ZEN - Earnings call transcript Q2 2021

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Jason Tsai

Okay. Why don't we go ahead and kick this off? Welcome, everybody, to our second quarter 2021 earnings call. I'm Jason Tsai, the new Head of IR here at Zendesk.

We are pleased to report our results.

Joining me on the call today are Mikkel Svane, Founder, CEO and Chairman of the Board; and Shelagh Glaser, our new Chief Financial Officer.

and today's regarding may product our prospects, to of such forward-looking development, course ability ability statements and as future attract the call, effectively. make we statements growth to During compete customers retain financial performance, December factors release Securities The press and our actual our in subsequent our prior the Risk June XX-K filings Exchange XXXX, Commission, could results XX-Q assumptions, that affect annual the our contained upcoming the are report and risks XX, and ended in quarterly report on our of for with and for and earnings year Form the Factors section XX, including on Form quarter XXXX. 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 isolation addition non-GAAP be measures call, should will this a During or and as present The measures. financial non-GAAP information. financial our GAAP not substitute in financial considered GAAP to, from, in

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

Mikkel Svane

in our for the I'm want want Cabi, somewhere And the happy I who know Jason. Jason, thanks new Marc, stepping the to while you, brief here to in this of team. say And to to we Shelagh, make you be transition. I with very course, Thank very to here Thanks you this for call. started, call. CFO. also you welcome is to on of I instruction. wings Marc welcome I before this officially get Welcome,

and to dollar by We saw XX% this accelerated strong bookings grow last by our year-over-year customer Zendesk makeup increases customers longer compared they driven and translating Enterprise revenue our are our with to XX% quarter base retention. of in use record quarter. higher We the sales amounts, growth continued to The to engagements RPO both to Suite. products adoption our changing business. the Turning customer our and of

now deployment. why is deal Suite social X,XXX simple messaging-centric, solutions booking our our one interactions. trends reasons absolute record driver of the It's have a our customers and for solution. with gaming surges economy, hold true, updated usage that greater is leading increase online business, the like have new is through world. over of significant pleasure in key experiences our our for our support size, this expected complicated adjust While what and that to is deliver lower this was to now win chat. digital-first the using strength more, all QX channels while of relevant what's we IT Suite. that why Zendesk Broadly service because giving long, the customers to quarterly in of And of forecast powerful performance increasing users that fundamental also are resulted means We've we range. continues an Shelagh messaging are revenue people without of customers Zendesk in That a providing in at in number reflects And have quarter details this end In and speaking, pacing customer are minute. modeling seen average and best-in-class the will for And customer trying experiencing to metrics and on-demand real-time more more that - capabilities. radically platforms a you are reach expected that on an deliver unprecedented a that particularly our service

demand. enables gamers Our help and expect interactive the gamers the that immediate products

new This largest our retailer, existing Roblox. logos, world's friends quarter, from good we with including such video expanded the added customers, game as our and relationships we

support mobile nearly gaming and business - stronger, we has than that over gamers XX our excited the I more billion to The large now X never Shelagh points of both near- the quarter. I our So Shelagh. am and growth that, online Take serve key foundation turn over been opportunities. worldwide. with it about the of to and And long-term discuss away, will call platforms

Shelagh Glaser

Great. everyone, time for your Thank you, you, thank and Mikkel, today.

acceleration last achieved strong and growing record and XX% momentum XX%. driven adoption. penetration from strong quarter, Suite of Both growth million, Our continues. net by In we levels delivered quarter's year-over-year, bookings RPO $XXX.X this an Enterprise total

booking our of A to changes year mentioned, Mikkel later greater impacted quarter pacing revenue. than historical this the closed our last our in quarter's bookings As was trends. and percentage

total our We continue into of XX% our we expect this to as become ARR. QX, which, to push persistent of the has grown Enterprise, as

for our nonrecurring like Talk, was revenue onset at at We high in pandemic certain volatility products for XXXX. which also model usage the the the adjusted end for of

