ZEN - Earnings call transcript Q3 2019

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Zendesk Q3 2019 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator instructions] I must advise you that the conference is being recorded today. [Operator Instructions] I would now like to hand the conference over to your speaker for today, Mr. Cabi. Marc ahead. go Please

Marc Cabi

This earnings Cabi. report call. results. Cabi. third our to quarter XXXX We're is you, Welcome Marc our quarterly Thank pleased to

me our Chief Svane, Officer. are of Joining Board; Financial call and the Gomez, CEO Chair Mikkel Elena and the on Founder, today

conform as development, customers could course that the our Exchange factors for including no quarter ended growth statements effectively. filings actual and our refer to and and on actual the in regarding retain such risks assumptions, prospects, ability call, these our Securities to section by future to after The today's make and except XX-Q Commission, subsequent our forward-looking we ability XX, today's our these required XXXX report the undertake upcoming statements. to During quarter regarding may statements, financial forward-looking and contained compete for the are to today's information XX-Q statements We presentation, affect prior earnings June in and obligation release results earnings for our changes results with XXXX. ended of the and quarterly law. to on as statements update performance, release press of XX, report Please product September expectations attract in more quarterly Risk Factors to or or our

non-GAAP non-GAAP our we financial from for During measures The information. in substitute both not be and financial measures. addition or this call, GAAP to, considered a as will GAAP present should financial in isolation

such financial and non-GAAP periods. periods, on measures letter all website. which reconciliations disclosures our available measures, additional and for earnings investor for earnings press prior of prior regarding release financial find shareholder including You today's with for the releases GAAP the comparable in non-GAAP are press measures In certain financial can these

I'd over With to call that like introduction, Mikkel. to the turn

Mikkel Svane

and so good much, Thank afternoon Marc, you Excellent. everyone.

Francisco even results strong that want affecting life and to the of Southern our consequences excited just first on course, impacted. acknowledge wildfires of for and share in our terrible so to colleagues, customers. in San I California the these we partners While headquarters our in shade quarter. are of many are friends, The thoughts the California a casting are sobering with days our families, wildfires, our everyone our and north

continues million Zendesk, going we milestones crossed run annual seek important strong was accounts. to Demand of the back revenue, revenue in customer the paid surpassed our in XXX,XXX be our and demonstrate QX, rate all $XXX high-growth, experiences. to quarter the million broad-based. in $XXX.X companies two products Now momentum increased we and deliver growth that as annual exceeded we QX, strong year-over-year sizes quarter customer of XX% for We revenue in to another improve

evenness regional those While are we we path of parts feel manage in moving We macroeconomic and the to on see on good our continue execution world too. improve with to forward. challenges challenges a

be dollar revenue confidence and new A for in of multi-billion opportunities long-term. Conference, Zendesk there about to customers March kind over Annual in the we and our billion that company we $X our stage having to of map on reach results User our relate guys give road revenue announcements can XXXX be goal we the for set year It's I and that excited the all are us product in strong Miami of QX our we as too. the and community XXXX prepare particularly our year. where that of I'm a us you and hope will next wheel ahead

working X,XXX to get XXXX. over very employees have hard We great to here are as in that for that we team turn the I have Zendesk. near and all year the acknowledge I end the want of call executing before now ready So Elena, and we the they

for results thank great of So all, all you them possible. making thank these

the And results. with over I think that, Elena, for to to turn want financial I it you

Elena Gomez

Mikkel. you, thank Great,

Now the annual growth on strong the at highlights for We we XX% quarter, are third million rate in of quarter. run the revenue for billion revenue into revenue delivered achieving to XXX and let's dive our way our exceeding well of XXXX. X

paid XXX,XXX our said customers. Michael As customer surpassed accounts

Zendesk points was rate now more omnichannel bundle X expansion as enterprise our customers. percentage net ARR. Our our percentage year-over-year X,XXX increased has and than The business Suite of a XXX% our

strategic enterprise we continues Our as with well, business [indiscernible] and more our XX% large implementations mid-market year-on-year growth did customers. pro to perform of delivering north

