ZEN - Earnings call transcript Q4 2021

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Jason Tsai

Welcome to our fourth quarter 2021 earnings call, and thank you for joining us today. I'm Jason Tsai, Head of Investor Relations at Zendesk.

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

During the course of today's call, we may make forward-looking statements such as statements regarding our future financial performance, product development, growth prospects, ability to attract and retain customers and ability to compete effectively. The assumptions, risks and factors that could affect our actual results are contained in our earnings press release and in the Risk Factors section of our prior and subsequent filings with the Securities and Exchange Commission, including our upcoming annual report on Form 10-K for the year ended December 31, 2021. except to these statements or statements changes our obligation or today's to no law. in conform by to to expectations, undertake update after these presentation the We required as actual results Please refer more forward-looking statements. release information regarding today's to earnings for

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

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

this the of Zendesk for information may of by turn and the opening its and been to I introduction, operations not Such comments. does the With contain represent Momentive, Momentive call will Mikkel business, accuracy prepared financial over information such warrant has information. results subsidiaries. this brief and presentation Lastly, regarding or

Mikkel Svane

Thanks so welcome, everyone, earnings call. to and much, fourth quarter our Jason, XXXX

$XXX afternoon, some $XXX received a that seen press have First, we private and you equity of of an consortium Zendesk Board in separate between issued per acquire a of as unsolicited for may nonbinding from this our Directors release proposal to firms share.

of shareholders. Board meeting vote will advisers, of strongly the including reviewed approve interest the execution shareholder our value additional acquisition the assistance best Zendesk proposal to recommends for on is a undervalues stock a thoroughly shareholders. in in issuance February with unanimously proposal and the transaction long-term Board connection strategic Momentive, at generate financial The substantial believe the its that of concluded legal our plan, proposed offer for XX. Board not and of to continued that significantly company With The the of independent the and the the continues the

we're focus taking the be our are fourth with to great results, million. We're a quarterly We going that about. a with revenue strong Q&A We will XXXX was we And related or year commenting strong to for further business. on XX% finished quarter our which not excited growing very full any of instead, unsolicited $XXX proposal. year-over-year. year and

outlook For with much 'XX, the share the of XX% full Shelagh year gave grew year. $X.XX that our on at the exceeding you to details billion, the we going revenue performance is shortly. start to more

a the Zendesk on the As during strong economy putting the a focused customers. is growth. XXXX, engage the world to digital-first expand this the with we've customers Zendesk of rewarded how ongoing months evolve we by evident continued a are from pandemic. shift their choosing first company, higher business year $XXX Zendesk throughout we were and to they our This after growth annual amplified XX% upmarket. customers around being annual That's during with fantastic to onset Brands of launched and success Suite the rates. seen in just stay million at moving Suite, XX since with has adoption that revenue. grown longer it recurring our the The In

to nearly our adoption driven product, quarter. and disruptors year powerful recurring are our our of great became where in Zendesk Throughout total In another with accounts combined we revenue. motions. during customers Suite Suite, is bookings time generate Services accounted $XXX,XXX annual the XX% by also of example the established our from the enterprise and has to renewing now the in customers, scaled over Suite our an on because bookings our of are total functionality turn XX% brands implement. for to it of go-to-market fourth customers that account using successful easy the that and revenue new of QX, maturing Suite recurring New industry for especially Customer for value. 'XX, annual are Financial XX% and

ease earlier their faster cross-sell helps in Our acquire them and relationships. new of customers adoption

grew Services than strong services adoption Suite that financial ability continued in been recurring expand the the annual long-term to we momentum business 'XX, our XX% And has more customers means foundation in our broker now for of $XXX from revenue growth. enterprise have is retain Overall, an existing extremely and and our more Our stronger. million. alongside and than Financial compelling never

all record for a the employee a 'XX. vote by keeping I was by we next want to market, that going in comes As for Across 'XX, acquisition the our on XX%. a and across year, proposed levels very business, the board, excited competitive grew shareholder positioned talent saw into what are we we and out close execution. we well are continued look momentum strong acquisition upcoming to forward 'XX of saying and Momentive. our base