the this of last lower-ARR been for Suite XX% It our of decision strategic launch continues to up with outstanding. we the Suite of In our these than our surpass our our remainder makes of updated and lower-end, the total connection more trends. quarter. our X% has plans. year understanding Our of up year, expectations reflect forecasts ARR, The eliminate now made product to from the performance

is logos. causing As in off leveling decision our a total this expected,

longer-term positively as predictability this expansion out rate. trend net growth quarters continue better the Suite rotates our plans several expect these customer We of base lower-value for impacts retention, Suite. drives and towards to and adoption

this XXX% in stay range the of the our may and at was experienced We during of end up onset expect from spike the last healthy XXX% in do from XXX%, contraction we long churn quarter. term the range to but our and the we NER in quarter, upper of see increase NER pandemic, as term. XXX% graduate This near we to

scale, nearly for up GAAP by XX.X%, by by minus our personnel gross Non-GAAP and product percentage XX.X%, Free Turning business. increased quarter was operating flow was $XX.X year-on-year. from of Non-GAAP our margin hosting driven to XX.X%. by points revenue personnel the gross was X margin year-over-year in improvement to points, margin margins. optimization operating quarter. largely Gross year-over-year. our points declined GAAP than the point as X.X efficiencies X second percentage we to cost largely up more growing X.X margin costs declined higher was in infrastructure. second percentage support driven invest continue cash million margin

Now moving on to guidance.

and to full guidance. year continued end lower revenue of our be to expect We represents the full our XXXX year-over-year reaffirming we Given customers, year which momentum the in our our raise XX% of now billion, results QX revenue $X.XXX strong are at midpoint. $X.XXX with and approximately last 'XX range growth quarter billion from XXXX the raising

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

free million. year range flow to full expect in be We cash increase the million to and XXXX for $XXX of $XXX

estimate have free all I've year higher performance. My that would improvements stronger cash for first Our operational Cabi, here reinforced as to in thank Deputy his collections are the represents Zendesk. CFO, months Zendesk. To flow our Marc of resulting for support I I like joined transitioned why to X close,

strong opportunity and scaling success on for true foundation. a to us. with business, passion growth talent exceptional our building have tremendous and our growing customer of ahead I We forward look

You Investor that, in shortly. over it for And Expect will I more turn Q&A. at hear Meeting to our will front November. back this Jason invitations on with

Jason Tsai

Thank you, randomizer. the last put everybody a done Shelagh. in as And we've for we've few quarters,

America Merrill Bank of up Brad is Lynch. of Sills First

Bradley Sills

Excellent. mentioned Well, I just quarter. question, wanted a that Shelagh, the you and impact this to the around just consumption ask to move

bit there quarter you just the your If the for any in delta Talk? this assumption. drove that. on expectations double-click could mentioned on was on volatility - side a some What year But prior consumption the for little - you

Shelagh Glaser

saw the as usage-based looked of we Talk. rates a growth year of of kind in saw last really onset So volatility of we with at usage we the and bit rapid quite COVID, the the it, a business,

to attenuate. come saw bit those As a it we of most the out growth we of some trends recent started quarter, in

sort the of messaging to that moved adjusting new we're we've really as of other and based on have they're platforms. we some And we're So customers environment said, Suite, of got lot the a using in. up

some COVID it and year last coming bit. out a then it's extent, a of environment, to pretty unusual So

we're adjusting so And models our for that.

Bradley Sills

Got it. meaningful product there pretty you saw else color net that acceleration, driving of on revenue you're are with Or some that And Obviously, the the that any In side back retention? that those on revenue retention talked Is you Got starting to in quarter. result. the come there you've provide it. particular, call a you'd acceleration? to more has now? do seeing with out this other lot Congratulations from that hard-hit Great. then acceleration past, in the nice Suite anything can that expansion deals that's they industries in about that.

