Zendesk (ZEN) 30 Apr 202020 Q1 Earnings call transcript

Company Profile

Participants

Marc Cabi	VP, Strategy & Head, IR
Mikkel Svane	Founder, Chairman & CEO
Elena Gomez	CFO
Philip Winslow	Wells Fargo Securities
Ken Wong	Guggenheim Securities
Kirk Materne	Evercore ISI
Samad Samana	Jefferies
Arjun Bhatia	William Blair
Aleksandr Zukin	RBC Capital Markets
Christopher Merwin	Goldman Sachs
Stan Zlotsky	Morgan Stanley
Brad Sills	BofA Securities
Steven Koenig	Wedbush Securities
Jeffrey Van Rhee	Craig-Hallum
Jennifer Lowe	UBS

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Zendesk Q1 2020 Earnings Conference Call. [Operator Instructions].

I would now like to hand the conference over to your speaker today, Marc Cabi. Thank you. Please go ahead, sir.

Marc Cabi

David. you, Thank first our earnings call. Welcome quarter to XXXX

our are our we And it results. from doing virtually homes are today. We pleased to report

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

press statements and growth and course as risks prospects, The that attract retain today's Factors customers ability to our and on are statements XX, our of financial compete actual assumptions, upcoming and Exchange future the prior XX-Q in XX, the the earnings contained on we may release Securities to our XXXX, subsequent our and During forward-looking could affect XXXX. in for including performance, ability effectively. take for and factors December call, such report regarding product annual the development, Section results of Form and our quarter ended report Commission, the quarterly ended Form Risk filings March with XX-K our year

update expectations, We our to earnings more results forward-looking in undertake changes to no obligation Please by or to refer to information these statements these law. for statements conform statements. today's today's as actual required or except release presentation after regarding to

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

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

over to With turn going the am this to intro, Mikkel. call I

Mikkel Svane

have not. to through we apparently Marc. much I by hope on leading thought team of our do spend very I loudly. so investors in days that shareholders and inviting Thanks been our have our have Zoom, couldn't our this asked how but the I now Zoom, is appropriate. offices so call would here we clear great. earnings This if into would come and most I inviting been home

can't talked. but what dramatically the course last since changed I start Anyway, we I of world say, has

mention we life of pandemic for business world. in We out every for the crisis the course immediately were clearly this The communities that We by the business in Zendesk doubling responding shifts remote service planning this especially in a helping our work customers to help customer day-to-day a by days. but And challenges the also and support, disrupted world. needs increase on also to responded globally customer everyone uncertainty there. their few moved launched team We helping our customer of a as and big within focus disruption. we manage of on [indiscernible]. assembled and through lot response to future and in immediately single initially new We assist calls

these kind initiatives. we to we up a number recovery with help partners also access So on of had our of expertise profit and aid notable in and us products ramped

today. It's the across now been is channels impressive important that customers I response. with to than think use what’s our globally that the to customers companies expecting most customers seeing and for ever their connect more

we So have rise our many seen almost customers. a of customer service in for

a for of rises our dramatic large Some segment customers.

an much conversations. automated chat messaging reflection reliance and in more self-service, seen increase We on and have also on

through WhatsApp chat are have customer box is lot We our them like to many shareholder that of a the help but people platform Samsung COVID-XX trying letter, symptoms. self examples, one diagnose in

center applications providers product, our multiple products managing conversations healthcare. for track call government customer and trade We healthcare to that medical that's have self-service another voice have our deployed and helping

to trying really as usual we and forefront business to I of coping with to our am back help convinced anytime So a activities going are situation. of go we lot been not customers soon. have And this the on

to we we Zendesk to their through implementations, believe world We around are see out, parter very Companies complicated slow deal course term time and us. tragic world near like are this going and not products, financial where preparing going to expect thrown they the excels. the time also They value. is to for and will that impact where in to But not out to also is are in of value investments. ourselves throw the with going pandemic immediate

We need response play easy truly down our these most we’re delivering the This in to even our use on we the the to pandemic double strength business see to market. place in results, that being and do and very to and from going response over simple strength plan to and way. with can out to businesses fast easy come stronger and we all with customers strengths the convenient decision to world helping most their so

it over Elena, want thank all to customers. going turn am to I Before our I to

We have paid one than I them trusting every to thank for of more single accounts, customer us. across XXX,XXX want

doing can customers, the you that you to are everything help we are key are to our success. you We know because we

