Zendesk (ZEN) 29 Oct 202020 Q3 Earnings call transcript

Company Profile

Participants

Marc Cabi	VP, Strategy and Head, Investor Relations
Mikkel Svane	Founder, Chairman and Chief Executive Officer
Elena Gomez	Chief Financial Officer
Jen Lowe	UBS
Brad Sills	Bank of America
Drew Foster	Citi
Tom Roderick	Stifel
Alex Zukin	RBC
Chris Merwin	Goldman Sachs
Stan Zlotsky	Morgan Stanley
Samad Samana	Jefferies
Phil Winslow	Wells Fargo Securities
Koji Ikeda	Oppenheimer
Derrick Wood	Cowen
DJ Hynes	Canaccord Genuity
Ken Wong	Guggenheim
Brent Bracelin	Piper Sandler
Arjun Bhatia	William Blair

Call transcript

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Marc Cabi

All right. Good afternoon, everybody. Its Marc Cabi and welcome to our Third Quarter 2020 Earnings Call. We're pleased to report our results.

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

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

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

non-GAAP Mikkel. press You earnings prior periods measures to prior regarding Web of and periods financial with reconciliations shareholder including press all financial are for these and today's comparable in disclosures the GAAP letter, on With for introduction, releases the I'd over turn call can measures, such that which site. the investor our like to measures, release non-GAAP for in find additional earnings financial

Mikkel Svane

today. thanks busy know super Thank for you it's for this here you day. Marc introduction. thrilling I earnings everybody much, Thank joining us so and a

our here precious your appreciate living So time you spending we rooms. us in with all

growth our In of we third corner quarter, the levels. turned with business COVID-XX. quarter continued momentum impacts last And so the and returned our pre-pandemic we of with your to biggest side. on And the on business the entered year

guiding the year. for and trended that our third doing of billion-dollar I'm a been this pre-pandemic revenue results, are constant the We're of all we that revenue we quarter return as billion-dollar Our And trends well as when expansion target growth, happy with set strong very first while year. the cautious. are closer crossed these business we've also contraction to our annual pleased on too that we rate. we rest too, levels run also to for since we This inspiration. full the XXXX, is journey exceed remain our particularly

and in many all in though return customers helping crisis resurgence well see adopting are our still solutions adapt through to products, And of that Through quickly Our customers, been helping on many the can so how recovering. quickly examples make with very very and industries of so using of challenges cases them. how quickly businesses we the companies this changing the our tools conditions. react are to for see gratifying We worse challenge our situation know and this restrictions has grit very year -- and a working perseverance. the it

our So as through for this. us big to partners their you all thank a customers trusting

sitting you fast, keep your engagement. you to to this thank going numbers, listening all are I big employees, the I'm you say at of you of XXXX a many to all our with know them call. to continue home, customer in everything smart keep turn Elena your over I to that before we and will do agile We it can to keep And

through So this. grid everything for sacrifice you your for just to and and you as we're and say working your to thank away use this do pandemic opportunity want in this

with And you, that Elena. thanks So over to everyone.

Elena Gomez

year-over-year XX% the provide and to to billion our that track the internet reception of momentum dynamic full model. exceed is be a anyway. Thank our you showing. company reflects demonstrates Thanks, pandemic for of dollar basement. everyone Mikkel. the time midpoint, resilience to at this with on environment, spending my year growth and business from our business which us. strength objective you I'm We're coming In Best guidance

Now we are more solutions well than ever, deliver. we which are to seeing to positioned time companies with want quick value

year-over-year demand exceeded Third is revenue during of driven see us. was the XX% Revenue our pandemic initial solutions the expectations. rate increased our improved a by for quarter. contraction that outperformance signs and quarter the churning behind We and strong shock

the with Although continued significantly contraction but rates churn we and the returned normal compared Customer the levels continue given climate. historical to to economic improved elevated pandemic caution remains in uncertainty around third to proceed trends. rate quarter,

in us expanded encouraged We’re in with the that that contracted second quarter. customers the some quarter third the of