Shelagh Glaser

in played has QX had certainly, a net in and we've frame. since rate, Suite was the tremendous with time when doubling Suite the So it nearly success role major expansion introduced the

as of some And COVID, seen come a we some were of the - back. there's off the of that coming are bit of seeing about the a too. effect that, bleed industries XX% hit We we during also We've hard experienced of contraction, back. is then that some there

Jason Tsai

Allan next at comes Wolfe. from The Allan? question

Allan Verkhovski

business? a half? terms is certain of first both sense expectations half give Are is. environment, versus you bounce-back? saw the geos I bigger a second a follow-up. hear environment Enterprise Can versus the the like how small Would having have strength love in also to the you us for in for then what the in demand selling And How

Mikkel Svane

to bit ramble Or you color? want little away a you Shelagh, me do a want give little to here? do

Shelagh Glaser

then back ramble. I'll jump the your You ramble, of on and

Mikkel Svane

this doing throughout has you metrics. our the has can demand really see Enterprise it quarter. our business but like really, we've really, that Now that positive really been I'm seen And been well. broad-based, about And

for we about It the more in more coming a say. back. hectic hectic. lot now. So it prescriptive. really Like solidifying general, seems more we intentional, are everything excited of year are people last up It see, plans. just It's - that. was Like less gearing I balanced. activities, It's would seems seems plans And their very more

really QX, continuing. we So increasing all Globally, that. - feel that confidence and see we confidence lot good after we like overperformed, about regions after about a happy feel like QX, very of

Allan Verkhovski

exiting like the can what drivers have Suite your a and under the does it. Suite ARR like year now or percent related It your ARR. like how you for going forward? as year? Ultimately, And about a the follow-up, as look the it get to quarters for behind limitations of you of big talk belt. just X represents Can the about XX% Got success main

Mikkel Svane

success different parameters. have we Like

capabilities new what that's follow alongside don't they is well. off adoption to what going expected. of any we we like the adoption for Suite. using in But see are the setting customers beyond of adoption want The can a - is really too. or while We kind how well, to think we any through get the use and of have kind see really it adoption that, that continue and I expect going usage really, neither we constraints it kind that of how is the of don't limits the trend

Shelagh Glaser

at estimate going Yes. our aligned XX% Mikkel that I is it's as basically really would said, be would our Suite. say of to customers we - And the beyond expectations. least

that may applicability. we find there's time even over So more

Jason Tsai

from the question comes Kirk Allan. Evercore. And next Materne from Thanks,

Stewart Materne

I wouldn't it tried camera, my let turn me. to

sure Shelagh, there go questions to my this, just can - has not yes, have just Jason - get to you the will a you I voice so talk lot I'll start video, I'm of sorry, okay, go. on But we over with to but me about - So asked this.

the NRR forward-looking in Yet strong. look what Because the in obviously of is is So aggregate. solid. coming RPO up. bottom some embedding anyway, metrics you're really when moving can sort range, the end of at talk was guidance about just the the good. the sort of think All bookings consumption up the look you growth of guidance you the quarter, just of very revenue? from up were at sort I really not

that being conservative just business. sorry, you're probably around assume would Can us I color be bit the quarter, consumption that because you a this little on some the helpful? part just you of more think after So I give can -

Shelagh Glaser

Yes.

about that first in certainly, we're my terms we've the of revenue kind we usage this to baking as thinking full is And that the forecast of So key insight. the then that quarter saw attenuate, captured some the revenue, the ensure guidance, consumption in of chair. in into QX, literally

of So more I of deeply the and to got business. lots opportunity the the contracts business about learn

kind through enlightened, QX, range really strength even put sure full but through you in we making strength place the as about a as I navigating by - practical the personally, enlightened we're way in for was chair. in And transition the we so guidance thought navigate say, the seeing of quarter transition, with incredible me subscription, first this the

Stewart Materne

to throw deep end start, wanted Mikkel you Well, the to so... into

Shelagh Glaser

minute And I I enjoyed have of not been it. every bored, so

Stewart Materne

And drew if up seats you know them back? then Are down? follow-up. this the just seeing they maybe is to back don't that come but rest they X the of year? that or And of kind I Mikkel, year, contracted does you adding last customers the Are mix? shape the how for for

Shelagh Glaser

Yes.

