Zendesk (ZEN) 30 Apr 212021 Q1 Earnings call transcript

Company Profile

Participants

Marc Cabi	Vice President-Strategy & Head of Investor Relations
Mikkel Svane	Founder, Chairman & Chief Executive Officer
Elena Gomez	Chief Financial Officer
Brad Sills	Bank of America Merrill Lynch
Stan Zlotsky	Morgan Stanley
Jonathan Kees	Summit Insights Group
Drew Foster	Citi
Kirk Materne	Evercore ISI
Parker Lane	Stifel
Patrick Walravens	JMP Securities
Derrick Wood	Cowen & Company
Arjun Bhatia	William Blair & Company

Call transcript

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Marc Cabi

All right, I think we are ready to go here as participants are joining into the panel here. Good afternoon, everybody. Welcome to our First Quarter 2021 Earnings Call. We're pleased to report our results today.

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

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

quarterly Form today's today's or statements. earnings as in regarding our to report update Our to statements or this required upcoming obligation forward information looking XXXX. do changes by after statements these on results presentation quarter XX, ended actual except March refer these no release expectations to for Please undertake more law. We for conform XXQ to

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

find measures and can today's GAAP in reconciliations comparable with press Mikkel. additional financial to non-GAAP measures, these and disclosures our a Relations financial over You website. Investor periods non-GAAP release or release intro, for letter our of including on measures shareholder earnings certain available turn filings earnings it in prior regarding either for financial press all With the are for such which periods, I that

Mikkel Svane

enjoys enjoy as Marc. intro, this exciting you listening as this. everybody thanks, that to With saying know much I

and again welcome, Good everyone. So, afternoon. thank you

driven last sizes to in points the a with solutions. broad-based across all very deploying year growth. year-over-year evaluating as The growth driving underlying regions, are strength We are performance from strong increasingly It's was XX% of and revenue the this our up to companies start by revenue good here X quarter. off interested

introduced to time service centric since months this radically only now easy, about online Suite With that to Early quickly provide in evolving world. Solutions value new our X% customer size. of The contributed XXXX fast robust first simplified of very we our in for messaging and more growth Zendesk agile, complete than total launch, Suite solution. are X the QX, the the and suite Zendesk quick already type accounts deal in new and recurring attracted year-over-year of customers the has revenue. here new average adoption strong also

our up Glaser Shelagh made pleased Intel, variety CFO board to management and of has by we we of our where next and hold our leadership from new XXth. excited, set quarter, she will have a growth. the phase comes positions. today Zendesk as I'm Glaser group. us join leadership of platform on Shelagh Constantinople join to also the Alex very Most CFO This COO to We're excited a share of team data recently, of team. our appointments to to announce as May she course, very was and strategic directors to ourselves number for the of that

to chief I time. joining opportunity very a occasion welcome and want As Johnson to our Alex this of us Board. this he's previously our Gale marketing fans for we Brandon announced, big and been long Steve and as use have officer to

you. have We very, are very lucky to

say whole to It's I the my enjoyed who's appreciation girls have go know We script good been know as Elena, an a a family, an your know get itself. kids, so fantastic pleasure organization to of get course, it's work it's What you, to I But like moment to pool you speak your girls express really the to as to ceviche, all Also, your and been that to you you, taking really Elena. to now themselves. here, we results makes me on to been and really that as for take and it's youngest part our and also -- the absolute that. to also best. thanks fantastic been you leaving with girl Elena. here, husband, absolute wish for little to The best. us. level, [ph], get of my family, Allow you, your closing pleasure that to Before off want a little mom your to have done remarkable personal been financial Johan an all has wish speaks we've the

have really let well that, to you Thank proud we very all take numbers. you wish are the You accomplished here the produced through Elena. here I'm everybody going you and and With of everything you, best.

Elena Gomez

All right, you. thank

You didn't got we But here. anyway, going of you're I so XXXX script, emotion tell get continued with the me momentum. off script this to out enter did

Xrd reverted We dollar-based our in sequentially. rate row customers quarter contraction points During new and the to our on great growth with side, QX the for expansion expansion XXX. rate pre-pandemic was percentage back bookings a X turning momentum gross and our net levels. maintain accelerated Up

year-over-year. gross margin margin percentage was organization across First driven points said year-over-year. revenue Revenue of largely of revenue our customers. XX% year-over-year. gross outperformance support margin quarter infrastructure. gross was regions Non-GAAP for $XX by from and quarter was as fourth accelerating the by expansion. and costs year-over-year, Mikkel our expanded XX.X%, personnel by fourth margin quarter. increased, from product prior. driven X.X in improvement the increased up by performance scale and Non-GAAP million in our GAAP was revenue operating up by points broad-based was GAAP all XX.X%, Gross points, percentage operating expanded percentage margin flow margin driven quarter XX% Free the cash largely strength in hosting sizes and X.X efficiency X.X optimization X.X points