RPO QX, rate ARR up of XXX. from increased to year-over-year, at in short-term improved long-term net The in us this Total partner multi-year XXX compared with commitment flat in XX% be to of expansion business. remain to earlier and XX% QX of long-term. given quarter the performance this XXX% prior to saw in agency RPO RPO demonstrates XXX QX We plus SMB the for quarter, to to in customers our an year-over-year. our number increase year. RPO Our continue the increase range contracts from XX% elevated very compared to XXX% increased XX% strong healthy and

XX.X% up optimization expansion was gross expense gross cash and flow travel driven and by margin Gross gross third gross operating benefited XX was and event from the turning margin. X.X by X.X infrastructure. margin points scale due efficiency Now costs the also and GAAP organization lower revenue margin quarter. non-GAAP largely support six product year-over-year. third Free percentage in our of in pandemic. increased driven Margin Margin expanded to for our million Non-GAAP percentage quarter percentage GAAP extended and personnel points operating margin X.X to hosting up XX% revenue points. margin from management. outperformance was was improvement prudent points by by the improvement our margin was year-over-year. costs largely

QX. guidance Now let's move on for to

midpoint. at We expect growth XXX revenues between million the year-over-year XXX representing million and XX%

operating between million. non-GAAP XX XX and million expect income We

X.XXX year billion billion. between full For the we expect X.XX to revenue

between and million operating million. XX expect income XX We non-gap

plan by for no cash free estate real expect Francisco. XXXX Free million longer San to We be our occupy flow be full changes XX in year approximately of leased two make flow to to impacted buildings could office or we higher. cash the

have related remaining from which amount has changes payments been the in to of these additional XX rent since included before unknown. guidance, operating these impact them approximately contractual may million timing XX, buildings, and The costs accelerate we are We and March XXXX. not this

have work. of reimagining that we spaces. the physical a last lot on big focuses months, Over how part A our six of spent time we conversation

office, for many to remain when intend of And adapted well work. to employees to we our employees have Our remote the remote. do return we

we our determining globally. how are real We can optimize estate

Finally, great this as outperformance saying Mikkel across be not said, with the that with during I'll organization. the possible teams could close our quarter

balance remains profitability. financial position. company for strong on With managing a with growth focus customer and strategically the a decisions and long-term, long-term delivering competitive and Our optimized the for value sheet greater

are invest Marc We for company. back of you. positioned well to growth to the long-term this

Marc Cabi

And turn it Elena. going now. Q&A over to to Thanks, we're

for did we'll last quarter, we And put of be Jen order Lowe UBS. analyst we our randomizer. from into first is randomly As all selected up today And that names calls. our using today's analyst a

and video, you to yourselves, Jen. if we're you Thank you, see well. can as unmute happy you'd to on If turn like your

Jen Lowe

just Great. start to first. point, And to randomizer on the putting Elena. that thanks for me Maybe last in

forward. around but exiting early, rethinking the rethinking in footprint only in that reinvested? San How it's means at as new the mentioned I for well know that you're I'm business? might not the would globally? it's real you going more the this time, like know bit be two ones about that of about you what ultimately sure margins the You leases aspiration terms point headcount, should think or that as estate Francisco, that in the footprint, your a you think with cost we would efficient being what look be

Elena Gomez

a it's our Yes. to No, to growth. focused going continue investments We're balance I question. fair on think

And so savings, in real the think from extent have we that to will business. the question where I investing you be the estate, that's that if will, we

same benefits as growth, result. but we're ways looking at our and so the be income position We if in will to continue a it to makes constantly us would will, sense time, some definitely operating for scale at

Jen Lowe

shutdowns? Obviously, quarter, see again. There's surge dynamic. the course responding over that might the in seems same or been for do Maybe the the the of you how way It not trend improving freezing starting any be are starting that like of Mikkel. we've Europe. before, rumblings or shutdowns but the incredibly to? now to there tone Is and up third Has we're Europe, just we wave through in to bit environment a are now, actually is for prepared been another saw they're little hearing of customers was earlier? given one change that business What find shutdowns cases unfortunately, maybe more of that it we're in

Mikkel Svane

million question, course, dollar Jen. of see we And that's, And market. more the preparedness in the definitely

Now, preparedness come, more hard be, market many market. rough I we we how way in more know to what the imagine. what can everybody we it see know can a like. preparedness in, winter in but factors, be all in what same end that we Europe, prepared the is we're it's definitely and for can We But, uncertain the going

a anybody in think We of thing. good have the which businesses they optimistic S&I. prudent is prepared the how their market, been very in probably I have for a lot see operations don't overly