Let that one. take me

We're the So about QX. industries that as support. year, that XX% that. we many yes, now, approximately That's saw that impact back, about last we to as we of coming seeing in said, you significant see we saw same And of XX%.

several So continue to quarters, we over next come the we'll see would that assume, back.

Jason Tsai

Thanks, Kirk.

from Hey, hear Ken, Guggenheim. you. can't comes we question at Wong Ken Next

Ken Wong

you Can me hear Hello? now? guys

Jason Tsai

Yes.

Ken Wong

double had a going. sort I Okay. of mute a

So sorry about that.

you there that of but of billings, a billings side know Shelagh, billings in attractive. a you, I that's look run helpful with Enterprise where particularly pretty really interesting there? think revenue? about, Is and some guys would maybe the And how the are any second guess half revenue QX. about kind it for so I see obviously, think KPIs, dynamic kind metric of this the about will on that outpace we So we you should to, in color talking do not guide rate dynamic as higher be necessarily perhaps scenario we guys

Shelagh Glaser

It So Enterprise. we're we - said, certainly, was continuing acceleration, as we a large see strength in deals XX in to $XXX,XXX QX, saw over ARR.

see we're deals that. to that continuing those we're seeing larger But longer close. to just So take

just the larger, So effect we're of more QX, more a we close. that balance those to in for deals bit same assuming saw that take longer that the and effect year complex

so continue we expect of would space. and would progress And trend we'll we continues, Enterprise the expect in lots that, make that that to

Ken Wong

Got negotiation we sales be you guess, larger, you kind deal guys should of I process maybe about it. kind in half? you sales - weren't on get could a for think quite feel And ready partly sales cycle, as that and then, guys was guess, I of longer that that, that you much that, potentially the larger sizes that do is it's just to think that going come expect do as just just alleviate tap? what's the back very Or of and these nature we to cycle something extended

Shelagh Glaser

but is to things And I'm a longer here, occur has personal Almost is a Enterprise it's there's own Mikkel lot that cycle. in more industry, insight, need levels product, business. like - any experience just typically sure approval and any of smaller a my versus sales that,

businesses anticipate of don't those the I So that nature changes.

you'd so just there's that anything And commercial, provisioning pace forecast. if Mikkel, to want the and I we're just don't rapid really more SMB have due into the nature. But much to know obviously, add.

Mikkel Svane

Ken, pacing lot as being the recognition know, the in And of of our And is - model Shelagh. this on right, on the historical bookings, is is based that's revenue on based quarter. No, you based data. a

heavily also of we less influenced as that's year by And last So I our intentional. year. a say, purchase. of was last was lot what last - There saw less activity would intentional was,

deal. Enterprise right kind We now more have definitely of purchases intentional and more

quarter, into going the the see been the is has Makes quarter. towards Shelagh we and forward. gravitate of So that we've to last market the that that the And our balance of - shift more sense? models we've end starting built seeing, the month

Ken Wong

does. it Yes, Yes.

Jason Tsai

Brent at And Jaffray. Piper Ken. the question next over from Bracelin Thanks, comes

Brent Bracelin

really not from listen, is the flip strong maybe strong. to me, we The think. the as fast is fantastic. be is for it'd penetration customers doubling Enterprise expansion contribution side new net guess adoption, Suite I as ramping

specifically maybe That to could was And here? are customer And mark appear what takes subdued a So just helpful. might little quarter. you metric of customers, in to kind as the more. the Again, to stood kind weak. recovering lands a lower-end can And relative the new to be the a on puts deemphasis lot here? do question at of of contribution of that drive what customer positive reacceleration a and more pace provide a any new would could color there that but be you out it one where those you do that kind of be tied look