Now, moving on guidance. to

at guidance to our $X.XXX Given the revenue and year-over-year momentum to continued XXXX we our approximately represents strong QX which XXXX business, are $X.XXX midpoint. our billion, results XX% growth in raising

is XXXX continue will by business. While our to defined strategy we growth, our scale

We the range of income expect non-GAAP operating million. to $XXX in $XX

range in real $XXX $X million, rent the related the We includes San cash changes year million to approximately full $XXX estate accelerated our of expect in free of payments expected flow to XXXX Francisco. for which

we Before fun. of that super people so I'm your extremely say turn questions, your aspiration to at with to I like be this and talented I've believe get to well the With for X company. company thank company been for positioned the It's billion Zendesk proud I'd Marc. sales in and past these always I years. done thank I everything absolute at is making for annual $X to biggest to the revenue on will analysts investors be pleasure and over the plus also team that, its support. this long-term it rooting many I calls want to want sideline. I'll genuine over an of our cheerleader the achieve

Marc Cabi

Elena you Thanks, working great and been and it's you with partnering with years. over the

have accomplished We together. lot a

it open want for operating few margin. I both a we cover questions, around our additional do to metrics points Before up gross and

journey oriented product As be you evolving know, a we've more been solution our product based. rather than to offerings on

metric with leading with we're end, Zendesk forward, Going count our our that customer paid replacing we're count. Suite. a To customer logo new

entry at logo chat-only recurring we time. can of expect suppressed believe representative ARR evolving on just moving the progress level should our But Xnd over we'll market. metric. and In as reflect offering, support over addition and metric mix support beginning metric proxy metric of our be forward end We're the our first more more or again, depart XXX some percentage report our approximately $XXX,XXX elimination you chat-only is the let the this up going new Zendesk enterprise ads to XX% We quarter term generated XXXX. the annual net with be was do in The customers only the also quarter will revenue the near sunsetting of a will of customers with way from and XXXX. agents

Lastly, just more margin. little on detail a gross

We our costs. we and infrastructure including data as continue goods to realize sold our cost scale, of efficiencies

market that retention that organization well renewal support past future we've in motions our success account evolving include Additionally, customer as been closely and opportunities. the our over to expansion go-to year, identifying as

non-GAAP change As this would has our margins non-GAAP XX.X%, been our impact and GAAP and the a gross this excluding have and evolution, XX.X% XX, gross GAAP QX respectively. from margin from in result, benefited

Marc Cabi

will that, we up begin With to open for questions.

through As you you we put randomizer. know, questions and these take

So, the comes Lane today Stifel. question Parker first from of

find Parker, me Let I you unmute you or you, on can yourself. here, can so unmute

Parker Lane

me? you Can hear

Marc Cabi

Yes.

Parker Lane

months, very Great. the Thank I think new Suite you traction you and X in customers announced. XXXX what Mikkel, all. Zendesk great with

you been base? with didn't those resonating solid. are about lot or how that's customers about you field X the think within X the have we product I in out assume, more that hearing users power or customers mean, the customers You how there new is engaged what that the of long a years, very customers? rate a talk time. as and for now very over is But with are I entire resonating conversion XXXX next of right

Mikkel Svane

been We slightly or anything bundling expectation this or or like overwhelming. before. successful have suite has our reaction never such beyond launched products The really and

very we're So, this. using about excited all the customers

there's think X here. I trends

elegant, see simplification customers. in quick we which the easy these use, X new to both up, amongst These making we're then easy element set whole very First things and with easy customers. get to invested and made key we really to flow like integral really going communicate of an natural use, messaging of trends the your and can are foremost, current key in very to you

all the customers. that kind We adoption suite. are for We believe very motion be will our bullish about of of this that of default the continued

Parker Lane

that's and very Yes, helpful.

you place? the growth had, was There I seeing with are of think primarily logos about now the with or there is are you customers expanded much those in suite type enterprise have I that more XXX,XXX, that customers. you in have saw announcement landing that offering XX% traction you

Mikkel Svane

both. It's

very land Our key motion. much is motion and business expand a

larger driving we into growth course, of customer is that winds traditionally deeper were. move affected the it's, they the new are our But also by majority as that enterprise. of than So

Parker Lane

of in Elena. your move, thank next luck you. Alright, Best

Elena Gomez

Thanks.

Marc Cabi

next Thanks, Parker. Up is Lowe [ph]. Jen

Unidentified Analyst

and hear see you Can me?