Marc Cabi

is Brad welcome from you Sills want use unmute to. to up your Next if America, video, of Bank you're and

Brad Sills

that's to unable it earlier been as any how start how back. provide that's of will for can providing I made those where there's the of tried I amount where concessions, kind wanted and of you've taking some in we contraction. anyway. are business been seen and that comments the industries Thanks, customers, know ask even decent my with you've the goodwill expansion this about you’ve some kind but about a of to of color those industries to coming talked past, I about building thinking where the Is back gone come remember in question. video we to expansion? some guys you of the hard within like the you on there, Oh, looks there

Elena Gomez

would Yes. I'll these definitely feel But expansion not. hit Marc definitely industries. Mikkel I we back seeing free that levels some to in say start we're hard back. pre-COVID in. come and we're or chime mean, not I to are of But But

close the diverse. broad to We not mean, businesses our pre-COVID good But overall, is levels. news are is, pretty and I

out there segment drowning that for any industry one picture or is isn't so And really the overall financial particular us.

Marc Cabi

more much you travel I’d there QX return hardest completely customers. just and patterns But of return definitely to our hit industries, that just normal are related industries, of outside a look you if normal, if was those airlines QX. at patterns a more car those to add share, but look probably in that, over the impacted normal

Brad Sills

Got the Great in on it. this any you. you with thank then can color, larger some of guys these billings results expansion quarter And on organizations. Great, provide progress of kind backlog. and deals bigger

So to firms committing deals larger are some going any kind of bigger with and the kind expansion of platform support. color of you maybe seeing Zendesk sunshine, bigger, even these wider on more the and

Elena Gomez

our customers if there it of set family single Now you script, in of too. wouldn't commitment reflected chime of on saw but to product the elevated Zendesk longer in mentioned to you any you RPO, products. just I I so out encouraged and by committing you in we're really that. terms Mikkel, Brad, us will, saw call an

Mikkel Svane

we we at, shadow, also think about. returning expansion here I strong very put like repeated that in optimistic our, we're you general, as growth the in is our look business can

Marc Cabi

So from Foster Drew Citi. next we up, have

Drew Foster

you Elena, there that comments the I on double RPO. of just click made around wanted some latter to

saw any in growth metric you there the quarter maybe multi-year in the RPO larger quarter reaccelerated looks there strong other But the as renewals big were any of really your terms was know So, are some in quarter. well. total and just benefits QX. both of mentioned whether deals landing you in current deals the -- had in of from that just there, quarter I sort and And some

Elena Gomez

at broad over broad tell few can it's you terms, can't saw the on contract our We looking to really momentum Drew. good year, we the definitely any last back And segment, within specific based. don't point it's but and this customers I RPO I based, comment quarters one in and But QX.

to say more than see actually backdrop commitment commitment of these the And we're encouraging to there's nothing that level more in this in. customers. from So other

Marc Cabi

there, add transactions XXX,XXX quarter, to I’ per just we like thousands of have we customers. do because

result So we're on one customer depending swing not direction. any to in that any

Drew Foster

lower guide follow helpful. here lot. Understood, little the just Thanks of we're implies Elena seeing in QX bit and a then a a QX. growth a sort than And another of up, rate

of of wondering of taking conservatism just you're maybe an business where than level large qX normal? where sort more So there, deals any there's outsize the areas there's if

Elena Gomez

the the That's different a with question. we guidance totally fair a but generally -- We in same approach same are environment. approach,

for think, prudent just election an to put pandemic, out the got woods, to that it was we've not in I like got So me, really about a of when as guidance. just I just out cetera. et felt was year, guidance a we're measured we Europe, it be And about we've talked prudent

So that's what that guidance reflects.

Marc Cabi

me sure up, Tom Next Roderick let right make get is I on.