X to that Day, published on further of to information we the merits investors also rationale review. our the Investor at provided In insight we transaction, which we encourage presentations and provide the addition the to

good strongly to they how always are and expectations. we super the have, everyone's comfortable. last lot dig had and in weeks. even We've over how we in perspectives is Momentive. we to it's more help discourse we about we We this conversations it outlined are and redefine that hope interactions to community our clear a that customers, have powerful customer intelligence customer a in how we about. really into misconceptions a exactly that a investors Open Zendesk and everyone We to and do billions It's vision weren't acquisition about is excited powers make committed get Momentive, the real something to company. the and our sure that of few have of are is leader That the knows a committed intelligence. run for our opportunity to ridiculously the And customer much to for with appreciate day. reality there. out feel willingness combined how we about importantly, why so strategically plan We most will are make we for turn to as correct if every and With well. vision place plan They've engage. been Zendesk the that excited investor And outlook business. really the future any build can we

and is run stronger to going and with away, best Take that, to believe are to results our detail. We everybody's turn And with And more to with improved build quarter the in we in year for growth I'm a a it discuss Shelagh billion financial $X margins business by going rate that over interest. a it 'XX for Shelagh. rate. the

Shelagh Glaser

growth, Great. time you, was this generated $XXX our today. you, million expectation. everyone, thank Mikkel, thank and revenue XX% for year-over-year in quarter, ahead of which your We

For year. grew start the the revenue at of $X.XX full to billion, XX% significantly year, provided the we than better outlook the

fourth base pointed in our the of as for of Mikkel the and strength the out, as our seen As all in Zendesk driven enterprise success was growing quarter XXXX Suite. well introduction customer the we've by

these increased last length quarter, As our to all-time more the and of of to fundamentals customers as seen both well our and our average our our improvements retain the ARR as are customers In we've highs. year, size comes from of ability meaningful average compared at with contracts deal customers our fourth Suite, and customers business. expand Enterprise in on

to to quarter ones discontinued as continued this New off on are that the XXx churned plans. generate the compared ARR our customers

it positioned this accounts ARR. early total introduced to ARR of for of in All strong well the Suite predictable long XX% now our more that We business and growth XXXX, leads a is $XXX for over in over million continuing term. and

While expansion terms we a year our use rates, in from longer contract have are seeing and the more encouraged are that of gross the Suite, by data we we They products. higher initial customers. Suite only are

net to to above long-term our to from was rate back time, converge quarter Our continues NRR our the though we to expansion. XXX%. of remain come majority the above target term. of and range, XXX%, it in target NRR near believe quarter expansion The XXX% may XXX% seat Over will range this last similar

counts from benefit XX% engagements signing our ago. year and generate a quarter of with XX% at and longer more from now of Customer customers churn last ARR, over ARR, contraction Our continues lows. on XX% was our NRR remaining near up all-time to and XXX,XXX

our to margins. Turning

was largely driven Our time, up improve XXX non-GAAP of by increased points XX.X%, fourth basis in gross margin our efficiencies year-over-year. over revenue personnel optimization continued hosting to and quarter scale, infrastructure. support has Gross margin product our

had operating this on $XX basis. During quarter, we a non-GAAP profit million

XX% while cash improved grew quarter. margin points non-GAAP year-over-year. year-over-year, our in Our in operating free $XX generated operating million the income We XX flow non-GAAP basis

free generated For year flow, million the XXXX, cash we full up XXX% year-over-year. $XXX

That quarter. systems a temporarily cash resolved. in was that free the fully has collections flow by quarter impacted fourth now Our update our issue been impacted

As Momentive expenses to our related proposed well, had we acquisition.

our cover guidance. Finally, me let

are our November operating our at revenue XXXX income Investor that full shared Meeting. confirming We year and we guidance

revenue expect the We to growth approximately midpoint. $X.XXX billion billion, of in $X.XXX XX% year-over-year the at or range

operating with our margin our continue to for We in is year. we line our million and in November range basis, Non-GAAP margin XXXX growth. operating to the the income our to be to expected as operating a $XXX for year non-GAAP in be X.X% full on expect to $XXX aligned XXXX in of guidance million invest

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

approximately generate $XXX million growth we $XXX For at midpoint. in year-over-year the first for XXXX, quarter XX% to to of revenue expect million the

income We more operating want million. flow. share QX million $XX a free to margin $XX cash bit detail non-GAAP on expect of and to I operating

flow, seasonally non-GAAP compensation margins is payroll QX, due best flow we cash as assess and the all we over benefit and to reset increased cash and we on retaining longer believe term. For for consistent and On to free are compounded only guidance our attracting of due the GAAP practice growing, talent. to it's our operating periods, provide continue employees as performance focus cash to year flow this Zen's lower previous with investment the costs. taxes for free normal in year It

we is pre-close provide of slightly million in that expenses to want quarter to $XX Momentive expect acquisition expect the related proposed additional to the primarily to This due be cash million since I to However, the free incur. flow in our $XX color to negative. we

normalized quarter. We to the to flow second in rebound expect levels free cash

turn our operating for that year course the both on grow of full flow factors, is half bottom said, year, second income at results cash 'XX improve strong it XXXX over and our as we flow making were above leadership performance In in XX% driven guidance will continued execution. closing, Jason? investments by expect outstanding foundation our to our in midpoint. over cash with line particularly for substantially Zendesk the market, our we positioned QX Jason builds is XXXX our free are and and With strong to Based the Q&A. and Additionally, strong well team's translate as the the to growth. today the to Mikkel that, free in growth. top I confidence