Marc Cabi

can. Yes, we

Unidentified Analyst

on greater around anniversary, great It's ASP. your the to start on $XXX,XXX hand, at and it's than on to and rate is a place get have and large and very really helpful growth growth boosting last that. there. as just question, I movements on think, shelter pandemic, Certainly, the period if context. specifically, suite that other the the just the But Maybe to hand, the of disclosures the you're greater new impressive and $XXX,XXX follow than up the on look contributor I you seeing one in this

curious, little about think as that should a and at need that being is a that that rates, there we we it than possible normal of if just growth there higher number comps that it I'm XX%, might those made going and is some we to the aware we the or be normal the XX% look were examine So, that growth representative have should forward?

Marc Cabi

bit. Jen, on touch the comps a little I'll

If in last year, a the began you QX recall, to more pandemic QX. than in much really role play

of performance of as there sometimes accounts, more But large accounts you record QX. track seasonally impacted record feel definitely comps by our be consistent we very as over obviously activities the get good multiple the AX ARR in that's definitely more oriented and strong doing. XXXk we're of our customer provide is that get pandemic But have and that our So, than said, to type sure why into can the year we and general, period. underlying QX our QX end of total actually easier representative but as QX track very was is percentage well. a there a for is grown traction and how those made at there about

Unidentified Analyst

the one the are me, again and they've the Then on to What the more customers, for disclosure of move Is what go uplift? to that than the as seems pretty ARR moved suite. particular, looks on over of there a already? of think gate in existing lot ones X% is it sort that? any it's kind made have tailwind out the to on rule uplift transition? It customers already like of thumb just suite that XXXX that been an successful, growth about like making existing a Is for we higher How to next year? should ARR being customer going of the

Marc Cabi

It'll going can to a They're from quarter. We past said quarter ARR in uplift. to from observe of vary definitely coming that XX% mix the and anywhere this it customers. uplift you customers get have uplift nice XX% to us. available from Sweden about in, to there's but XX% a We quarter

Unidentified Analyst

Okay. Thank you.

Marc Cabi

Sure.

Foster. Next up is Drew

Drew Foster

luck of questions. you, next to quarter the my chapter. offer for also Nice thanks taking and Hey, Elena, best on your

Elena Gomez

Thank you.

Drew Foster

extent guided the understand are duration in Marc mean both embedded which head throw definitely to that extent perspective, a visibility customers existing I potentially dynamic elongate, great rates rates. QX larger for that or of some growth your you duration role always Elena. that duration and this the wanted throughout put color starts easier is getting had ARR fairly you're just around less we're doesn't tailwind a First question you, customers portion year? with I to especially could a that from Can but a into and long thicker your as to or you to the longer significant to uplift that billings starting inflate for explore growth compares the you've traditionally to full-year than year. the [ph] commit Since playing Generally, or year, a is in see think, longer we deals extent

Elena Gomez

Well, It's as contract this, you're last still term we're the continued to longer we and as and But, impact up as market, rates. longer monthly long-term remember definitely our of move, we're very mix as be you a to of steep up up term our as of commitments, been our certainly, longer couple from we've long steadily well business as contracts. of moving know, length years trend term so contraction can contracts. market, focused is to moving our tracking that customers. think slowly. that time, a positive is seeing which least see we're customers But moving you starting comes over going The not XX% as to but team sales has on term a see have

Drew Foster

tossup Okay. And then, a question. guess follow-up for Mikkel or I

service a and with what give to engagement and customer the seeing of can us here on relates messaging, messaging often back reimagined sort XXXX, or the the what's sense you efforts, early XXXX in traditional pillar how how the it contact and key of of As half for a customer view customers hockey ticket in you're center, either what those start trend of you're what's stick of that, In Just Is maybe that addressing the the since line look piece? terms routing what's like model? pandemic? offer a sustaining scenario and fits levels? volumes, the sense into it you could of messaging give the us the seeing you're

Mikkel Svane

than [ph]; is All of that's messaging saying shared growing definitely private stats on of any doubt there's channels specific social kind fastest rethinking the haven't that, Yes, we of kind other channels both and and us. different that the is one customer. no SP that these reengineering, the for Block that behavior that

to course, of and also So, it something with course, how challenges have is little in. deal our very we're Message A looks escalations different world into and no way There's center customers That's, based products. with customers. like was that's and new It's of a a customers. It that so living our different very and all messaging think that much this of of interaction. a lot with also we are front an interactions different. doubt around. routing about we're engaging from our it like on email-based working that adapt

customers a where sharing doing and we but these feel answer. forward going see point Yes, no doubt more that That's You something have more world and staffing some on look things, that we about these share to that. is and is that it's there's to have in think and but things, our don't the great all we at going where I measuring to customers about agree all through later this specific very to differently that today. differently exciting. journey was time we're our data with can different confident