to which partners, partner XX% our than more year XXX expanded Additionally, business is include one more ago. than

continue longer-term across performance all delivered regions. RPO delivered also We APAC the XXX% XX% long-term very countries which year-over-year, larger, growth up be XX% in strong uneven growth as XX% up strong with and in year-over-year. and XX% the good XX% growth respectively year-on-year, EMEA and to sign, despite up US we contracts grew quarter and RPO fundamentals RPO robust RPO current have to in of some XX% continue Our and over LatAm respectively. Demand revenue

growth margin delivered and XXX points. and basis operating points gross we basis XXX expansion non-GAAP committed driving We're expansion of to of high margin Last operating non-GAAP margin revenue expansion.

XXX raised the million, growth XXXX for the XXX is represents midpoint. million at full which XX% year-over-year guidance revenue to Our to year

is operating million. income non-GAAP to year for to the guidance full million raised X XX Our

And call Thank up the operator, like for open you. to now questions. we'd

Operator

comes from Winslow And Phil first Fargo. our Instructions] [Operator with Wells question

Phil Winslow

in about some commentary. for shareholder guys to double-click the I in thanks guys, wanted APAC Hey, on just comments the made my question. obviously of the one made Europe, taking letter you

of seeing to provide of you us wonder about quarter's about were update thinking what an on the in trends some of if you On QX, sort that you QX the you're kind QX? saw how call could and last relative

Elena Gomez

Sure.

well, that's we is focus are make our I really I think but countries important as doing but some sure important regions one some that's performing own that whole not well thing seeing on we a is in to are one execution. thing think are pockets that really

so that's we something we can't control. And the Right, that for macro control can climate.

focus but have place we quickly that do the about we're we're are and ahead of not that on religious hiring that, and if we more going leaders making regions. that in to we time going So to have we we're to all sure sure hiring leadership right in can, on sure to try make making importantly we're our

our given that a the becoming represent and international reminder, as Given size of XX% almost we're regions business. that,

Operator

Materne question And comes our from next Evercore with ISI. Kirk

Kirk Materne

numbers of because sort think calculated And peer very of obviously of you helps the we would expected? our guess just softer a numbers whereas Thanks. you about were somewhat all And I really those maybe obviously you numbers think your could in ARPU to might thanks be the I relative think that demonstrate bit calculated helpful? that you sort I could billings much. people enterprise of on how should bit wondering really just I just than if the you traction little about could billings perhaps sort that Elena, also touch some upon So up talk strong maybe numbers put how result for Yes, about all. were of little was subject, and a a maybe just market. strong touch

Elena Gomez

Fair good a it's question. question. definitely, no, Yes,

RPO we a monthly remember you one is level of business and for highest guys still thing have the considerable proxy a should at of our but don't enterprise definitely look we the at business lose. that terms So amount as our growth in

thing The is did billings. billings other those we certain in The have closed of timing QX.

in those sight attention of And QX tough dealing sure that billings we and that QX don't course close so with we're closed lose no of year. make And was would now we've in compares come actually all then to paying QX we thought very different. been that

Kirk Materne

I follow-up of margins just obviously any with Did was in on the spending plans you're the one actually nice your line ask in margin guess kind then could just Thanks. there op a on line? just financial thinking a one if was is that I sort you is year-over-year And Okay. yes to surprising pushed out on of if or curious, pop anything you what basis. of side

Elena Gomez

I committed surprise, think Yes, really that been focused scaling I on us, is things for the to. one religious our and we operations no mean of we've infrastructure

when we engineering and scale a there of to make organization, are of to to to changing that data everything engineering that And in at entire DNA looking the team grow budgets we're that's we know cost who doing of we really migrated you at on off new focused starting this sure say can the level. cloud kudos structure continuously would As our think the off. across really pay looking there. environment, as we XXX% centers into how just at on is I and we focus terms