I responders, in it's healthcare we families, course healthcare and the community. first the station neighborhoods etc. own there, the also first our workers in want professionals, home, we of say the are that professionals, most grateful out important are to responders, for

to and thank to So all you for allowing keeping excel. you also centers continue of going to everything

and Elena turn on I thank to want to with you. So that you

Elena Gomez

making head growth emerge exceeded proud a on also going In every business. us started revenue few and to path good progress right leadership XX% international new crisis, thanks how in highlights sales to in I'm initiatives, region Mikkel. we're Revenue our XX% year-over-year. QX first the stronger April. say through our EMEA as the to our discuss quarter increased managing a Zendesk we're setting of All economic as a on current

by XX.X%, and cloud up gross XXX GAAP customer was quarter largely XX.X%, basis was margin points gross improvement margin margin initiative for Gross the basis year-over-year. points success XXX year-over-year. optimization. first was driven up Non-GAAP

for consisting quarter they for GAAP COVID-XX. a of our margin cancellation points points. improved transitioned from and bad operating of by customer debt and million relate home. to driven flagship conference expense includes non-GAAP XXX one-time margin arising basis operating from concerns The working employees to the as our expense increased cost $X.X additional XXX stipend basis This improved due collection

was the of and Operating million. the quarter cash customers flow XX to impacted started quarter on QX policy and was cash was flow related first date implementation the X was the This Free of invoices light challenges impacted with of negative $X.X vendor the facing new of flow in Free bookings, new first COVID-XX million. Free cash our by impact of negative partnering timing will in our and procedure $XX.X days renewal in prior. invoice on QX. customers payments. amount timing cash by March flow cash the business their those also flow and instead to

And now strategy moving our and our forward on our view quickly on outlook.

As product you're of We're disruption. demand inform and indicators well planning to our contraction scenario caused churn aware conversion, generation, monitoring forecasts performing global carefully help pace has massive and and usage. and booking, COVID-XX leading plans including

the our customer business in strength of model the resiliency We base. our believe and of fundamental

are overall in customers this and and that includes doing and software ride-sharing conferencing. remote and have in highly and We book including well that industries but including services, diversified platforms of customers industries are travel our valued many significant environment is airlines, facing hospitality important and and computer pressure e-commerce business retail, and learning

of and expect higher performance modified be we help this trend of outpace and challenges end will improve business system intermediate have Our undergoing began by our absolutely a as this on financial in continued has partnering revive, long-term but with will in global the the base see we still of expected QX that with to and customers are the will future that and principle them with Starting to crisis we foundation growth. has economies partnering QX our early emerged. larger customer impact be contraction. to who we while our undoubtedly impacted of believe our begin economic at business to and to the protecting near Trend

monitoring operating in carefully our economic of the are we expenses expect, would light you As crisis.

expenses already expense end balance To hiring our sheet XXXX. our strong we we managing healed and substantial is a that expectations. remain saving line measures in including have revenues that plan are savings over course our in to expect reduction While of we implemented committed will with the

are uncertainty our year macro guidance. the withdrawing we financial full Given XXXX

year-over-year We growth operating working midpoint related guidance embedded quarter $X At are, XX% bad QX our our the insight revenue million to of support however, providing give the COVID-XX into you in XXXX. ending is debt from XX, including reflects of and expense guidance continuing employees QX approximately home guidance income our expense. best June the

as this weather to position stronger good a in company. crisis a emerge better, are and We

relevant more new even are Our customer experience solutions this environment. in

are this. in We confident

business and We subscription-based sheet, model. diverse have a customer a balance strong base compelling

products are go-to and and and employees. exit to and position our continuing all we platform market strength. invest focused we our of are with of Thank investments initiatives this in you ensure infrastructure. are We to crisis all to our These customers invest to in