Jason Tsai

Shelagh. you, Thank

As through in first coming past Zlotsky was randomizer. from everybody put a And question we've of quarters, is done Stanley. Morgan Stan the

Stan Zlotsky

Perfect.

So questions Maybe just a of end. from for couple Shelagh. my

very why guys results about guidance strong for that up bump As the think you the in not up we QX, put XXXX?

Shelagh Glaser

Stan, nice see the you. question. for So Thanks to

we So left. as done in lot the build our because year a what to more really want do year I think through confidence obviously, we've there's is the past,

so you every XX move each we get confidence is with so do build days, we And year. days, what our to the together as through want we XX

the about very just obviously each that. We guidance as good build of really we're the in confidence course strong so year, prior did giving throughout years, And for you And just quarter. then QX. we feel

Stan Zlotsky

year? us many through move as so adoption help And help from of already what can Suite, XXX% have strong we much customers XXXX much and very did the in this Once follow-up revenue And retention you are happen QX. NRR bigger so a how to happening chunks, on coming net Suite on Suites, much -- revenue into again, retention. then as how right, much just those and a Understood. pump beyond? selling retention net net revenue with With think at even

Shelagh Glaser

seeing time. we in played a time have anniversaried as Suite. fully and your yet Suite. 'XX the it getting frame. good many don't QX the Yes, do anniversaried dynamics a of obviously lot just of because then because we're still frame, really But that Suite we're stickiness point I question. it's Suite We'll not a out, We yet QX through over customers of lot a Suite. you stickiness time haven't But those think on may do customers seat think expansion, we've lot fully to point, change I with with

Jason Tsai

William at question next Bhatia Arjun The coming from Stan. Blair. Thanks, is

Arjun Bhatia

the larger is enterprise customers more that Congrats are on I'm One stuck the pricing a traction. adoption. tiers? success hear those the upsell, seeing you're strength? curious elaborate upmarket. move can that Are customers that thing just you just little having to more quarter. just maybe love are existing Or that that out upmarket So detail if higher you driving on to buy would on bit

Mikkel Svane

a disruptors in I services, talk -- bit give shareholder Well, And I of that it's that boosts may definitely see keep digital-first you few to bunch our you a here can enterprises financial very that trying the like with see we a to visible letter. the this Like think where additional established we points a the color. example in the industries up there's of and is mentioned interest change also are of in Zendesk. economy, little

of industries, choice. like We in the kind also see, disruptors' considered we kind of because many

everything that I beginning on, Suite, XXXX of is simplifying trend elegantly a together, like lot And that's think without have also of IT is like we see only but most seeing we major the we and it's there like a not it's very that it's 'XX it the our in so integrated overhead trend very, Enterprise also today. believe so what which that of we're you and usage just quickly. of out can elegantly spent a roll

emphasize X are I points here. would sense? these So Makes

Arjun Bhatia

us then Yes. impact, And lot know your the FX And just It's play a billing any, quick we're if very for for exposure practices? helpful. companies. FX guidance Shelagh. into Can on that's and I you having what headwinds remind of seeing a guidance? follow-up of

Shelagh Glaser

exposure. certainly, FX have So we

a that's part of thinking things. how So we're about

of We EU-type kind then days. only Europe. the are have currencies, And early introducing so real, we that's

on lot have don't we that. a business So of

making So part think our that it's headwind protected. we watching of and major and I we're well material for But sure it's us. something hedging not our about in putting that certainly, would revenue, a But forecast, we're but it's a not in say.