Kirk Materne

you. Thank

Operator

Samana our question comes Samad next from with Jefferies. And

Samad Samana

quarter. from one first maybe accelerated questions, my it taking for like XX% the thanks and prior looks to growth afternoon good Hi, on US, the

a uptick in us little And And terms you you could understand that in a maybe strength? in drove uptick, follow-up have standing then region. nice question. of maybe out So what I if help particular what

Elena Gomez

The said, demand I the incredibly Suite We're our doing like Americas performed. has region has seeing products, consistently for good well. been

we've unique to our and do those continuing to playbook, nothing year-over-year well. are did NIMs hire stuck there's So ago like we feels

seeing few strength an seeing in of you performance. what in the where that uneven we're other markets a and we're market we're have not seeing So countries have some

Samad Samana

And XQ. deals of said around some maybe clarity deals could XQ were closed might follow end larger you Kirk's there. the give the, XQ slip this the in? for question similar the versus point seeing are And have on then where i.e., or all there Were kind at characteristics, specifically there I those any to Great. moved from in spectrum, just countries, what to more the up of that on guess have XQ deals maybe into you of us closed that you of

So close some or is not? as it still there around a let concern

Mikkel Svane

QX. did deals QX you think you all details, we very some don't first can I but closed in we just see that give a the early lot, ask in

were So new some noted issues there, they and some there, but deals we timing expansion were for of some us, size larger in them more nature accounts. of as

a was there of mix So both.

end closing quarter. deal the outside of things way by in the of Sometimes the decision get of the

So And satisfied, very characterize it. closed it's those in we're deals then hard October. to

Samad Samana

Okay. you back and hop in my taking questions I'll queue. I appreciate the

Operator

question RBC Capital Zukin next Markets. from our And comes Alex with

Alex Zukin

for thanks the question. taking guys, Hey

signing ask. the of did reason the just slip. theme quarter this is XX the is revenue. last actual time did of Thanks. I sticking slip below your deal these I million. billing RPO meaningfully The deals $XX was it where current the this or sequential the add year or pretty million deferred a maybe If And do with So look at third for it

understand XQ that how and little flows just the through? seasonal just just deferred So you can for if help of and trying bit quantify a to maybe tailwinds

Mikkel Svane

in current same talked the So, which same since Alex. on The you also of up just RPO deals variety larger these showed impact billings about. were

So of at those them are have and closing October. that's in so this Most can point. say of deals I kind what

terms large As far as in and is we'll and seasonality, try to heavy customers deal QX mandate. execute mid-market enterprise that of both continue against a to quarter

Alex Zukin

there maybe you've worked helpful? that was I that lengthening, highlight past that cycles just then are that you've there those the inclusion can identified any any products And terms deals, anything confident just something it's you or be would guess temporary trend sales where that that more in or of you're help is of trend

Mikkel Svane

New making sure those his the, and and customer with and of do tackled are customers to expansions. all are before generally with conditions closes invoiced something terms that

site have timing are any to happens don't I those here. that think just to I from natural common theme time time.

Alex Zukin

it. you. Thank Got

Operator

And our Arjun comes with Bhatia next Blair. William question from

Arjun Bhatia

thanks just to this a and wanted announced formal my partner the start quarter. strategy questions. partner off with channel guys, more for program the you as Hey I taking partner

thinking as the channel a you of Just at partners versus maybe prioritizing are as partner and even of your channel. many building deeper out partners on the maybe terms as with of SI thinking going about getting breadth the larger signed of How the maybe level? possible handful in

Elena Gomez

think of you So, we But jump partners absolutely but about you're number I'll that start making of the and sure just partners. quality right, in. the guys I the understand not it's

Ricardo and much very that's that mind top Norm of run who business. for So

had experience already have with We partners.

larger regions As partners bigger ecosystem. But as know, system with all well a as partner integrators. that the than in guys of you obviously the we know about are we you and bit BPO, think as want implementation thinking little to

around you we're the definitely couple it's not quarters, of not there something needle strategy in can how us are terms then It's that to a of on what move but in partners couple talking bringing years, is we a a of but treat value, only partners. a also journey,