I'll turn it back over Marc. to

Marc Cabi

to begin David session. Q&A Elena. the Thanks we're ready

Operator

question the with Wells [Operator Certainly. Instructions] Fargo. of comes Your from first line Winslow Philip

is line open. Your

Philip Winslow

all question factors invoicing are looked in invoicing reported already and for obviously and subscription the same up Elena, the wonder due in you that that families. I if bookings here if you because hope your help you take short-term impact number RPO change to we change also flagged hear is to was true revenue quarter add is it obviously for us that'll for terms guys there's some but short-term the you glad well in Thanks that my obviously unpack just and Yes. RPO XX%. COVID. taking could to last Question billings that like change the flagged

unpack those us have far and was one if follow-up. forward? you of think how wondering going as kind impact So you QX about as the help And those what I

Elena Gomez

Yes. Sure.

with shorter seeing from RPO we're just more by of all of first enterprise commercial us really encouraged invoice our even customers. and demonstrates to durations customers our business of we're some commitment the other So the important customers, It is our do thing but overall. larger

billing sort between and RPO really what's question that's that So your driving difference right. was that of

Philip Winslow

us of help from think Maybe that about delta, Yes. there coming what's maybe impact kind yes. the where

COVID much So how call related changes. it the later versus the is XX-day invoicing

Elena Gomez

to share tell over going two quarters. I the of you We're the impact not but billings going us to that it's impact can

Philip Winslow

reach potentially kind and of a for waiting out Mikkel. them on high with has in a you working Zendesk place do talked renewal for renewals? just has customers. early follow-up sort been the about an for rate. versus you maybe And with are that footed of to been Got of front your that known work Obviously have One it. thing sort to customers What impact verticals you extremely

Mikkel Svane

question. That's really a good

like they and customers still that we are -- We also can on can with renewal so being out we our I we can them side about try and to this other aspect make say customers but through very really in other come them any the stronger proud helping proactive that that are so sense? course. just that help of Does rate too are we situation the help

Philip Winslow

and Got stay it. Thanks safe.

Operator

Your Ken next the from question Securities. of Guggenheim Wong with comes line

is open. line Your

Ken Wong

to mentioned does was you customers Great. perhaps we I us doing dialing asking bit of back maybe guys are there earlier reduction? larger commitments? you what you wanted Phil just touch what the invoicing terms look temporary on that are a of to that understand terms little I but in subscription think a adjusting like? on the that Help multi-year bridge Is what Is kind price gap. understand on

Elena Gomez

Yes.

where to different it's -- unique really customers. So it's

Some terms. want extended payment them of

make want we them everything the trying It's of we important flavors. can to long we're that different all keep But haul. do and these perhaps sure is discount. show retain customers to the for Some empathy one-time and thing

Ken Wong

Got on of remarks color it. duration scenarios. bookending of of be case And of guys impact? in how the touched then in magnitude one on going follow-up potential and through are there you best you outcomes and guys those a scenarios may this variety kind worst prepared of terms kind Any for

Elena Gomez

economist the super and one a happened but just scenarios various quick evolve. evaluating of situation which sure time scenarios. thinking couple to XXXX all running sort being appreciate but started even about think is clarify an has of to are I it's into we which basically we're I a is recovery without No, which to into a frame make longer another fluid not we a with one We and a Yes. want longer we're recovery continues XXXX. That's recovery

Ken Wong

a lot. Thanks Great.

Operator

of Your question Kirk next line the comes Materne Evercore with from ISI.

line Your open. is

Kirk Materne

not the needle Thanks these into sort meaning Mikkel shift want I Yes. beauty very expenses to talk obviously the the the wondering if of of could days per much. the about managing don't into SaaS was things motion. sort serve you but model takes a investments car to you if thread don't with the of much sort neutral se a need, of sales longer as it feel clearing is that make on R&D when but today year up little back say you bit and now get sort are you from upfront of and

So you environment? that I'd and about Thanks. kind about sure thinking this of on and hiring about kind but how terms think I'm curious in are just in thoughts you be how of kind some that of balancing of that Elena just things those

Mikkel Svane

constantly same we If some give need very that up we to can situation, the given where where don't that other agility to from very, like volatile have focus I that It's world. we a you the true exactly our can really signals on what we see as of some make response things market and so organization principles because we need started important we to kind think it's There's and means say, kind one quickly of. of a conditions the down things kind of is fluid things in to we kind I'm progress. of the and getting know agile in give starting, the as and it's I to adapt the with organizations very very the and this very scale we with are you that's impacting market in everywhere to the

investments organization other on as areas. very can and focusing motion accelerate much in be investments possible giving it also agility move think be ready Does where the as those our really make we that over we but we're so So sense fluid to sense? makes to

Kirk Materne

Yes. It does. Thanks very much.