Tom Roderick

most been growing always strong earlier probably early on, very in Mikkel, and size I mean, you're up. for Europe So, as was and business your you've than relevant international, companies your

always had view you've a on with So what's going internationally. great

of saw year weakness, European that ahead it. I of companies think when a lot call you last

Would or got sounds a offered like to from Europe you're feedback what see of perhaps seeing starting in are rise, of a particular, in what to what a bit little seeing cases good comments right you love broader now. internationally, on that. a you hear customers, the you're for hearing customer with caution to sort those hear down. relative to is is So I'd it feel actual tick real-time cautionary anything love little But the bit beyond of pretty

Mikkel Svane

can the affecting exist I accelerating have month that's not provide just there. that in insight I'm quickly doesn't like definitely sure definitely gone, things already. mood much And so been Europe. the It's last over

at what of other there very the a like through is question like of hand, kind know, going it, readiness a like dealt We there is before, the know all tunnel, other for kind light we of have months. is just into, the these as next, it. we're the with we important like, to end On there get

in insights where other around shouldn't any we we have places great don't great I even strength. see the see strengths So about world,

to a So that prepared I going that think ago. for talks they the is six fact bit are we a were what more more bit everybody than little through months little

Marc Cabi

Europe, payoff and we being capabilities has enabled business improved of self-service self-service category you environment. approached our remind had SMB did the and where just last customers in on to I able how we've a that Tom, year our we reorganize join of us some our

think this I been very that's helpful through for us period.

Tom Roderick

XX as the can that. of for for Thanks happening follow-up to Quick more over deal product you last the happening side, with demand function relative and sales days, reminder. that? of good what's anything a just line on suite XXX that's Yes, sizes offer what's the a days, trend the the suite with

Marc Cabi

I'll take that.

in some So we channels messaging capability suite, that support for being is we've there built our been conversational suite. support seeing messaging Within really good as more natively. that's a bring demand

for outperforming been the And bundled demand only support good feel around support of so we our suite have really offers especially and products. that showing demand actually that standalone some kind our

up Next RBC. Alex is from Zukin

Alex Zukin

to one guess, it. take maybe wants for first whoever the I

an the were up from also business in perspective it about you maybe of the got and confidence talk most talk you're saw for about outperformance, about that enterprise building kind businesses that can deals was that pipeline held where you of strength. And kind where the quarter think done. then both of you just If versus and last velocity,

Elena Gomez

can I chime can in. and Yes, start guys you

of all performance really if I So business, the at strong across our QX, it's of look the Alex, segments.

you that that the that We shared we trend. if the did make were So quarter don't couple based a I one by that one of just see things broad encouraged want Board really days business. will with a a we the ago of return, to is

QX I point cautiously certain deals do where any were will, But you put if deal. we're think maybe to back. there pause, want optimistic. yes, And came that in don't on But I that so one to

think the in saw was performance you QX based. I broad really

let anyway, with they encouraged we're in a We we pipelines like one pipeline, add is about to of but QX. terms quarter if specifically not want. But talk I'll In Marc more what trend. colors saw or don't Mikkel again,

Mikkel Svane

I that one. anything don't add to to else have

Alex Zukin

from given a current what and RPO ago just your guide this quarter you don't quarter. of follow unique to unique know your Maybe And in what the given billings to there's compare, growth puts is, billings between what dispersion takes to quarter, up, I is. RPO but a quite last your the current growth year growth kind was it, this is,

And as quarter, what a trend out think so we you forward, about want make to that's guys but I do. we think QX, we as don't a growth about going of know,

so And you also, right about, forward us seasonality, way those then kind terms of think what's would would what you caution what your us -- to looking to and remind on point us, in of growth what's the you expect, how figured beneficiary perspective? second of Or outlook? out sell, et order to way you Are of of cetera? to into the you right to the kind a demand what know environment, some put

Elena Gomez

got well you think in one, I So played. five like but questions

So first normal I not this year. is thing think the is, a

all that's, we like, know that. So

the paying on we the seasonality, the by goes but expecting going I'm attention next encouraged that did on, QX, So as talk while not you to everything I'm that, is but to shock to and QX, course. pandemic guide of we and typically less. in of will what about be I same our was obviously impact COVID now, And exactly is is going I'm financials time year, to what in and tell initial less not

Marc Cabi

Yes, Alex.

we that their really contraction companies we them bring the it's remember on agents. back back that important those those think from travel, that their bring QX of continue and carry categories, until employees to took I in some to

see that help of kind recovery And near a has categories And so us. we those that will an here impact term. as in