Francisco. conference relate system, our Showcase in that our We have a tiered was or announced which San at

and important incredibly making economics that's both on [Technical sides. sure we So understand the also Difficulty].

when just guidance. I clear. out read to think the just sure I do to it's want make want I we -

full was to $XXX raised guidance for year represents XX% million a $XXX year-over-year growth. revenue million, the to Our XXXX a which

income operating million I number apologies to million you non-GAAP think is $X for $XX Our to year, is for raised quarterly missed the to gave $XX that quarter the million. statements. so million, we $XX full The

Operator

And our question comes Goldman from with next Sachs. Merwin Chris

Chris Merwin

Okay, great, thanks much. very

on a program. that question the just follow-up maybe partner So about

do in you a can said, a I is actually I actually talked year-on-year for recovery more business degree growth, I the the follow-up. region, some see that about XX% think the to of catalyst you broadly, I help that, with Thanks. guess a and mean for like what that international and main maybe growth could

Elena Gomez

investment a have It's global in the I regional only and been already Americas. view Partners as Yes. regions our are that a and thing. don't including really part of

do more the making investment meaningful And couple focus. and sure So next to over our begin impact I that. of will that's have we've they years believe the support that been

it's are growth to reaching encouraged So out I'm a partners of as good by well. us the healthy fact and

So the way all positive, around.

Chris Merwin

that count to you letter of on one you I about Thanks. customers, looking this or from see this customer main lever? in just potentially I anything what decide for you XXXX. are talked you you either in get things, But to about some product, getting shareholder some to maybe really monetizing positive share the some continues can pull think before it's monetization know Sunshine, from there that then And feedback Yes. is milestones but mentioned

Mikkel Svane

customer we platform the of So extension with at I San Sunshine developer of conversational in platform what first, the think being do for Conversations Showcase event but year. Sunshine and lost an at is which And important this we whole forefront you really, experience can our business really Francisco that. this of it's exciting, really API

getting step But to the to going just Sunshine well. of of important about in March was Sunshine story have lot Miami and it getting share. really going it So XXXX I stuff relate beyond that, we're interesting a say us and a to and for to part as that integrated want lot in talk

Chris Merwin

you. thank Okay,

Operator

question comes next Zlotsky our And Stanley. Stan from Morgan with

Stan Zlotsky

you thank for much taking question. Perfect, Hi guys my so

revenue Going million only bumped a raising versus right. $X XX% Because revenue I QX feeling numbers. $X pure guidance have year just If follow-up. full bump quick to guidance very QX back year specifically numbers good the your ticked million bumped look confidence the at then up by to just $X of the What the is we for but and was increase versus to how guidance, your ish. me full the billings gives talking million guidance look you. year? down you by that which guidance at about after the which of end gives and high after to about so I'm you signifies range versus What high your those end looking. much for confidence pretty you're by when And full just about the QX you Thank by $X the now, matter, full-year amount we up million that if you up

Mikkel Svane

are I think three things there Stan.

so we leader to of open there's But have That as that that stated we QX. performance. earlier, around visibility We're in more Elena managed of like done with there. forth. not wanted EMEA during things had, and up done, around be First manage coming some to leveling we need sales better to referred positions uneven the we a things are the we through we to the some that We're do.

would we traditionally deal. have QX have been again in early thing some deals QX. a Second That close is,

opportunities And obvious for this our we So feel year we general and for our good demand visibility there. then have XXXX about customer both into around offering. product

Stan Zlotsky

for still Australia. Thank you. EMEA, those seeing to Thank those specifically or of out helpful. UK The contained that last spread is you or going me. around, beyond it to weakness unevenness very kind That's Is may countries? Okay, and it those it some mentioned and quarter was be of you. that back still just within two as And you geographies. where APAC, go

Mikkel Svane

major two to out much. going said, I'm we probably the quarter after countries the we we're go nice But a stabilized. Australia, are that point not not one and that country by does Those quarter, recovery country this saw make trend, a in UK

want and us. So conditions what continue to through internally we presented do macroeconomic work to is any type do of to to execute