Mikkel Svane

do to Elena anything? right. add want All you

Elena Gomez

No, covered it I you think Mikkel.

strength and our benefiting we're making we at were of worried at as base we're in us and putting savings I'm in super the that those as this come would I of we're sure some areas obviously QX, will last in so position the first that have tailwind we really then the key is some traveling we're we of so we of the looking natural employee I think good then what out hiring street. drive, thing from quota have, terms not sales get natural into say hires about hires on I and will

about good So that. feel

Kirk Materne

Thanks helpful. very That's a lot.

Operator

the line Samad Your Jefferies. next Samana question comes with from of

Your line is open.

Samad Samana

thanks in taking doing everybody environment. well for questions. my hope good and staying is Hi, evening this I safe as and as can you

that ramp and I adopting First was about may Sunshine in the unique Sunshine a Sunshine be was one still follow-up. we during virtual. Mikkel. you've it COVID release how customers obviously a for if just curious think if relay seen you maybe and are used big I'm any to cycle should and for then cases or On moved have

Mikkel Svane

can definitely platform. We Yes.

in good our what quick I help really some that's really to roadmap. and really and guess need good right making and our interesting our Sunshine capabilities trying for use also have are to we customers there them on definitely some customers things solutions we've such. now; to and much it We the and faster some features they the time of see so now that time to we on quickly value see U.S. outside very, need, of seen value like customers that really value potential very to this and focus see time that really helping U.S. in things

phone conversations these home channels Sunshine the strong this very the these very is for real The demand this having the internet that than has that this that over where uptake using the is more a messaging of point very, very on a we're turn of tracked terms really in intimate the and in relations, like relevantly very us your much time a out has in this platforms. kind better sit very for waiting believe that asynchronous Email convenient long conversation really be convenient right of on is rather now environment time conversation consumers like being to works seeing sees potential and of everybody business platform for over part as to seemed traditional for time messaging very,

Samad Samana

the if it's XX% two of slowdown curious That's think slight think retention what's then that less about going I'm activity? helpful considering XQ those all when versus bookings new factors? is as about Elena you a how you for things framework and parse maybe I impressive on. I guidance, out is the much result gross of guess declining maybe Can

Elena Gomez

Yes, definitely.

the that's say seeing key business guidance part I oriented it so in that fluid I more in that. very of our contraction it's to which we're a and but would to what's would continues to orient definitely think be included more I

Samad Samana

was one just as apologize let I end to follow-up. and third Great. going the me Okay. squeeze then

think business my with trying new you bookings is happening. about when to larger about customers activity your, taking or Thanks activity still questions. that with smaller more customers? think with Just for again So new where is

Elena Gomez

commit the double as running little need think I as impacted a well different need larger may wouldn't it's seeing before I new of seeing the the really. and different wants some customers in but something segments say, big I driver customers is still our time. large more business expansion for that businesses not COVID. very customers always seeing self-service. that new our by quickly to of segments up really we're and across a say bit bookings coming We're from I we're click been us. some Definitely I existing of usual

Operator

William the of from Bhatia line Arjun comes question Blair. next with Your

Your line is open.

Arjun Bhatia

Hello questions. guys, thanks my taking for

then What environment? little maybe different products are leading from go And do need? become out could was faster messaging time little great. has to if think walk to of pack you customers direction accelerate you your strategy to Are a with see is some bit a a value new will that market how wondering kind to and SMBs up I First, at this of you to to color environment perspective? shifted be but market. lot maybe this a know I through you've this a coming more that perhaps on going just they and that in adapt you the would been cash-strapped? of there on kind your doing more

Mikkel Svane

Yes.