Marc Cabi

Next Materne. question from Kirk

Kirk Materne

maybe organization, Zendesk starting Mikkel, Great. you in a have echo, have and Elena, much. with level are this to suite higher we're already. curious, in service imperative CEO interacting out really that of accelerate helps up best on customer wondering I'm now maybe and was if was with, at the dynamic, takes all see the a higher great on for you new congrats evolution? very of I'll level I Thanks and as run strategic you're moving sort dealing up able a that with? think luck. maybe maybe customers to all you at conversations more as just a happening you, to start who perhaps the level suite, to are I launched

Mikkel Svane

pandemic changes traditional center your think it way the metrics, your customer the has a thinking more customer I of changes made because much relationship. experience your lot of traditional it and all businesses, all front about for

a to us for have way. different new new there's where in backdrop yes, customer a for people in have is the center embracing bringing the So, building sit interactions and we're to living here the that's and are seeing definitely more front channels CEO, about doubt channels, these about customers. how the think customer but experience, and customer online say and our this change these messaging channels, all like, we're world overall new much no engagement that I think can't relationships and into a customer

Kirk Materne

deeper into it. guess, landing define normal a bit you Then Are also XXXX, at in if or bigger above you the mid-market just curious Obviously, Okay. it's if Fortune You was ARR you your or your considered a more just seeing to are at starting customers. at look and customer you're Fortune actually broader CRP your level going kind are of or what any enterprise guys direction. I getting or cadence? of you enterprise whether was average want customers, however you're Elena, of curious, with of you Marc in right it's customers. have more we you're the the with trending little I the a customers? grown lot had get into all to a often? sort kind getting XXX those with XXX,XXXk, XXXX, larger of success I metrics, more, Global Meaning,

Elena Gomez

mean, I our say we're evolve know, doing are both, earlier, as would expand. land and roots I that Mikkel as continue essentially, we you said to and

time. land be see motion to playing that for metrics C-level starting over certainly, the as deals, in said, continues how which a you critical to conversations as So think larger the have us. can But occasionally the you well continue at in that's we're like I to, letter, out shareholder those

we true. good that's again, both we're expand, So land are But seeing. but momentum and on to continue focus

Kirk Materne

all. Thank Okay. you,

Marc Cabi

Thanks.

Brad up Sills. Next is

Brad Sills

Hey, things. wanted you Obviously, Congrats much. nice so of Oh, coming teens guys. pre revenue seeing were question that up to back Thanks more pandemic. XXX One, quarter could a what just XXX. this Is to Where is expansion the about drove still customers retention. or ask back guess on nice great. activity? saw or my suite two the that of quarter, get I incrementally? had seen kind kind quarter. to I goal high move level? level teens the this you metric previous see know that net we to that a I seats it XXX is at or not you and more simply uptick the high

So that it would end, what but towards get that to back high to level? the would be take

Marc Cabi

confidence the move that We upward number to have year. in continuing over

things couple a are there think going I on.

hospitality to of about the were hard normalcy return mix, see like whole broader say think natural our suite. down to transportation of categories share But now our would to is hope hit, focused the normal that and at I if set on as customers. What industry levels. car back. Again, would look we we some growth get customers of have that those and come pre-COVID you that just they're period, existing beginning an contraction come already kind just that uplift more rates expansion to a through of and industries First, that is from product ride some of from

hope So happen expansion those now, levels, would X back next will expect we the to to the the which be come over step next pre-COVID to quarters. X we to rates

Brad Sills

fabric a for to hearing there to projects? from that Then embedding offering That's heading a more customers projects push coming from these one a I to of Sunshine I Mikkel, office if last a back deploy strategic some of into were custom Thanks, of plans of exciting new are think way, big a released, support Sunshine, year, applications? about was and the know types of an Marc. lot pulled on way. great What Great. Zendesk you in way a custom and On hear. and think Are features in may. with types those deploying I front to the more you. in they back Sunshine, then with pandemic, more into please customers

Mikkel Svane

I to share Brad, don't have really anything that. new on

tools new suite available conversation a with Our the to components these definitely and purchase easily developer majority today. a in customers of to friendly sunshine of lot is of a and make for into and the heavy without also Sunshine our use to focus having seeing for the We're little go easy also making some a our hands more bit customers. more lot

but I of it's share about talk we're adoption, becoming Makes Happy later examples part and sense? usage the about to that year. of say it's for adoption exactly normal on the maybe in so us early too seeing, Zendesk. the to of more more think

Brad Sills

great with And you. much. Mikkel. Thanks, working thanks It's so Absolutely. Elena, been

Marc Cabi

Brad. Thanks,

Kees. Next Jonathan is up

Jonathan Kees

me? hear you Can

Marc Cabi

Jonathan. Hey, Yes.