Stan Zlotsky

you. Thank it. Got

Operator

Pat Walravens question our comes from JPMorgan. next with And

Pat Walravens

at you JPM. Thank

So here's Michael. my question,

So you are compete do to SMB run is and a to and market bad question you the more up sales I'd you effectively in love market. force a you my understand the lot that up you in talk about are things so thing, thinking? don't as market how isn't doing can And all is move the we up

Mikkel Svane

think the I how like we an quickly well up anything Zendesk use, don't resolve. doing about quick who are running, we're qualities the that that do agility and values see how So, trend time overall the the the market. of about and materially all is We in and to changed that the ease meeting of has platform we the the compete,

that kudos of expectations. keeping increasingly wider, up urgent for are things with All wider these customer audience in a

if that so from even more platforms. Sunshine know what that provide agility platform comfortable exactly the And of agility is the they them platform. need that very about even we because you stressing that our their of is for lot are with They an familiar and it's concept customers

So especially muscles the current future very confident in enterprise our region. competitive our both and about

Pat Walravens

Great, you. thank

Operator

next And Wood & with Derrick question comes Cowen from our Company.

Derrick Wood

Great, thanks.

you any quarter sounds what just do do can in there's internal will you I how long you what on things is and impact trying for sense get follow-up. terms talked take bit, on lifting like I'm sense hearing initiatives and So, of have business? macro maybe kind but a other internal give it that you you're the And and that for, it, can macro the of there just a to then up about is have it think execution, new color improve to quarter the execution do you what execution and I'm maybe is last a and to leadership you a and this just touched an on trying to little

Elena Gomez

in in in top but fast getting our on we're and it, been think is, you mean I markets And key leadership we of right hiring at good focus the make to cannot results of I on need think as want operationally, I be level, we as to think really sure times is us for the have and hiring. the I at highest we it and with that. need had terms have

but in take and bringing leadership time. So new hiring does

we're uneven traction So see that where assume begin I to out, countries focus as going XXXX. and our to to some that into a right have early our away. two but it that, we going don't quarter right figure is to that's want those Is and hope is in but now or QX as strong, start to in we QX frankly performance have impact

Derrick Wood

then behavioral it's sales Okay. if going on cycles about terms you're give kind that now expansion what just or Thank detail in to And you've internationally changes change side, bit had more to of competitively? little for longer I mean any more macro digest. you. it's of other time I whether seeing the and anything, guess a to

Elena Gomez

regardless a theme the but of going of tone internal to on focused from different specific on a absolutely, is focusing than the around not XXXX tone of because the strong those hard to it's macro us. on it's XXXX That of any our said put us mean I Yes, execution. lot preclude execution we're

Issues]. [Technical so And

Operator

comes Stifel. next question our Tom And Roderick with from

Parker Lane

plus that, for my the those Parker fold a customers in stronger Hi, wondering Lane question. percentage base of if composition it's the Zendesk? Tom, customers in have in have Suite so the of actually thanks just terms come existing just net from you could X,XXX what far of for in new I versus the sort was customers today, you taking sense us give of

Operator

Okay, Tom, moment. one one just moment.

Mikkel Svane

hear now? us you Operator, can

Operator

Yes, hear we you can now.

Mikkel Svane

are for line. we Sorry dropping difficulty, our the

So to dropped Derek just but where heard how I'm answer, am it's strong question. your for we Elena. through kind one But quickly, working of next that answer take in kind not the recap, But I not off, much of was execution, have and question. of single XXXX. a our and sure improve to you just Operator, hard to sure we're very very I QX difficult start we'll from continue to go

Operator

comes next our And with question Tom Stifel. Roderick Okay. from

Parker Lane

Parker it's Lane Hi, in Tom. actually for

X,XXX Zendesk customers versus if customers percentage you of existing it's you Thanks. have those attracted sense that net could us So base the of a give from combined been Suite today. the the have new What only installed came offering? from

Mikkel Svane

was I need distracted question, a to for second. re-ask that I please.