an give to that. me answer Let

running and really on all decrease would that I we we get the like that double think some are them complex relevant out the that like them deal. very incredibly very unique can days very, help like our that quickly customers their and to time and of value deals before and So is by and we large been we had down strengths negotiated results give running up definitely can, we almost short say there's now, our these gates largest is have of we can organizations and cycles basically

and definitely – our relevant now right definitely focus of, kind and we we on always that responding define things to in we business to that are the our not been going that’s anchors are really-really [indiscernible] qualities these infrastructure. have to So all you in time IT believe the complicated big these is the we are environment for the future that definitely like part going vocabulary

we just where like and companies a economy sure we is not behind can to systems up again believe to population as running this need this bring as agile but to We that's sure and the a as IT to not just that probably out come world. make as a more population stronger to through this the as need get can make Zendesk be come and but we our in world of and we and XXX%

each hold the don't so live and and the to we be correctly, world back keep customers our up us have sense? agile, can can so around and we can other to so add Makes expectations us. we in we So up

Arjun Bhatia

Yes. you, operations. that and scaling letter Elena, are service a reading volumes increasing It’s interactions their quick very people are I for up and increasing follow-up remember and helpful shareholder the are maybe

wondering portion than that answer ask but be business your a that is small that not -- I to things I'm of or seeing in in know a without that usage One really of It category. you core conversations usage is the increases are and based. in? that fit impact that want coming revenue I might

Elena Gomez

interesting be what's during usage increased Actually time is to seeing honest. we're this their some customers

and encouraged seeing seeing actually both. We are more We're Zendesk by some are really who increasing their needing customers usage. seeing

not deals extent that contrary. our more attached the say a So in it's a to pro that's dampening there. large it's seeing of the attention serve would paying not, enterprise I place I'm we to say would slowed much in We're revenue because bit very as terms seeing are they're definitely usage our little uptake. a quite to actually but has I

Arjun Bhatia

Got the taking it. Thank you for questions.

Operator

with the Your line Zukin from next comes RBC Capital of question Markets. Aleksandr

line open. is Your

Aleksandr Zukin

of a ,Elena taking go staying it guys. my sectors trouble Thanks a to you sizing? the couple Is the follow-up. versus of -- glad healthier can seek if maybe the got on XX% that what to you have for us quick I I'm Maybe you're And through Hey a questions the talk it exposure business? economy and guys Is then maybe hear give business? safe. just XX% sectors to you can of

Elena Gomez

at It's XX% what And across, When I whether -- we about we of it's us. the enterprise. some it's but in Yes. too. that book segments typical our of when are, just I’m across people in for that they all our include or business. it's it's range the not talk say of forgetting It's our across rideshare, entire SMB really ones some all travel, numbers look in

Aleksandr Zukin

it of Understood. enterprise? the, if because but one if of kind the new bookings And or is us the understand the grade like of guide. some not part? the better Is pulling in seeing the billings could that is versus a SMB help I it sounds maybe current you're are you can renewal in in dollar guess so behavior most billing rates you And where you're on it hand degradation or those RPO trending help rate ACV us understand yet where the of

the or that driving understand, or turn you that? us help is that's to if spike could want retention so that understand just I So the

Elena Gomez

fair and question The it's I Yes. a Alex. market conditions are super fluid. mean volatile

I key was guidance contraction for we're in think impact about just as customer we're and but was seeing about base our I that setting the being the the thoughtful seeing me really and seeing said of highly is we're mostly across both in to I industries SMB highly enterprise. the like not impacted impacted contraction industries. It's it's the only but oriented terms customers be SMB thinking

Mikkel Svane

Yes, yes, to want most contraction I that Alex oriented. let me, clarify just of that is

You think customers can sure or about have, comeback. their us when companies keep business many to them conditions we've related and make down back conditions so they travel sometimes in XX% more is place we they those where and industry been working to come a travel with hospitality that

Aleksandr Zukin

can I just it, maybe that customers Understand, you with contracts it, going about if how in in one changing you're on exactly? I and that is or their working that mean are proactively sneak these renewal? could contracts talk contractually, multi-year that more Is

Mikkel Svane

companies through when times shareholder see you'll will manage statement. period work to of we they're Alex heavily one a with them There subscription their in industries. are made impacted on that we this the on if help letter those terms especially

Aleksandr Zukin

you. Thank it. Got

Operator

from with of line Merwin question Sachs. Christopher next Your comes the Goldman

open. Your line is

Christopher Merwin

through new so some product in guess customers more with time these or portfolio Thanks where they're of with facing. the to and challenges very Is to importance the think just seeing sometimes analytics first for for channels my maybe the online engaging given as in about customers through companies just are try support taking I particularly resilient core ask I wanted that conditions, you demand? much question.