Chris is up Merwin. Next

Chris Merwin

long with can think hear little ask. have ahead go a I trouble and as as me, video. But wanted you I I'll I my ask to you,

what saw you some think customer little than I the some last larger curious, about segments to less pretty you deals? metrics particular mid-market. out was it [indiscernible], by broad do we all a call there? in with and Just enterprise about RPO. you the in mid-market longer and saw like relative there you'd quarter, duration strength quarter segment? talked particularly and segment, your and the Thanks. bit see given Can much performance this stronger talk anything SMB in base sounded customer recovery Did Curious, you

Elena Gomez

said all segments obviously segments Yes, Chris, I our in QX. quarter, had performance the a encouraged repeat macro environment, see I of we're all our that the really of this which by in have and what would the just we did we which and earlier, in trend not is it's but strength the mid-market definitely backdrop

Chris Merwin

as the there more about share And contributor up, that of Great. one called think of deals we core next being as year? then to just expectation that there follow customers, number I the for when a a letter of CRM part is Thanks. guess, and platform become maybe material Sunshine shareholder seemingly anything more Sunshine, of was some else that conversations utilized can the you the for out, your still mentions you

Mikkel Svane

Yes.

very So We're a trends where big capabilities of could the our for are that maybe messaging It in both that's is is next that something and future. going I part to about a the excited going. more about. just and talk platform the -- conversation use and and months we're coming no offer lot doubt the year, the we Sunshine

Marc Cobi

Up next Morgan from is Stanley. Stan Zlotsky

Stan Zlotsky

into. double wanted I to a So that click couple

contract going to on was in Or that thing just was pure it. array, customers to I First But allude current RPO think any Alex meaningful bookings? shift started that? annual one specific there monthly benefited it from more too, to

Marc Cabi

our think a I mix. in business than don't Yes. very big I XX-month shorter observed that shift

our business strength just more an of I the the of was that So the indicator in momentum think of quarter. of

Stan Zlotsky

Got it.

Okay, just questions that's And the asked. again then also were click double of great. some that

usually Specifically strong are of into business array, that quarter? really it's QX a part the How which cycle. about in enterprise big the thinking is selling you

Elena Gomez

in Stan. think mind, mean, I done I was the Yes. guidance backdrop our definitely with

segments, team And what proud QX so different typically is for but see enterprise through. kind we of said. in you a the as just QX know, encouraged we've as this happened year. big and of And our got super this to quarter all across is I'm

to not trying of about cautiously So get optimistic skis. we're and our that just be ahead

Stan Zlotsky

it. Got

for it in So for segment extra what you have like to you prior years? an may versus done of that is segment that say you -- did apply fair particular layer conservatism that

Elena Gomez

wouldn't I say that.

be falsely precise think honest. to we'd I be

of So I the guidance wouldn't now. there. right reflects view I just say would our go a prudent business

Marc Cabi

see the don't I call. on Shebli

going we're move Samad from So Jefferies. to to

Samad Samana

we've about seen some formation customers business of they're your as maybe the to think just you're maybe should in more new as question, merchants, to of It's sources, you. and record actually, maybe ask relation adding you added for more to companies, third about quarter? that wanted to about doing the Shopify commerce, would think I hope the third good help hearing companies new whether us the bookings. new during as a strength be customer well. adds, we of it's see U.S. how Can we of the I was are source think adjacent all relation And quarter? mix that about new new And how in in high some the adding to that we level that think or other XQ these Zendesk from big in in we're of

Marc Cabi

I'll start this.

are And demand The saw it's we're of evolving, it's of has think think for to I of that need employ. do important provider I pickup customers a So tools whether working that lot And from whether end with kind new we the customer lot customers. eco companies messaging a interactions that, channels, ecosystem. differently. and it to good curb with other

going better this the in in to from than we've thing and that that's of health overall benefited the not do QX, business much only the that. of QX benefit I say we So from think I'm year. QX like was

general think recovery. I nice a we saw So

So to I don't want upside attribute to that. our all of

Samad Samana

starting they base, like about curbside long up of pieces technology, indicator where other different follow as when in pickup, set maybe after of success moving or a think about you to to either of whether lagging buy can as just how companies some somebody whether are your store, Zendesk maybe future a customer guess it's customer I I that, an or terms trying And if online triangulate or with they're think some to guess, leading support for I something they growth. the to that? pickup. online of up we're guess just quickly indicator, as how a on you these