Sorry.

Parker Lane

the the So current from is customers question of customers Suite -- came how many

Mikkel Svane

Generally have a new of Suite higher and its customers in mix at kind a we're rate a of actually higher our new mix. traditional than We Suite customer customers new does. XX% business has XX%, in

Parker Lane

offered. How And what in Gather like you velocity, the just the terms business it. versus just that the right business the is the look a the today of and at end play portion demand part of now? Got of initial the enterprise is of products much lower of

Mikkel Svane

each if empowering help out problem bigger own and like is, you you to without that a ask out empowering customers Like lot users help is is at typically of your having we through there. look strategies to necessarily other, is reach brand find bigger and to there a how your to solutions you as fellow community more customers to So, each a company's of important date. that's and you common part behavior more fellow to your most know other and users

a use I the how lot. That's Internet

stuff part go big we its the a coming Did like questions their would ingredients the of it fall, in is now. of right there I this some see version definitely with of of it's can your advanced along, product the will becoming the customer but as more more like on question? managing in part right we current relatively and that more feature-wise in your is of part and enterprise of say, more deeper and part kind base answer that segment, now stuff you So

Parker Lane

thank you. Yes,

Operator

And question Koji with from our Ikeda Oppenheimer. next comes

Koji Ikeda

the Thanks Sunshine really sounds a customers from the for is, have I interest lot guys. early like prospects, introduction then early platform, and and taking this momentum my on increase has is out of is month conversations great for believe there I guess events. two products traction which Sunshine helped there's the second question And it earlier around of questions I and those and two the platform? profiles the the question question in access. are still

is think how available to the generally progressing process and So the profiles how the events to better get products beta could talk way rollout you. on about what and the could, right if about past early role customers maybe you and to you a from profiles Thank access out? and good that for were understanding shape are is

Mikkel Svane

Sure.

March year. lot event Sunshine our sun the to said going before, at next about more So a hear Miami as under in you're in I

bring the We types excited platform talk Sunshine the about the just we about [indiscernible] you scope to are elements and like platform, the very Like is how one conversations can think of the that for that broadens that is you. Conversations of to that.

can story solidifying that it. definitely around about the more So more platform we attention put customers it is much the our comfort with has and be on

typically premise moving. and understand elements the are and that We do like Sunshine developing that with the are well very still understand things platform our that in that those of are of customers some still working customers are

of are the time to really them and some We closely they appreciate on them. a these and can get how kind kind stuff. very do with interested really they and things market to lot gives interesting working access advantage of They're very of in that the early

like working customers, quickly that stuff and we again year a customers visible we other ago. course kind about on first moving to like comfortable of that is For they're of very super our all Sunshine, progressing not trade-off Sunshine like announced make like but or

in more about the excited it Miami. about under year very much are in March We talk sun next

Koji Ikeda

there Great, my that for And month blog thank Was does what a post did a mean a any retention? could, on have resolved? that? And breach one you I is if real follow-up. security impact question for selling Thank just you I that. that ago. negative on the update about is questions. I guess taking I notice customer more any

Elena Gomez

ownership it of has fullest that been affected touch customer the that these relevant the picture. our than as is And is. indication full have be It give this this directly that all the along every with in we of years here, that we with like and about and something authorities I Like is possible to we more we think them bigger they are for ago. been the the way them have kind findings and happens around were commitment turn to everything happen. our things part that also with it we And the Mikkel some working can take that customers understand all feel like details investigation [indiscernible] is as to stone three presented customers doing we possibly that

a and of same different it learned are very that of them practices and lot from appreciate years important we Also them big to the our kind part three customers have walking them us. a state and share our we and company has us in today we of when working the that in customers was their are of together. have come been have a of and shown course lot way that trust have really for a of have also of than security over security just with So happens happened key those centers through it's about a something profile inside with development our the

Mikkel Svane

blog is a the I And best that live will view, of say is blog that blog. a point the location from is

have but get through updating this, through every we that will had again as we do that that customer communicated process, So around been with to this do we very impact potential this us we blog process. site important updates has be and believe transparency