Shelagh Glaser

one would of a sort situation. thing out contraction to kind thing COVID expansion the is rate, coming year that lay had I of lot - So due it X do the off we in would prior we when I net one laid are - a drivers that of out I kind also the period of the of the have the

is and our to intent So certainly customers. expand the and but our new focus grow land continuing

now range of some that we're of COVID. were of the effect, end to that the is seeing quarters bit kind So higher that a right the impacted by comparison

why we business short-term it So a the model. in long-term see really change not a effect, as that's

Mikkel Svane

more a lot new we I also to data, pointing what kind logos, And customer stabilization quarter, of to, low-end of record we customers. quarter. indication the plans. have, Suite question think, Suite. your you contribution about actually this to the had We and terminated migrating amount a these don't the the Brent, of you of that I customers that if is going but remarkably our you're you're to second-best know have choosing see compared have why up new see as more the and And

like why sense? number of a make stabilizing. is quarters logos So next that stabilization Does to as that see you're that's going the over

Brent Bracelin

Yes.

stand-alone of kind So of noise of lower-end you here products. some like there's as some kind it those sounds abandon

Mikkel Svane

customers a flattening of logos while you're that going And of kind it's higher wash of wash We kind to as of churn, have and through for number we see a lower-end kind the to out. that.

Brent Bracelin

But strong logo new it. like it's land Got very pretty been was this quarter. It the sounds customer strong.

Mikkel Svane

Very strong. Yes.

Jason Tsai

comes Hynes Canaccord. from Thanks. And at over next the question DJ

David Hynes

maybe ones how then help in quick you, to in much second quarter? get transactional would revenue context for a just that quarter? this that in revenue you quarter in from results talk are two be, And deals Shelagh, much about put signed comes quarter. Can the you how revenue a just

Shelagh Glaser

usage-based booked So have. But think that first revenue, revenue, the in the usage-based question past: quarter. it's I single of since still you in it low digits. it's it's inside We've about it's talked the terms and recognized obviously,

where the of then usage effects the our in of the into came quarter is of then the that's of of to volatile Mikkel revenue play. the And able revenue. some recognition as the earlier quarters. the So about, we're be And is, pacing, for Talk the in quarter, of it in majority to recognize terms going subsequent later kind obviously, talked most

start a a move as So to bigger as the we will model of where Enterprise, we subsequent quarter versus lot those higher move is X to month, into current the be for effects month the quarter.

David Hynes

Yes, yes.

maybe Mikkel, then, for you. And one Okay.

So are common at there of if landing for onboarding threshold threshold $XXX,XXX and on that we Zendesk? the profile customer that that's the pattern what What's customers we are like characteristics? would over did Like recognition we them, the look at up? pick that

Mikkel Svane

breweries industry, a their that's like And definitely take has traditional talk also of we are given very like think But when we exploding. working industries with, that digital-first we are like them we with like with of their it's about wins gaming kind it's like industries, with - we Enterprise that other is lot of are a about lot businesses. now of the companies, has of no channels Well, than very is lot we're I these broad. engage the very customer gaming doubt everybody really everybody our are - so This world embrace service. for and these to and to working like electrical a - customers newer - like

demand broad say it's also see our in kind appetite, in market, I it's and the it's So would broad, we of very - very the the Enterprise. very

Jason Tsai

Taylor Great. The comes Thanks, over UBS. McGinnis from at question DJ. next

Taylor McGinnis

Can you me now? hear

Jason Tsai

Yes.