Mikkel Svane

to wouldn't and This people quick that the spend implications we our to a is and businesses. too, especially the correlations IT really speed, we many it platform, business. on like trend cycles, projects, right We in customers. don't certainly years a right has speculation, has And long-term agility business, And in our iterations, is massive many, that time any I years about to IT lot a believe engaging move very believe with traffic category are we in make how these do to between short the implications of see now want years. It quick deployments, where reflected lot our want need smartness. spending big we like, on that's fast, a and about They they own think seeing we're of now. activities, next

Marc Cabi

Winslow. Phil is up Next

Phil Winslow

some driving And those is chat, base? issues? doesn't with going are up And ticket And of you to question shows for do expect your penetration that up? customers high and follow is Mikkel interest doing down. the maybe year-over-year, just Elena. that I of asynchronous the research to versus evolve? significantly, think to into the customer deal some go up driving in in really your if Is synchronous? maybe that? of Sunshine resolution you it then, XX%, XX% things channels So add-ons different about teens The your do how how question think Elena, that what conversations, to meantime data like been what's the in the A that is volumes are hasn't in Thanks. that Mikkel to benchmark types what's you of the a are those

Mikkel Svane

business like give about, about this a a like, lot And traffic experience have can especially like can the that is like, maybe moving thinking is new is great are no that for experience, natural, a thinking of flurry from how as with this And much becomes tools don't today we course ton you automate provide like, They're volume. seeing now lot we ones this are that these of Elena, where I increasingly way? because the platform. customers that Like new you help customer all it's doubt way, we seeing to lot engage And can our simple. no a on engagement there's our traffic self-service. with offline is also more a but a here. on your we're it channels them customer fantastic and your of But platform. start option other a where that that's, And we moving online, doubt of feel like of online. lot of also activity customers, that's providing our self-service primarily, from how a

of see continue to a to to got ton we've So excited. our very customers products traffic, ton to sell of

Marc Cabi

of from all add fairly new. our are view Phil, a point penetration I'm channels Messaging customers. from just going to

first with So message The so of critical And the the to conversations. explore is very companies behind looking acceptable and this, also minutes Help XX products, using ability couple than customer world. in rather innings said, hold Mikkel this the the more Center, at consumer demand of we're self-serve our day in not to understand like called definitely for. are age. this wait but they those data Delta Yesterday on that's I Airlines customers

out have a And nice So that. portfolio there. of that we're we a to I lot of serve think, demand seeing products

pretty we're excited. So

Phil Winslow

the in add next a all year, model add-on Elena, So ton of right? to

Elena Gomez

Be careful.

Marc Cabi

we average its lot a that offer raise offerings the that support, selling on number also bundled price suite of own. A

with customers next of right. a and to in the open All might us you lot the support bundles think our a is Up other Koji create for as suite, more bundled that models, from building we mentality around are future. So about your coming example, other products, Oppenheimer.

Koji Ikeda

me think should the from is trough question expansion point that rate I the on fantastic. of real That's dollar behind quick the just by to hopefully really expanding business. And mean XXX%. one last quarter that a based net Hey, number

guess walk Thank I us you. more about downside, a mean, I too? dip And -- of to thinking back it what mechanics the maybe expansion, for products, here last that? would expansion? that both we quarter. to through really take the saw metric you of can the really So Was combination XXX%, of it from the seat

Elena Gomez

Yes.

think I So that Koji, mean, right. you're I is number obvious.

take us. and First of all, of in a was for and say that. But think is range said, lag on year to a don't by to like this any a it's trend. early bit healthy we continue the have contraction We I it the one little in saw impacted a that quarter

that's annual a metric, remember look right, Just that back if we year. an

to with back we're But So we back as of going said that QX, not that. that Marc earlier, customers of keep encouraged quarter some those to dynamic, they're expansion. eye bit. by least on them levels the for contracted But we'll terms pre-COVID a saw expansion, is in little with are continue us now in a of at an

wth we predict. mean right, would don't we elevated and to contraction. hard that to know. don't to just another decrease that, this to level And environment, For get churn It's of continue know