Koji Ikeda

questions. taking my for Thanks

Operator

from Bank next Brad with And Lynch. Merrill America our comes of question Sills

Brad Sills

bigger the with Wipro on the global what SI or color it's of and I'm also pipeline expect early, to but Great, contribute? these thanks this some when might these on can channel, you're on provide more that ask of that is deals? you plus one is on working expansion guys. above, global any some all it but color around in developing Sunshine Accenture, Wanted to the I that you sure know to do it's any SIs

Marc Cabi

opportunities around really with what our I I being think is platform, I development partner's work the and of opportunity The of expands to think days with Zendesk. partner early So, lots the GSI's consider good still it's developed. availability

So targeting. that's we're kind of what

LatAm, the Asia fairly us with I I translate part relate when in think and to next presence think as that of do layers us. and a And work platform. our there'll you a of you next world, that we in with business when look have of of into will a I of our done already in in have those layer the look partners Europe, the continue around be conversation capabilities good have partners What is of list Accenture's doing March. expand we already big

Brad Sills

some color so Thanks on you cases much. Right. early more applications Sunshine use And Any or if where can there? any one verticals? on provide then you're Thanks, seeing Marc. I may traction

Mikkel Svane

already few about we good in do Yes. shallow look Sunshine more want have, forward in stories. the say. a think lot a But kind we shared talking to our sun event the I we Again, I to of at We under that Miami.

Elena Gomez

we the objects. events more around think stories letter to addition I in as covers capabilities create Yes, shareholder the early

around excitement think around will there the I much and be quarter. that's it more right

Brad Sills

guys. Great, thanks

Operator

Wedbush our next comes Securities. with question from Steve And Koenig

Steve Koenig

can questions. concentrated my us Hi Zendesk. wherever the terms follow-up. Hey, concentrate flip thanks of geography? where you then give one and color deals, taking any The Maybe in quick on a one for they

Marc Cabi

in actually of geographies. performing were kind of extremely well. many in different of say were the Americas. I didn't as think across slip that see there well, I a They where there. ones the anything couple Europe But me out I'd LatAm that to stick

Steve Koenig

How you talked for a your and not Got color it, okay. the on the be bring bit much lot give if Thanks, can of Maybe additions. sure as kind grow of and capacity. you Yes, SMB? some enterprise SMB maybe focus a mix you me drive balance have follow-up in SMB can to on Mark. great you And and little and EMEA, but cross-sell versus bear sales net SMB the do would here. about, rank how market so are you sales maintain your products because just making you you it capacity file enterprise then you

Elena Gomez

that process, for we're no, of always acquisition. altitude, I, very highest forefront improving planning, of definitely of but looking Yes, cost planning long our at overall the our the

know invest, sales we SMB the of also to us is constantly and what So a capacity, as one, balancing both. more stream as to organization sure lumpy, you allows segment rotating is not It that if from to the the but pipeline and we're and healthy thing, there support market them can you but bit on at a our that's it's growth very kind one in to more marketing make is per a over in have the important but other both the street the obviously not have generated let's revenue we're efficient always you only we and put a look investments really tension one about, whole any make predictable that just because segment, view

Steve Koenig

Elena. Yes,

general lower your retention trend? retention SMB Just software differences but in changes any quickly, any in rate or I rates has changes mean in and a

Elena Gomez

really not encouraged mean since I've No, here. I actually been got here really, and I'm even before that I

on, some little and relatively band, concerning the needle Our moving that we contraction have quarters bit see because say rates a do some that's churn we'll within at all. programs and occasion, so but that's a steady nothing remained on better

Steve Koenig

Got thank very Great, you it. much.