Jonathan Kees

It like too. see Great. me you looks can

for of in usage did messaging. you customers? it, it's kind of discounted, talked I much simplified you're still taking charging luck. How pricing my best by the will I questions, because you, in play miss mean, my it. Mikkel. this actually you you're would guess wanted for of uptake Maybe the I'll saying this thanks is questions. to So, I much Elena, by I of more terms I of terms for start ask XXXX pricing. not about With and hypothesize

customers charging suite? seat. pricing a in of factor for terms big new the uptake was still How of by You're of

Mikkel Svane

and to find First Jonathan, need microphone. you your foremost,

of lot a wrong, Something noise.

pricing if about the as Let I think say me a you discount, happy. am

wanted we really to simplifying. achieve. have think achieved I what It's we about

and understand, much our These key transparency these products areas. pricing are more things. much making much it to around easier to buy easier Our

products Like and the were simplify our Obviously, from to key over can all product but the or works. size, we sophisticated aspects of average in not deals in we directions was the from suite. implementations, only a These it with years. demands deal big key see deal one one of have the mind We growth things. the these

new an see the with we uptick suite. So,

wanted achieved the we we what much make much that to will, the we deal have had of simpler, perception if in here We seeing improvements are product to easier, hoped all but cheaper, see. you average size much the

Jonathan Kees

just hear quick follow-up. Can ask through a Hopefully, you the can hear clearly mic. me

of for terms going we is In of hosting is the made, scale the like margins, considered and onetime gross that forward now efficiencies it the be a improvements you revenue for thing say can QX? more going to or

Marc Cabi

I in this think of will for benefit margin cloud infrastructure expect cogs. incremental the for swing yes, would on strides the time. great be always We margin gross moving the over be we've gross and in that. to they But, being. our we There around will time low the made I some we'll had XX% finished improvements look

Jonathan Kees

Super. All right, thank you.

Marc Cabi

That's a gross non-GAAP margin.

Jonathan Kees

that. got Yes,

Marc Cabi

All right.

is up [indiscernible]. Next

Unidentified Analyst

Hi, thank congrats the I traditional you the basis? Elena, new with expansion of we the understand of was other for having in seasonal us me on as see can negatively With out net maybe the that future would you you just on unpack you were get and just working the well-deserved of the Then a that to regular meantime. I impacted role. way, have much Marc, in maybe forward customers look one on. on from some R&R out that you the XX% help in XXXX how the follow-up question. the versus expansion, hope

Marc Cabi

from year really expansion got really of up last customers fully. that returned all characteristics. business good I think Not hard is our showing a lot healthy of just hit our

to So, a dynamic. ASP I bringing really, those We're a the back think means customers more that moving helping confidence have continue prior agents. employees, primary very rate, they're rate the our mid to from and healthy higher using expansion suite pandemic. and where factors expansion we we'll that we getting which just expansion are People move to were are that to that high gives here level to are our the us

Unidentified Analyst

different may think you're it, Zendesk just this customers and database? well service trends starting the seeing actually taper have customer that we Understood. that's with bot been to continue I or maybe the see beneficiaries. to and so you're we're a that that COVID if maybe to there's how as the And us COVID really Peloton of during to mean if compound help reverting then when ask I what that that maybe a I'm well I bought way there's chatted of just all with and growth curious anything beneficiaries inside did understand

Marc Cabi

I'll have believe the Mikkel a I answer that, but changes in lot the that of durable. think we are market

Mikkel Svane

Yes.

lot think taught habits changed a us I It's around. all a permanently these this has pandemic something. our and lot of habits stick will

Peloton, brought things. of to for no they convenience, has will a year kind the that but have mindset these things that's the lives how change and been we year doubt people's our these the breakout there's do that mentioned and Peloton, permanent this You can pleasure around

convenience on customers. scale or these with So Because of more more bring customers. timeframe permanent talking trends are things will have last. we our our What the to kind about permanent we're the etc., changed the a with these that can

All We never our we will things back these get how go to consumed, how shopped, how permanently. were things movies, changed before, we stuff. watched how we how we like

going from things have will role forward. in We big how take we best play the what the and learned a pandemic do will that we

are That's about what hope what our we customers talking to So, seeing. helps. that and are we that's

Unidentified Analyst

Thank great. to and the so guys you start appreciate year. you Yes, and much taking my questions nice

Marc Cabi

up you're Arjun, you. Thank next.