Taylor McGinnis

Okay. Great.

the up-sell And of if XX% about Suite earlier, sorry it part seeing I'd you're customers with I much then is maybe the on gave guess, that getting Suite migrating level you you just missed a traction you're quarter? how with curious logo can if activity, versus any seeing talk that last interesting in single-product I customers? to with So like be you are relative but to And there. third trends of Suite new multi-product

Mikkel Svane

were numbers? What the

Shelagh Glaser

I So yes. think -

of approximately seeing terms in - we in the QX, saw So about we're up-sell. that same the XX%

the and that QX XX% we're in range XX% said and seeing saw in we we QX, XX% and think in QX. between was I XX%,

trend, average customer to we're as a Suite So versus non-Suite. see value positive that the continuing of

the In think But substantial on terms new had in customers the the Suite, of moving I've hand. number Suite. to say moving products don't that at I customers, they're would to of are the that just got customers majority coming and I of

Mikkel Svane

Yes.

think metric the around business Suite. is is new I of XX%

Jason Tsai

from Derrick Cowen. And Great. comes Wood the next over question

James Wood

Can Great. hear you Yes. me?

Jason Tsai

Yes.

James Wood

do ask So bit I it's want you're on end-loaded little business, hear quarter. shape I kind a first QX half. the get like model. message do QX, the bigger half second working the have business Just think seasonal you being you that uptick maybe and to more QX, of business slower, the QX Like about to the Enterprise how and a kind see the Or seasonality see deals Enterprise trying question uptick bigger in more in softer half, of in the including the of then shape of how about think sense on direct it But QX? then a being of Enterprise in a back to kind stronger? in and for to second and

Shelagh Glaser

the have seasonality strength continued year. talking through in is about. we're that the in quite that expectation Since still you're necessarily, really I Enterprise we our growing phase, don't pattern So think,

to and to Enterprise in strong expecting we're be in QX both continue So QX.

James Wood

entering hear to think how XXXX, Mikkel. one Okay. Sunshine. there wanted And COVID you're And hit. about I was going to thinking I about for on a focus Sunshine that be maybe bigger

and evangelical it. kind sale just developers it deeper scope. of kind maybe integrations It's and and embracing you kind beyond the of on application backed involves think of more a of I off

you you have be do it's more when So as where more thinking hear to to of about love Would upmarket bring moving development you're - that to think how back want kind you're more critical especially that. platform? going to

Mikkel Svane

Yes.

has the of development in investments on of we our our to also are kind investments platform integrate can our decreased. these - for of Enterprise platform is We part platform So not Enterprise much, kind capabilities available tools aspects pivoted from kind have why making it using And of do make increasing we customers. they see that Zendesk some they developer we the that of and so much of also, these demand the better can can our capability. extend, and they easily customize

kind really It is is priority. of that making - customers. that So in terms larger our these the Enterprise easily of current for things well accessible our works

Jason Tsai

Derrick. from Thanks, Citi. comes next Foster at question The over Drew

Drew Foster

Can you hear hear okay? guys you me? me Can

Jason Tsai

ahead. Go Yes.

Drew Foster

Okay.

a size have businesses $XXX,XXX opportunity So of that assuming think you But percent footprint I those your know you're within your don't above you grow base at using $XXX,XXX their an the installed accounts? customers really those own benchmark mark of to what as grow today. mean do for or I Enterprise.

Shelagh Glaser

we So it don't out. I know break

So continued above. and growth We're in we it to see haven't breaking the $XXX,XXX continuing out. been

ambition are coming new higher expectation moving those rate. but the numbers on to is to don't have that keep be some time, we'll our is at customers customers move and over the that, upmarket. up a win amount So in that We able of exact

Drew Foster

there? what more some your Enterprise then need make the of Mikkel, presence your the And other mean, investments think have or you those to that side, are changes as make, increase accounts, still I progress distribution you to Cool. on to into either set within you feature you

Mikkel Svane

never definitely invest Well, more of journey - people we is like the business in to we still we're build more and and like early Like teams out. innings in, Enterprise enterprise have the we still feel to Like interesting long ending. our here.

early relationships we But so introduce partners, of our - with need terms to take lot customers the business more into a do them partner Our both we is thriving. still and can like on. in with

in just Enterprise, only on - - that all that they're - to top-up. we it's getting But it's long more because it's there, so though bottom-up we very feel think still I so So opportunity comfortable a us, work journey we for there's - we're and exciting suits, even and invest tremendous for it's everyone and more from sorry, going been it's all or in a learn feel make back simple it's of But we're to lot interesting, and the super believe things. everyone these democratize it. it going about capabilities, to use we product and investments lot we to a as a for for we're There's available and continue a and we bringing while that. excited make and of these our