Marc Cabi

Next up Cowen. is Derrick from Wood

Derrick Wood

curious kind dealt Great, ask the congrats, throughout with to And pricing. Want everyone. good I pandemic. to know, you question of you've on that first know, how see just my

we you had today TCV TCV that you working of was more things of enforcing evolved less evolved? concessions more some on contracts? the and should kind on, these How about you has and think and you think early how flexibility Are how we been are to about that's where preserve talked are focused forgiving to given pricing? I

Elena Gomez

Yes.

from QX TCV believe that, you right pay was and and we do could will do but when to happen lot we So, we approach it's to thing, preserve that the and extent our the the gone over off we levels for right those total significantly time. a hit to to the especially It's down customers, do say of QX, are more not on, had and a extent there in was have COVID won't of that the customers, early lot uncertainty. to

Derrick Wood

just of performance. Great. then, on kind And maybe to geo hit

sales numbers. base customer that but across talked segment backward go-to-market U.S. APAC and accelerated a at little and like But looking geo, about those can You how broad growth a pretty standpoint. decelerated, EMEA look a standpoint I be looks motion calculated bit. about from

so And performance a curious QX. standpoint, geo how from booking in characterize you just

Elena Gomez

think good I think unevenness, I had we had we the some performance globe, leaders all brought we we performance if generally but had we globally performance around And had QX I there. was strong a regions. will, strong outliers, wouldn't say, LATAM pretty I year our saw and around, I say, in -- last think EMEA would and in from strong any you definitely too,

Marc Cabi

DJ let up, see -- Next me Hynes. is

DJ Hynes

get in longer customers are you term longer structured And how you having this offs like so guess a more more the those making to those I curious term Are there. on is Hey, trade to done loaded about as bundle just pricing talked deals broad commitment. contracts or environment? relationships when I'm color what favorable back product any end

Elena Gomez

urgency little I the sort customer setting to on realizing experience really They're focus don't bit are These who opposed the and we're there's are to, companies contract way digital of to like it's their one know terms. customers meeting all I channels things with improving the and of the that. moving the up the thing that point as quickly, think if a different.

larger they're when isn't trend all So different, little there one know, as you any customers. you get and a to

point So that's here I unique. nothing there's would out

DJ Hynes

Yes.

Answer seeing you Are what interest you. same you're And in adoption talked made customers Answer Okay. more had of space, seeing less. an with the And Bot do look X.X well. in kind Curious agents, they what's we acquisition virtual then, there? interest with And they trying to the Mikkel, as maybe one Bot, about tonight, like? for on

Mikkel Svane

Yes, happy we're adoption. very about Bot Answer

We focused Not the providing a themselves. snappier a lot that customers field, improving on we're more bit automation help up for and --optimizing can making experience. automation for kind have for very to customer across improve easier, simply lot lot better in that help a of a all experience. more by gives with providing that And to coming customer

happy lot but for been lot about been a customers, in spike massive they've that see it's a of kind for our a of confidence very opportunity them, they've they have It's that customer level not think that lifeline So -- seen, this traffic it. to this when a had just waiting, they help too. of -- that an some of gives I the extra help it's themselves not they're

about So them. very happy

Marc Cabi

Ken Wong up is Next from Guggenheim.

Ken Wong

So quarter you it of the to sense comment sense maybe really even was what better that of the pretty October? the terms through than of a clear isn't a like the in shape the improvement place like? can that extent on get XQ of XQ, love improvement look would Any what to

Elena Gomez

on factor going pacing things gate. But working QX, out nice important the people had -- used is of almost of was, but kind QX, an we that that not October. from settled home was comment definitely But I was our for a try. in great of room. obviously, always did like and And customers got to got encouraging, it's normal think In quarter us. to from a in I'm a we kind to their there living back

So little normal. there was to of, a not back bit we're

don't to environment but And signal we're more the out et I saw the cetera. that more definitely People gate. much we So comfortable of pretty got to adjustment that making decisions, in. want

Ken Wong

circling just metric, the And it. to of guess Got close dynamic, we I customer back maybe there? on we paid any that might get and how new when on of are sense normal kind then,

Marc Cabi

customer sell new multiple we bring customers always time, difficult where we over activity starting were more being of very the set happy normal quarter. in this with especially it's new we're we have of since predict But suite think to to I products sold. in

and of a an a we part integral service think story more environment. becomes the I have compelling demand is that much opportunity customer

positioned rate. new So a this I contributor are think key was to we growth well our business definitely quarter,

is up Next Brent from Piper.