Arjun Bhatia

higher advanced about customers? So deployments that's any Very Are The metrics you're those get at $XXXk ARR Is coming driving we think functionality? and steep pricing customers. growth everyone. granular that? tiers? see Just they're you to little disclosed the the those customers how Good should a that guys. seeing you broader that larger bit can $XXX driving that that? Hey, that way want Is into in we more it of in on some impressive. there growth

Elena Gomez

we're and us. that in certain us. That of and be with Marc sizes marker but we've more essentially, to That the just we out when Mikkel, customers them. about come really But product our they durable and to which start expand can hasn't seeing changed to what I seeing grow through show through up can talked customer, cases is about, land rates. with or always is there's continuing adoption. start as characteristically seen, are just expansion, we're impacts what which seat we talked us where a some larger Yes, would Mikkel what obviously, be earlier, than add, we you continuing, other is expansion customers we do COVID of That's

it's Over our suite, product time, launch So, the customers. larger we now little more of these that's a evolved bit with resonating as both. we've

Arjun Bhatia

Okay, larger you're know That's today? we've just lot. whether helpful. still I Then similar or level curious, a talked success solution an what that's seeing customers suite suite, perfect. the was the seeing But about very it's midmarket SMB I with of upmarket in sales relatively if

Marc Cabi

our much midmarket is course, more where for focus more and short term. That like solution. still It's Longer is SMB of very and term, things. an interesting

that's where for opportunities type products we we be new getting into as are deeper, the but especially future. of think, I integrate today, some some deployments new there'll

Arjun Bhatia

and of Thank luck Understood. future. the congrats, Elena. you in Best

Marc Cabi

Arjun. Thanks,

Brent Next up [ph]. is

Unidentified Analyst

here finish you've had working Amazing you years. working and mics it's the first guess been business. just the over Mikkel. Elena last start Hopefully, scaling you. off, with here I a journey the we'll pleasure Thank okay? X Elena, with with

board as here? billion you I rates? you have the optimism to Just of is it under international? of end expertise. your here The for QX, suggest you're $XXX was going high opportunities be would news leading business accelerate certainly the well that think above back is it going what's scaling there's levels to it the top close suspect parts bad Is today. of you Is X you business this we trying and pre-COVID does XX% to optimism seeing good The in joined million what break. recovery? guide a in that love to enterprise? the could and question hope I it get busy. Is My years, build are is when higher news back of Are what driving growth the the we're QX. over a lot at Xx into assess funnel a

Elena Gomez

one question. based, I broad to say this thing can't the for thing. and is Brent. point It's the Thanks

me we about very given all say our confidence at all we performed regions think also the complexion our In when also across But encouraging. of all and very success as you I what's looking is business. started of We we're at the actually very at the looking quarter, and they seeing segments, fact, really that's what would started the encouraging broad-based looking suite the started so well.

as in months Just over well already of deal is XXXX as thinking increase logos encouraging for just of so and activity X about the recurring with already us our size. That business. X% average

hasn't gave and that the what of confidence the is really really me guidance All philosophy changed.

As complexion we about the probabilities little SMB, and based. a but really every at talk we has always enterprise between look broad it's and quarter

Unidentified Analyst

didn't it you at from different of sales walk it Could default the Just as have is the about trying Suite stuff why Zendesk and that's resonating now you Is addon about have but largest Is for component customers. messaging XX% it So now you through when to X% becoming you, customers? appealing is Suite the to to on it Mikkel, be so What's appealing appeal ARR and all today, Five before, this a you've Zendesk different had while? motion Suite here. you've had understand now, and me addon that for messaging Zendesk today? an that, years XX%? resonating talked that

Mikkel Svane

see Well, the bit far. more trend quarters, little so here. I very confidence yes, as can more feel about We talk a few we a think good we

concept lot technology, democratizing this more is complicated, that capabilities of Zendesk more what so the are normally expensive, about is adopt of a kind and democratizing and think use on. to I easier of

to the putting call Stars one of It's that's center North customer making or think together, think about the it. really side or I a making center not just power together between the these on too things it suite. elegantly it's have much messaging set switch things one service don't based email work and as for about driving to three and up about main these easy

product the thing. of all you. You areas. have one technology It's That's is easy, relatively don't the guiding plan these to

the much and put I think other can features probably on too side all capabilities all process. all bad we with do. stuff friction the into we sales We and have is the the those

it of suite. So, really forward. our put we the are and where This too with choice a These a effort here. adoption little much simply put all the to lot two helping for of put overwhelming became we little the a Like customers. going confusion, up bit things on extreme

Unidentified Analyst

resonating. helpful. pricing, those reduce and seem go-to So market, in you the in and things two combined be to Very you. friction Thank friction product packaging

Marc Cabi

Thanks, go Walravens. on Patrick going We're Brent. to

Patrick Walravens

you. great. Oh, Thank

getting missing and be an personalized Mikkel. of on a in doing one I which am the that. you So you is my emails a driving from may leaderboard, month. feeling this workout, like I a first off, on email. you Olivia, about miss haven't But I That's Peloton instructors, awfully xxxx have been

a have of ton You changes leadership here.