Jason Tsai

The from - Thanks. the call next Walravens Great. JMP. at question comes next Pat

Patrick Walravens

of that was platforms to about more usage about to Can the that moving usage little bit we there And how talk didn't understand. messaging other Talk some a in the and really you that about feel general? I comment product in

Mikkel Svane

and little again, bit you Well, I a give here. can can Well, outpacing. so it's a Shelagh, color, little me support

XXXX throughout of kind data we quarter, by saw sporadic usage of and of influenced Our up kind model go from historical kind is how much of and lot the down tenant, were they where data especially volatile like our more usage usage. a historical

kind that it's these So of the our now. of kind historical didn't model of - had influenced because like materialize model, and just - was data. had we stabilizing But way just that

by a last big push customers with to volatility of So to say, we And getting use customers these that chat things, Suite. kind over customer getting impacted kind We that influenced - Messenger with it we a them easy are saw WhatsApp important, wasn't these and other these the different both it definitely for had customers, it convenient making consumers the customers the, still are realizing messaging high democratizing but is, like like have of is. in Facebook organization channels the And definitely There making for that. of engage all we to increasingly right. is super we to available convenient are and are growth and by are that still their our how usage, also for channels. year. wasn't a - that but it's our channels end And realizing lot the having adjust how

do hope thinking see versus I lot customers messaging voice you see sense, a will. you. first we make you... of So Does Pat? first, I that if can't

Patrick Walravens

Yes. I that not there's And this broader now, sense, does there's the on like FiveX. am I'm in impacting I driving, at make change No, that. car. it I'm wondering Talk. something going but sorry if if - Zoom much might but you Yes, about space buying so just just right look I be in was

Mikkel Svane

No. models of usage of very growth some We're the last year. too were still on much of But about from these volatility kind based like happy this. the in the

of So we that. had just to kind adjust

Jason Tsai

Arjun Thanks, comes next Blair. Pat. at question William The from

Arjun Bhatia

don't Is some those your just is X the your maybe it posing Shelagh, was I'm products point, think aspects just you to the how you I seems strong, year we're is trying to and any of a there's much a what guidance? belabor or assumption to quantify bifurcate Because - headwind this the before there business down like usage-based full understanding quarter, the there I in guidance. - assumption should say driving consumption in rest right? seems but this that have today. a new baked about can way

Shelagh Glaser

Yes.

So I strong. it, surprise business won't the subscription are indicators go we've And into you. which about all extremely won't detail noted, probably as

term, short and significant over a across really RPO, strength long highest term $XXX,XXX. So number board in we're of seeing the customers both

So is extremely strong. that business

single our And know continuing subscription has business digits, the business. usage you remains the in we're digits. growth low single been low So

unprecedented COVID, total half understanding you're single with year. But to second us the in significant in But there's that. said, had the the change those really not their usage situation adjust forecast low come as of when off So a pretty the rates has on remains for really trying usage Mikkel the digits.

Arjun Bhatia

it. partner deals? ask bring Got Okay. them for of point you're your maturity on Enterprise is be your enterprise I that direct this wanted And might is Enterprise, - But you. maybe channel something Enterprise still where a yet in team Or one at is seeing to handling? sales Mikkel, that the big

Mikkel Svane

is and And to really, want much are engaged. to like well building for so the the and more we working execute how they quick have like the like success for the things, reasons, it's really like all working customer can are on it, for on well said I been experience, the where, one get But a time of and value getting kind out it really, partner want really Customers move - everywhere. of of for these of projects they're not pockets the well. these that, seeing like us. this where get working areas the we are as it's partnerships before, things. we we we to where We on hand many definitely are quickly that and it like they're but have appreciating - pockets of something motion really we having And right

it's like to something see lot want So definitely of. we a more

Jason Tsai

Arjun. Thanks,

from up Stan Morgan Stanley. Zlotsky is Next

Stan Zlotsky

for impact the the So of impact my you a of to quarter? a - realized consumption quantify end. But changes possibly there to the is in the of saw questions on full that way the the year. from couple I quantify kind reticent you're