Brent Bracelin

And I the list back Zukin. that should to maybe might alphabetical with be fair of here next given not quarter, appreciate go we randomizers been but the

first. is, seeing to months, larger we're some six around their of have natives. Two are last support engage gold for greater get brands, or to So, your I is view for questions Zendesk wave good. whole I'd direct-to-consumer guess but love Mikkel, for if I could, here standard all direct-to-consumer larger the brands the these a this a maybe are want seeing change with brands new apps need that larger the digital digital these consumers support channels? My that to question struggling, as try modernize they with embrace you

Mikkel Svane

apologize all that noise I Well, UPS truck we think a there's that for my window. see outside the here

here. board. I read about to stories Disney et and across of definitely all in the the think Depot, and we consumer cetera We've we kind needs market, that types see that spectrum of all accelerating the direct-to-consumer, model. that like see Like Home across them that seen other

Brent Bracelin

I maybe Explorer. Fair adds dive here. then more enough. opportunity than three like the that net offline into feels business, of a We'll on to maybe support think about Elena, seen just as the we higher I'd here support that each in actually bigger And it's XXXX love we've a the that's guess last side, broader quarters.

love strong seems you So what support to little drove unusually support a acceleration what across just get acceleration think that on, the as business. and drove and It that here just color adds, net any about QX? in the

Elena Gomez

we et that segments. our part a continues we're we're a more web here. self-service other have to important had, you, be across by I our And of make for of and pleased investments try motion, very quarter of momentum if to Brent, for And lot and color the journey our making Yes. any our than cetera. all friction the free, by business in really I don't really know

segments So quarter. if anything saw the that, I'd know really strength different I in our of across point other don't out there's than than other we all

Marc Cabi

from next And is William Arjun Blair. up

Arjun Bhatia

Zendesk across of adds, new customer these just Quick making to up, choice all? and of digital get pandemic? for sense you arisen new decipher customer when for solve maybe seems somewhat service new picked Mikkel, decision activity a has just where much of can you at my is they're the platform versus urgent, trying it immediate problem customers platform one, more has that Are are how at maybe like the a because to customer these saying, able you're looking a that

Mikkel Svane

be their businesses Yes, Arjun. to sit would today. of well, the choice not live in going we decided we I'm but platform XX,XXX, here that's not like, climate

wants a since the business like to this our how this about think I think is in running for future. and investments path. time a the going can think focusing And they started with agile that's anymore. moment And IT activity. not to tool come from a and seeing And we we're said XX and today up them we're trust of again, goes to customers very all this picture, our is business harvest the the And like, good a that's customers But I the flexibility is on. believe continue with nobody we're partner a kind them trend forward our do help for we projects believe large results. I on just as and to because be agility going quick us, primary that three for that of lot our in strength our enterprises. I way scale to small year And that through they are before, get these and And them. really climate been give what that's our be customers. somebody who quickly results to And us

Arjun Bhatia

looking you're into shifted the all? and enterprise? more or That's fair. businesses things in larger have sales point that about account-based between last When And companies at mid-market that. accelerating maybe past on push environment, your still, is the kind Are you SMB those the and the it and with marketing, enterprise current focusing about at mid-market on team enterprise of small we've talked like resources let's motion

Mikkel Svane

lot like, activity. lot that. the of a that across isn't of of think like the we activity activity a traditional would board like see investing here. as I There's are in because enterprise what There's Also, we a enterprise characterize lot movement. Well, we

invest continue the So will definitely there's definitely to the that. we in need -- the a businesses invest it of believe we where I better where always be we There this. like and we large web course for to enterprises we will like continuing small kind can do things are mid-sized board, across for of and think the

Marc Cabi

I was that list join didn't we think my anybody on I that missed. see

So, to call. close at point, this we're going this

questions, call get be sure have you can you if team our after callback. we'll quarter. call. this make next Zendesk.com reminder, Investor a available see you calendar will and email again up site Web on will Just a And IR for shortly and a we you on of that follow our replay Allison at this on any And our thanks

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