now new becoming CFO, the new president you were a You of all have Congratulations, products did decide and CFO. new have what make deputy and you thinking? COO, Marc. you is a you CMO, these your changes a is have your to old When now CTO, your CMO

Mikkel Svane

It's thing. same not all by driven the

had computer, we foremost, planned was, and there. not changes Elena's no course, her try some forced something We departure. of First her Elena's we nail did there, but to announcement by did and success to

engagement important little team some like believe that think that up we're we the I shaking kind ambitions. It have to company growth a enterprises our very storyline product is for building facing products how of a same bit some of in by that a is and peoples future culture driven closer is we and It's our today. all the to want we use customer are organization a we're much in we changes the there has CTO be for the a complementing the driven of play that by really possible more lot customers rest time, talent nourished product have to better growth. operations. all offensive, space to the where aggressive play for can of a the lean of we our ambitions of great of and in some partner have capabilities and market there customers some and between on it's gray our our more doing At much get enterprise course, the also stronger and

Patrick Walravens

What Can I thinking one. ask CFO, first that the deputy that's behind that? was the the

Mikkel Svane

don't I it's think a first. Well,

I a sure believe transition making A here. CFO connecting both and the a can incoming kind think of stability finance be for it that in in bigger the kind that there's with we're leadership, that broadened support the more set CFO future us do the of think to transition people that somebody Then the we and to organization. doing teams. our way tremendous both more for amount leadership I up want to a of of will team team has outgoing well and have for to what tissue can it the

Patrick Walravens

that you for Thank perspective.

Mikkel Svane

of That was that was a information. lot

Marc Cabi

We got I more to keep got people. moving. X

to you thanks to going because great limit one, of guys ask you're time otherwise? up Derrick, I just run the for questions. So, next. we're Can out

Derrick Wood

shoot. Oh,

Okay.

Marc Cabi

next the do better keeping I'll time meeting going. and

Derrick Wood

generation. have CMO invested are know the I different then you don't paths you kind generation relate for love held out [ph] you I'll virtual her be to to in areas you you and Zendesk wanted and was expecting on just a started in to event cross initiatives? you. hear of I new normally up terms road. how what with say, to just event missed. It new think Alex of board was guys. hasn't great Maybe throw and down of a I coming you're this Elena, demand hope Mikkel, you'll working year. a We'd yet. of I marketing demand But

Mikkel Svane

people about, that different are event I strategy also together like how can then relate It's calories. all didn't around because we think have celebrate definitely in to [ph] big this be understanding but often, everybody and future our there's in so, a event. of an look have that of year, now tech time should ensure sector We behaviors, and lot do thinking light a lot of other offline that to we will the that a wasted not plan for event. would

That online. really, smaller a out well of have sea We have events worked us. we has for created, really

figuring targeted, We we're involved much more has much going in How think have focused, Yes, the they're we us. out. more definitely, really about That They're much worked future? out to well have it better for much they're that engagement. more for and interactive. Alex

Derrick Wood

you. Thank

Marc Cabi

is Thanks, Derrick. Thanks Reagan Dan for understanding. DJ. [ph] in for

Unidentified Analyst

and any the initial putting strategy that dynamics. I our taking stats traction then driving get of for seeing Hey, you suite before on the at the show guys. this compare utilization utilization would there the core can Thanks that around that pricing goal adoption? how And with of does expectations? to you're monetization Are question. of focusing then messaging your the share

Mikkel Svane

shared I think we this we more out have don't we report early to stats a share. Like had some, year.

customers. fastest Our benchmarking show where messaging growing among our the channel was could for we report, that, example,

data over refer that, It's So, that. I we to don't on days early have new the to too share but anything Make can still suite. sense?

Unidentified Analyst

Got it. Thanks, the team again. Elena, wishes you best. our

Elena Gomez

Dan. Thanks,

Marc Cabi

[indiscernible]. up, Next

Unidentified Analyst

hear you the to video seem I me going. okay? can't guys Hi, can get

Marc Cabi

fine. can hear you we Yes,

Unidentified Analyst

go. but first billings leading extent wanted potential as great? RPO what we year, on would the those of growth we midXXs. touch revenue a dynamic, there to To the any particular lean on indicator I good be just maybe guess strong I'm metrics not this alive. really current There thoughts growth in half next I also maybe of year, should

Elena Gomez

for I'll RPO be start, I great proxy say to just would continues us. a

just us In particular, number RPO is proxy fact, to always are billings that look customers. as our you now, can But and capture in it remember, monthly encourage of of quarter. at our billings move I would, our good any doesn't given that in many all for a because and customers you

You you our as couple especially RPO of at a have for to guys we to look encourage at different data look points, enterprise. but definitely proxy

Unidentified Analyst

thanks for Elena, help. the and all lot, Thanks Great. a

Marc Cabi

up, Alex Next [ph].