Operator

Jeff Rhee question with Van our Craig-Hallum. from next comes And

Jeff Van Rhee

want my Couple just Great, outs push me briefly, I from the jump back to if taking to for questions. thanks. could. Thanks I

a you've taking seen Second confidence America, guess of that that like that anything trend. it's in before. anything North broader I'm I look before, that like have ones have to at seen of just, What you part not you two conviction have a the close it's it not you a questions, gives start trend? give conviction this sure the pushed

Mikkel Svane

So predict. that always difficult is always deals these larger mentioned timing we've something to

up and larger not of deals is and time we've establishing we're history as landing move market patterns both Some we this that closing this the seen different. still our and throughout

at of the them close This quarter did a few same happened that to there October. be time in

perspective, is we against provide ourselves guidance So the the I we from those the timing factors. reasons one do way to of think of a protect kind

Jeff Van Rhee

maybe And net then based customer being Okay the customers count, on and. the down year-over-year total expansion for in of X%. customers just the growth XX% contrasted number dollar with

the I discrepancy suggested know better distort that. based there on and some things with variables a net is those other might proxy, But recall unique. the the I you just that the read? if which in Suite numbers number think dollar in I two And better, for had touch can there's few was between you

Mikkel Svane

unique end net based we've more customer at count that And does of for dollar if that our in reflect customer reflected expansion logo the of chat you the the that attrition net the talked that's view, recall very a business kind quarters, in logo over there. few count of So is about we you. the low and have last base

Jeff Van Rhee

little finer and deceleration, chance you say Okay. mean give And at is the I got just numbers RPO the point you're around the guess. about guide with model then you're deferred, XX comfortable I realizing that go with might consensus? billings X.XX $X you us We've being the I with commentary the the could out that least in the guess is comfortable there lastly, billion any with a at consensus that.

Elena Gomez

on here XX going comment guide XXXX. are in that days. not I We're know that, to but people for we'll to

Jeff Van Rhee

Okay.

Operator

And next question Lowe UBS. our comes Jennifer with from

Jennifer Lowe

ago its questions versus figure but like was already there. want days a execution. been really belabor what I out thank we about it, to at talked mindset don't you. this. of think XX what's before just going on going there execution bunch on seems it regarding macro, explore the Great, I there's we to looking know We're we

to on out execution to macro is new the miss crisp change XX sort adapt as want you've you Now a I execution to be you of waiting it parse for versus How need of execute what a just what's how days. backdrop? just economic more adjusting, you but guess it the discovered and bit I macro, past over macro little and or execute how seems to you a you do think about macro

Elena Gomez

make percentages start year. place importantly, most But going strong comment with need to sure It's need the leadership, in we to XXXX do control need and XXXX our to execution. on make not have I we our leadership we internal to the what we and what have we percentage regional think we productive a to and to not strong for of the us. So, on macro and focus need execution, place we started sure hiring can better, I'm in capacity most get start thing important

Jennifer Lowe

to finish And maybe just out.

So in called if countries that one Australia Australia. being at the look last of I was out quarter

But which guess, have I Atlassian within Jira just Zendesk, control. element I discovered you're like a think is company you there's maybe this Service competitive of but curious competition seeing your to. You that as very not anything different mean, sort is than control is if if a or there with doesn't purely Desk. your I'm there? competitively there different within new

Mikkel Svane

in large Australia with research identified are that; pattern we a No, doing trading has we QX, China. what

a interesting Australia. saw but what's one trend, is but again, in QX nice in we make quarter doesn't recovery So, a

be talk one monitor, country, combination have one of think when to we really in a we it's I country, hard for transparency but factors last quarter any are there So purposes any of did for that it about us to be uneven will but you highlight XXX probably performance -- refine how we country the future with region-wide, will specific. we those kind a it as guys. In when warrants again of disclose can was transparent was because that,

Jennifer Lowe

you. thank Great,

Operator

conference turn Cabi. now Mr. questions to this over at no there further Marc are back And time. I the will

Marc Cabi

us Again to Thank third to joining February. close so at QX quarter Thank speaking with we our you, much. after our look for for thank year-end you like today and I'd everyone you call forward conference we in Cabida.

Operator

Thank call. concludes you That does your today's conference participation. for

may You disconnect. now

Zendesk (ZEN) 29 Oct 192019 Q3 Earnings call transcript