Shelagh Glaser

go detail. probably much into won't that I

said, faced of continued year we've year. the for we expected that of move we that kind as really, going for, that had on to then the growth heavier the timing quarter. we've the both upmarket, we we balance as growth, some think just it's kind the is QX usage be And - towards of full of in subscription, saw muted piece, for what we that on of the adjusted headwinds I COVID, just just couple based end the the in

Stan Zlotsky

it. Got

be of that in say essentially plan? above outside your changes, come everything to else component that did would consumption fair So it

Shelagh Glaser

two were effects. So two those the quarter, effects inside the

the of in more so of long-term business, would than we all underlying positively the indicators really come positively, business, the And we underlying talked of indicators We the the it in coming had about thought the record bookings. Suite trending improvement kind right? are then

you've So is, in-quarter down all got that is usage really the obviously key revenue recognition business and long-term your But foundational to the deal of timing revenue obviously, are underlying well. the closure then recognition. trending when all real-time comes aspects of very

Stan Zlotsky

Got it.

may So Is to that little learn. fair slightly a to be know company still versus the company. Shelagh, that now in a has the prior tweaked - it last There's how way question. bit realize, you the - said done guidance lot that it setting I approach obviously say to you you're newer I you quarters?

Shelagh Glaser

that think true I'm objectively it's I new. Well, brand

inside company, first So great XX lot strong - continuing my a be this of stuff days it'd very to a that's and so business there's gain to for me momentum. learn, a

informed guidance, QX learnings that aligned of by make we put frame about to wanted I out that with that it was thought I guidance had make and time I the kind inside the as that. sure sure certainly, So

So it balanced. call would I

Jason Tsai

Samad Thanks, last question Jefferies. Stan. comes And from our at over

Samad Samana

I accounts Can let's quarter it, So $XXX,XXX. data couple Zendesk already just customer those were on the you in to customer how large first versus new threshold customers? that the questions Zendesk time point maybe us existing were for customers of of around crossed side. help contributing understand saw the many that, a call the the XX

Shelagh Glaser

able it their has they saw I So days, we come who had it's a into Mikkel to We large that few commercial our history were combination think prepared a accounts of space. quite break down, accounts know, talked we don't graduate get Enterprise early both you earlier, as new And we're in graduate. but companies about close and then, both. in, to were in to as from in quarter. the SMB been customers

saw some too. space, that also into we graduations So

Samad Samana

that couple understand, a the think from about I was Suite, Suites as how the you of can Suite opportunity? one or there about existing I we of migrating just then out adopting in in rolled And other us should to February? customers customers help that Great. SKUs up-selling terms where existed Okay. the that we know X,XXX the previously, And are were those think either

Shelagh Glaser

again, thought at it would Suite early really customer will Suite days, base. about has quickly our how for surprised way up - offering been we've pleasantly the the least base So we've XX% the being end the of we're is think them. we that customer and And at been adopted through

our is room Suite lot of go the expectation adoption. to we've So a current got in

Samad Samana

leave and several job, more I'll the for to Shelagh, new and forward it quarters. Great. you on congrats, questions asking there, look

Shelagh Glaser

Absolutely.

Jason Tsai

comments? was any last - to closing Mikkel, That want question. do the Great. you

Mikkel Svane

everyone, Thanks, here. earnings And today. congrats, Shelagh, call No. joining on first for Thanks, everyone. your

Shelagh Glaser

Thank you.

Jason Tsai

Thank you.

Zendesk (ZEN) 30 Jul 212021 Q2 Earnings call transcript