprise are not By we that more a massively model loss understood large and and mid-markets pricing for really this on services – is for prop element But of us dynamic different know services. talked it's you mostly and deployment I've There's mostly value about

higher and do the to putting with of Sam now thereafter team thrilled work some and really that have we're together fluid, engineering partnering we this tooling. work speed Where less on as looking at building Officer all and friction, and more is is deployment facing a Chief taking deployment with customers Customer

get to faster, to So our capabilities drive leverage deployed customers quicker, cheaper.

something And to. the begun so that migration it's we've

gross so of margin looking kind I'm that's expect QX start what make as I'm to but deployment the and We goals comes to over huge time. sense the so to how at Vik next pleased we that? see driving sure our see a we're be that Sam's going from together? that of in that as far And lift and improvements for – on Not that six much, months in better. with Does to color

Vik Verma

ordered. I that’s without mean, objection so

Steven Gatoff

Operator... there? you Maybe,

Operator

is your Mr. line open. Marshall,

Your Breen next the from comes Blair. James line William of with question

Your line is open.

James Breen

Thanks for taking the question.

structure? you're couple, the you're you to equation, margin you're go how you're a scale as CPaaS, there the the – in you you terms some in volume a the get around as impact Are user a the lot How what's going? some side this CPaaS, that with And margin of difference I'm that as sort the bigger. excluding a the that quarter bit getting of there's in growth about mix there assuming then the getting Just contact thought effort passing Is drive savings an does well. does sales structure getting direction and end overall benefits there little that talking like center. to to of on as higher cost of which Thanks. on any there

Steven Gatoff

Sure. team I on tag will this. Vik and

our margin structure I – gross So in think the CPaaS the the apologize was was... part first first part I

James Breen

Contact center.

Steven Gatoff

Contact center. Yes.

yes. contact The gross margin. margin is So UCaaS answer center than is gross lower short

And pull where above so that center will down the is gross our still more contact towards mean. you right do, the it It's more now. margin

more contact more today have if gross still doing margin up centers of dollar gross would our So one pulled it up. add to we pulls were margin

an your message. But that's correct. important is So instinct

side, for baked of us at CPaaS so are the customers a with our signing. a and the volume of model usage lot the a time lot On into base of the it's contracts economics

in pricing us driving most part have product, changing products, very, margin with for very at expansion so in looking on. really the message SMS geography than passing existing services? the the you add core Over more based and do for rather comes customers. savings so pricing from Sure. and maintaining power from value time pricing more And But really less that with we're

James Breen

much. very you Thank Great.

Steven Gatoff

Sure.

Operator

Sutton line from George comes Craig of the final Hallum. Your question with

open. is line Your

George Sutton

non-GAAP Steve, you you. wondered end. next if could Thank walk just year's of year goal the by profitability I through

get planning just where want to could wanted you I you talk As otherwise of the may to into you importance run doing might on where process, just the situations, that. invest you're that perspective growth? through a metric for

Steven Gatoff

metric Sure. list that top for is of a candidly the That us.

ago our with and going started few meeting planning are XXXX our board doing right Had We that through a now. board. weeks fiscal a

very candidly right? team growth, And credibility around driving support mix oriented see to sustainability but profitability driving important we, that we and growth. that whole Our to growth as a it's driving that and is factor a of

revenue One how is contribution is there And rate. and increasing at and two is at we factors. get growing costs decreasing so two rate really higher a a

you do you how the That's divergence those there. get When it's ask to So curves. there? we of how get expect two

did so we we costs. And removed realignment of about a whole the we talked what was just bunch

the down look whole costs will we and it ratcheted at We structure rate. good. was to that decreasing a increase so And cost

Vik Verma

which applies of one Any together gets everything them as developed engineering anything common that think with with one analytics communication. made for unified context I means and also to have of that I platform. add, team, this center we was applies we've do, acquired few in And I platform questions. one to a everything the company, a on We for the and which some part now MarianaIQ, think structure past you would to painful is the this I things provided to our conversation services shared multiple had common center, of guess years et layer back conferencing with we UCaaS idea the from had this about of is analytics That to context goes whole CPaaS had the nine analytics. entire The the did, over technologies to acquisitions video put last cetera.

that a shared means spend, probably engineering that I a opposed one as dollar these I productivity platform to, technologies. for to between So of incremental all various of mean of XX% more get XX% leverage lot there's more

one. So that's

our because selling CAC because we've costs more customers, send we innovation the and this customers, and e-commerce all parcel platform engineering can lower the more And be pace. of increasingly that center, started continues sell sell you the in That's to et big moderate end, video why can Second, you towards is to investments a made your e-commerce down. even though core of our you're conferencing, because you once the then This sell that UCaaS, increasingly CAC end same now you leveraged then so part cetera. at can the contact lower is strategy. can at see goes kind

from investments that's process. perspective see can few are they fruit massive to and last the bear over in So years the starting get and our be the all chess FYXX you where that how how kind reflected point now over few of a it'll the years pieces to planning last

George Sutton

to seen different search obviously the engine generically new relative branding optimization our Great. and What iterations years different CMO One Relative say CMO? change, be our thing. would over to might we've last the focus. with you

Vik Verma

She CMOs. a very at HP, platform. Executive CMO at done she's she very a the SAP. few at that of CMO is very Marge So, she's I experience. familiar and concept been Marketing was from Senior a experienced breadth very There Informatica, She are with there, knows this has mean people BEA, so analytics. everything at MicroStrategy, of of that whole with and She's been was

leveraging the maximum towards utilization to more more CAC. we're So and and heading basically platform get and then platform

go-to-market channel, et efficiencies, spend, indicated, Marge on digital together. an it I think analytics kind Marge us huge has I cetera, which come branding, as continue gives what as a focus of marketing, see and to you'll background, a from she's platform So background edge. combining we product But on think done all and

George Sutton

Perfect. Thank you.

Operator

and gentlemen, Ladies this concludes Thank call. today's participating. you for conference

now disconnect. You may

8x8 (EGHT) 4 Feb 202020 Q3 Earnings call transcript