positively and more been you've general other areas been with resilience it's challenge. perhaps in products surprised curious of temporary the Just a of where certain

Mikkel Svane

users/consumers, to look too do like different right there's interest signals bit like is little board like like channels. a one this customers. like has the ok to want is that products board. the anything seen for definitely I quarter we out the truly of of messaging a the lot definitely lot for convenient that a across for being where That I convenient we've now of out. see accelerated turned it's would think it's the see, that trends trend I so our many It’s at a across adoption newer to very and and us this, for be end that you there overall kind say very say point oriented we there's of

Christopher Merwin

a decelerate one Thank RPO growth sort was just quick growth a obviously bit, rate say growth you strong. very or current was Great. RPO sequentially. for up of long-term still Long-term mean strong RPO and in bit and been on you just little those really can the just about I RPO? follow-up and little growth current about divergence asked the anything which trend RPO

Elena Gomez

of continuing, for and RPO it we're to in continuing mean time. by our fact something by really sort stressful we're of encouraged we're So customers especially really are times. we're I mean commit encouraged that proud still multi-year this contracts COVID the think us I this that I to and seeing even during

of us us. making that organization value testament to proud think think and full done in has to I the what they the for it's I sure be share it's that So and sales of important a terms

proud pretty I'm of So that.

to relates I think in so terms of billing how on. it and

we to really also with this payment terms, customers. sure this make is need customers from back think it to helping different etc. I through if they during coming really and that working time even we're larger that goes them

Christopher Merwin

it. Got Thank you.

Operator

next Your the line question of with Zlotsky comes from Stanley. Morgan Stan

Your is open. line

Stan Zlotsky

quick staying for thank I what call four Maybe and guys, I'm have because seeing a sure then -- and are of end what March obviously And March of you healthy obviously. characterize you're it us terrible taking Hey to-date? the hope but help let's safe my follow-up. weeks first, seeing through quarter through the everybody questions April current was you what so is pretty you're I and seeing much quarter a just

Elena Gomez

Yes.

if economy the sign that's believe for back seeing from at back see them. also coming distressed us in think So especially really customers these but we it still weekly churn about same the with March daily, encouraged ,we're with saw trying comes is we're we're that if important part talked because customers. and so kind we're we're see seeing that and mostly I of some we'll the moment of changes script the we're now, but to to would contraction not are looking contraction positive industries more signal obviously our work and come into right really April. and start as a like I think the highly I lot of We'll be we early earlier that these customers at and these still that said that a much SMB late on I'm tone seeing of we

Stan Zlotsky

maybe there's the negativity then much And Perfect. positives. because so just overall Okay. bit but change to a little looking the tone at

guys So bundle increased are we giving product when this, an like end you that the uptake giving out Zendesk the greater on startups of COVID-XX, benefits away some or XXXX. remote there these be working popping within year of also other things are maybe half coming of adoption up of maybe working see you newer we get all start into could as second on this of the product into we start-ups just the were Explorer the away could the to and and

Mikkel Svane

companies trust a that in other That come want customers the out to kind responsibility and humble the the very [indiscernible] as the always because Does company don't – to I really to also you're of in products we've of we that – a answer, more and kind to advantage of businesses. wanted to and I to our try value try we everyone very business kind say as of now not impacted want products going I that we that no every high that, on will yes side. in a situations. but that global sense to, defining us because situation that customers of our of this stronger answer, do There's have is cost from that trust and I to can relations -- realistic and uncertainty based in been morning on have with that understanding the through the me even about believe speculating our he we a and want will a but-- our trying they're and that moment right the do customers about with are in us across got these to need I this is though bad up level, in that to our we have that Let what's to for the of make that without market doing the being will and yes. right and the we it's and do company future to situation we're that be belief we're our bring our churn lead Stan? and bear earn trust in relationships take help

Stan Zlotsky

Yes.

so course. a sense. much. lot Makes of you Of Thank

Mikkel Svane

Thank you.