Unidentified Analyst

Thanks guys. for Hey, taking the question.

How is kind some would accelerated enterprise environment? actually comp. about and the Is the bookings, have So almost Is that as success? you what so every underlying business. know demand if you Mikkel. of early you toughest of it your bounce It's the unusual Because activity QX Is look in Then now in versus year such Elena sales talent? it enterprise back? pipeline year better QX at strong this the ascribe it? What it I the more you the of some do on would a confidence? to you your of all seeing software rest like or categorize last talk how you're you for quarter looks CRPO year happening

Elena Gomez

I'll and start chime in. definitely you Mikkel, can

end always tail the just at earlier their I it kudos the last to street, to to a towards team, part into my and like through in pandemic reps of We said and invested of strategy end QX, exiting sure early, the Marc of that year, been us started March think give our COVID make QX sales X. January hit has we year. on I quota remember, resilience was last the hiring that really to just executing machine. QX hire early have

So I think that part that's it. of

that the call regions is well. which I what we're is helpful. when well, The a as success always is But that's it of our our helps obviously would they other out with generally look seeing part regions, all all portfolio, of across perform results. at that We really as

to more that I bit out but completely optimism. to we're see optimism a starting we're definitely of the little more starting see our woods, with don't You're know customers.

Marc Cabi

you they when to own year, hire keep and more in last generate they I'm just add, come their about people pipeline. seats their productive if there, going you think you early and

really that So, is improving all we're of what of over execution, which lot time, a seeing us confidence. gives

Unidentified Analyst

you and you again guys. forward you with land. Congratulations, Elena thank to looking Perfect, working wherever

Elena Gomez

Alex. Thanks,

Marc Cabi

Thanks, right. Alex. All

is up Stan. Next

Stan Zlotsky

Awesome.

internally contribution for will our definitely pricing everybody's paths XXXX? into Sunshine cross the question CRM It sake, we for thinking are this How remind this quick everything, into future. Sunshine from far going end. revenue the in what's your as you specifically as you. One off to Could Best and back year? and are adoption wanted guys to I latest will going Elena, expectations from the all growth you these CRM What us year on CRM? your about you awesome just Thank video. come For with thinking of product you. a working stay was my hopefully I'm to to miss the second. sunshine for years. the

Mikkel Svane

plans really, into it focused more Making primarily Our it people's extending our and really of building use an the and for focus Making important alongside upsell as more getting say it. is much key this But focused year. be to people Once it is you them getting part there's having accessible. of very, is on this sunshine naturally use for year, hands would people grow suite. capabilities, start of using hands of easy kind on and very course the for the will basic which opportunity, out getting us. capabilities we to for it with I into

Stan Zlotsky

Got it. Thank you.

Marc Cabi

comes question today Chris Thanks, Stan. Last from [ph]. Merwin

Unidentified Analyst

guys You hear me the Looks okay? can't video. see like I

Marc Cabi

[Indiscernible].

Unidentified Analyst

we There go.

much. very you thank Okay,

can enterprise segment areas about just be and thinking much curious continuing focus future? that seeing and slower new love bit bit we the you're growth in of that other go see disclosure, the In how to of would growth just for a a hear imply enterprise Should about and the set SMB covered up the my incredible Basically talk by up rest segment. a the business. you the think a you? the that strategically? more for up to we area question, business. terms you're about is more vendors Can customer mix can Just It SMB about in of enterprise how

Elena Gomez

in be I as invest important lot expand it's talked really in to easy understand that time. would those customers us. that over with just a Because board about we those it continues with customers, fact, segment us making on super of us. for say, We, to important

a only So, an where there's we enterprise become scenario not company.

try those we We lot efficient go out buy grow we SMB business really our and mean will we onboard always doesn't know to because experience, that but It we continue continuing enterprise. on sure that turn is and that make that continue ultimately into to experiences, web can't customers. can those focus of a to market,

Marc Cabi

they're do to have is of important of even relevant businesses, is and it's, segment commercial, that be in future The we the always businesses, business SMB part of that because successful think, so enterprise over with, that into other go them growing very one about lot driver and our growth. the graduates Chris, is time, of story out things may e-commerce a I companies going we into some important our rapidly. internet of a being SMB of

Unidentified Analyst

you to Well, your and next Elena, you best Perfect. thank both chapter. on all the

Elena Gomez

Thanks a lot, Chris.

Marc Cabi

is the thank because All quarter. care. bittersweet this for see for right. today all ride, to my and is everyone joining Take for Zendesk call next Again, you been and this a you will thank Elena, we last but into Elena, everyone great call with want listening it's I me us.

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