Operator

comes next Brad Your question from the of with Securities. Sills line BofA

Your open. line is

Brad Sills

business. the other net retention would I Thanks ask about that there's quarter lead in customers held guys. on level that seeing of could some but taking in increased to hearing areas obviously I'm seats and question. this activity I Hey contraction which other for revenue of imagine wanted hand to my kind XXX more you're at

side month So I even first growth seen the the the guess regarding could have kind then the or you that upsell your in and retention what's and net with do to year? what quarter revenue you think where the of over here, trend expectation

Elena Gomez

the those quickly. look in have of contraction just obviously this pace comment at these with right the That year but now quarter situation I we're we The at we talked okay very full contraction. I look is so we where together start have, about is So of we said but because and pacing distress. so we're definitely I what bookings holistically our are seeing everything change on consistent the across fluid think and won't seeing obviously to could industries seeing

don't could predict of to it the I what be will that as guidance. so factored and took this our that we trend quickly came full want it for we in what quarter change consideration but all be into As will the

Brad Sills

some deals impact a then bit that SI increasing bigger in of just it. you channel. the little a How some there. know you've that? and seen developing focused that situation global SI that's channel. on of a a global an mentioned this the very Thanks of expand pause I know that Got I that lot assume was partnerships. one global much does SI the these focus was and I here big

you. on any how in this? the all progressing update Just of Thank midst that's

Mikkel Svane

are add kind a going most important big -- the be part are part like order some be that proven our partners will but also global I Marc really Sis important the big to agile right think and of to ecosystem. partners, that it's at to Hey, ecosystem My increasingly like continue part they now like What like accommodate of and of ecosystem. be color? the panel really, of they're world to our better partners not is new

Marc Cabi

Yes.

be serve our make were conditions we people deals from most and over they to companies saw think improve I partners to what where our I of product what time. bring as our We have so will a doing. ecosystem. near want partner that's will an Fred, term activity should to I we that important In this recent quick think to adaptations and in expect the were that looking able quarter, were win think with these part then market in you partners some actually work

Brad Sills

guys. Thanks

Operator

question next line Wedbush from of Steven Your Koenig the comes Securities. with

is line Your open.

Steven Koenig

Hey. taking Thanks my for question.

So the your to impact a financials. bit little you about talked

You're expecting it to short and the over medium term. be

I'd understand uncertain the environment the like your with better plays is try your little obviously respect uncertain. duration. contraction You're a mechanics to total contract the how to because and terms to though of billing out appropriately

Does in a that towards moving mix you've if than hits them So well. with happening, periods bill and getting to multi-year that asking concessions these contracts a as to collect kind contracts then that I been got shorter this the multi-year goal can't and your I well? know when of terms respect I getting customer right extend only and contraction happen XX% they annual is know annual. annual a renewed more billings you and it are help going with how have renews out is you contracts have as building's or plays So annual think of the into for understand when me of

Elena Gomez

understand, for question annual and cycle? so understand renewal but every you're have And off monthly do complex is Yes have that's before that happen cycle to in renewal. their there so customers do important it's contractions when those if other happening these a renew In payment you could monthly a if you're so think of at do but both they're off it on month customers a some happen handful but and may of renewal industry depends customer seeing they correctly that to or the it are we I contracts. terms. obviously customer. happen, theoretically that annual I it typically coming be at cases the and I distressed The understand asking different look size of If it's

it's a one It's or bit both. not So other. of little the

Steven Koenig

quick some granting -- year stabilize I do environment? could you you and a be or them just it totally term, it or follow-up concessions the another that contract when than have just would depend expect a the contracts believe get And Elena, medium then to of could does you multi-year use you're year the longer on

Elena Gomez

out we're terms the but over needs customer needs trying position they customer rather something them prefer a cash environment. is contract. about and back on can different how the haul not to are. they good we we're That's think in with really customers their in do about With a trying if them. a the the short on but their to It depends of whatnot grow to are and in multi-year like of what think terms. look changing and We're little position avoid this obviously then help over come long contract what it larger as we depends everyone's It

Steven Koenig

it. Got

very much. Okay great. Thank you

Elena Gomez

Sure.

Operator

the Wood & with Your comes Derek from line Cowan next question Company. of

line is Your open.

Unidentified Analyst

Andrew well. you Great. all are Thanks this Hope Derek. is on for

Any how adjusting and how the and down has selling COVID are rates locked You business affected rep and behavior this in EPS travel color closed virtually? cycle. pretty early

Elena Gomez

actually sales we deal talked a overnight really is I all think huge with we've team it's that this I've and do that and way the material but that I business that value don't a being proven QX can home potentially in pivot some and almost I employees slipping Zendesk time challenged actually of well encouraged and necessarily impressed from think course QX of to still to environment. we our that unless virtual really and and not in things in see prove do to working and deals our close all environment. will been through with a in continuing to to continue of about,

Unidentified Analyst

assuming or versus maybe new you the customers for billings Great and from what around in then your come revenue Elena, existing each growth cohort and what year? are percentage of

Elena Gomez

break new expansion growth break out rate really bookings don't but expansion part but motion at So expansion distinct, between billings we net and deliver both to expansion we and new are our our looking don't big or we give the we on bookings a but obviously of don't our out. those and is

Unidentified Analyst

Great. Thanks. Take care.

Operator

question next the comes Rhee with Van line Your from Instructions] [Operator of Jeffrey Craig-Hallum.

is line Your open.

Jeffrey Van Rhee

Thanks. Great.

Just for a me. couple

selling talk motion line you things geographic I variance just within the out a geographic geography, sort you guess the you to can then the any talk if of by two I differences? if finish any call you've over if through will, also churn ability to, think from the get maybe just lens notable and aspects noticed cycles standpoint to can

Elena Gomez

We haven't.

that's noticed outlier I that's of is an any haven't of terms region such this would in mention So we course, here differently. but every trend experiencing contraction, particular something

sooner countries So we may back of see others. than come pockets

attention point. APAC EMEA I We complete to say, say or but are there's wouldn't stark a difference between this paying that that Emera at or

Jeffrey Van Rhee

deals the Okay. of focused And great that look deals come what I the at come were you they called large there? urgency. in the feature What makeup drivers terms in the scenes cycles, When capabilities think have urgency then with fairly on? the and out on of have Mikkel cycles been function with emergency some most what’s some were in

Mikkel Svane

really is demand built before. that it's the drive demand a the a some high similar more It's business board. and to towards like that channels chat and And ensuring here the earlier really the can a across customers, stakeholders. to the see across the but said definitely board to like thing the think over as sales across communities, there about we on products, the channels traditional messaging is board like even I respond and the question really was I across the like the engage

Jeffrey Van Rhee

Yes. enough. Good

Okay, you. great. Thank

Operator

the comes with question from UBS. Jennifer of next line Your Lowe

open. Your line is

Jennifer Lowe

on to the back you. quickly things to wanted Great. of of I Thank kind Elena, discussed some have hit gotten just earlier. circle to that

affects just or CRPO a concessions adjustments not made cash some it billings help but can that about be through challenging us and a them talking RPO be customers help to you but that impact of we're be As that understand contract? are or will something to the RPO, shouldn't fair think what's CRPO that could to is so it the being times, versus

Elena Gomez

that going am seeing flip customers fewer has come that of but mean, payment I orientation with revive. in in terms the won't through some I the we so has payment economy most change to terms early and as think, we needing say it's big side agents as definitely terms starts contract not this -- as to the to far customers. orientation tell. through but back but actively customers a expect are the time I been been cases I we're payment still to that that terms come big, on say been and We're has Yes. talking going topic our definitely

Jennifer Lowe

these relatively to Great it sort to Would of kind last think that QX expect in would payment would billings you would be, just there's change, at --? because there kind puts seems magnitude of you one-time headwinds the event. try thinking be in like you what’s the you of qualification looking takes of of I just quarter change the expect was as concessions on QX similar we helpful and a degree invoicing the any this billings, component there about in said that quarters the as for two and invoicing contained but be just invoicing think and then again mentioned the a

Elena Gomez

Sure.

we of so is impact billing the to don't I we think the two about even bill though always, of effectively one months had thing instead three. is we billings think just

same So if sort that's to simply in billing of QX collecting have mean of QX is makes for What we're impact impact as obviously that because cash flow should that some expect there. we I well the that sense.

Jennifer Lowe

Yes. That you. Thank makes sense. Great.

Operator

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

Marc Cabi

thank joining to call next on forward us a great Well, speaking you virtual to quarter. we Have stay safe. to we'd day you like look our for will and and

Operator

concludes this call. today's gentlemen conference and Ladies

disconnect. now can You

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