Jason Tsai

Samad Arjun. Thanks, The comes Jefferies. next from over at Samana question

Samad Samana

first triangulate count for terms cover where of Mikkel. that companies ahead in head the if Maybe obviously tight of is XXXX. you and as we focus on kind at of right give labor for one I'm just the Okay. quarter? to about is color plan Zendesk recruiting trying any of think you -- plan, retaining whether market. in us and curious ended It's in could hiring fourth lot a sales now. Just It's a we

Mikkel Svane

employee market, right very, the fluid see it's doubt, now. We no There's very that.

the seeing our strong I We a think very all peers had are year-over-year. grew that. Despite that, year. we with XX% team recruiting

how our machine So very and we that and market, set them it engage for our recruiting we And with doing fluid can really are of everything and appreciate up humming. But employees success. to kind is of a like meeting on. a is time we is we culture something each get such back company and this building to start again other, lot that is, together reality spend course, getting of -- big and where that element that a

Samad Samana

look just the short Great. in was muted to little years term from Shelagh. uplift total, the both follow-up for I That's XQ. XQ the bit RPO XX%. around a maybe a from XQ several than When at last quick to seasonal more just XQ and And

XQ anything we impacted for that of that would from to Just aware need be seasonality kind XQ? the of normal to RPO have

Shelagh Glaser

year. strange little it's a Well, I -- such was a bit XXXX guess

saw. about longer we is good probably We We short-term longer really about there with it like, feel But that So our RPO. compare. actually always and customers again, wasn't both contracts, that. a really signing long-term no, good so we're anything hard and feel we feel

to isn't note there specific So there. anything

Jason Tsai

comes over Jaffray. from question next Piper at Hannah The Samad. Rudoff Thanks,

Hannah Rudoff

I the you kind did any question. see last one, Shelagh, guess, the Omicron first follow-up on from impact guys of quarter? in fourth Just a

Shelagh Glaser

it was, So on certainly, team. their I know starting everybody on team. end somebody think everybody probably I year, That everybody's happened to towards was by that happened either the of the in family impacted be member. my or

of pretty bit think motion wins. for customer So got that. we we've saw But a I rapid a

also But in some business. things So us. for But some didn't be say it by was impact certainly, customer. results the for any the our and we it it team then impact significant impacted really wouldn't I members saw

Hannah Rudoff

that Suite of gaining And expectations guess are guys like Okay. year? kind ARR like? it's more path then And then Suite guys you what Zendesk see strong helpful. having you this Suite. traction does look the That's XX% XX% I of nice are of or with look to for to get of what kind to

Shelagh Glaser

one. I'll take that

strong growth Suite. continued we So expect on

anticipating those to are we're a about We that anniversary, we're learn going going so customers. to lot

about that. So we're excited

stay have indications expansion early are they with mentioned, I of more those customers us. they that and As

but So continues we into the we're year, growth we expect growth that, that, interested continued throughout on see and Suite, expect strong XXXX. to that

Jason Tsai

question The from comes Osnowitz Thanks. next Stifel. Max from

Maxwell Osnowitz

customer seeing is a now, total of is And right new a Just than of staying -- eventually? Suite customers XX% is aren't adopting them the obviously Suite you're are common greater there for there hesitant? the to Suite on that That XX% second. maybe for What that on that path trend bookings a bookings. is get

Mikkel Svane

there's Suite are of organization. change because the moving timing slight there's preventing no kind behavior plans management say big with from would other want know customers -- don't that have about we to about other in a now. customers specific proper there's it's Suite no I of and -- Suite. that right bit the a natural of course, a And in the of and have But that are issues what of moving all customers working also, the little lot we are very bit of to their that they

Maxwell Osnowitz

I X know industries. a Have COVID, anything thinking the Got there's customer have industry? pull service forward over some and support noticed it. been the to And And in maybe the kind that you demand how can customer last then of you different about like about talk investors just shifted conversations that months? of across impact are thinking X

Mikkel Svane

in and the during helping transition us a the by I we and as about, much that was was and to we highly our pull pandemic. transparent We in COVID. saw sharing had industry, what a so -- very we on as travel was like we had a them as that for customers company the industry big of wouldn't as the And long-term in of customers describe did on, relationship. of kind entertainment kind impacted the lot focus can that during economy, in transportation

calls lot day a that all for serving demand. X U.S. We saw from of tremendous also customers of got the the a of amount certainly Certainly, solutions. other, to NTR

And so like of more million XX a quarters within had of customers serve. like some couple to our customers suddenly

like it's the lot we kind And So of implications more I definitely think much to some in short-term with up these goes And enterprise But especially are buying we with and long-term digital going forward, customers. on of for kind COVID believe not engagement kind saw megatrends. about customer -- a -- keeping long-term results -- much the believe like our part like that's of the agility, focused through we but forward, saw market. demand going blips. fast of IT both are that expectations. we around more time which X do is These

Jason Tsai

Strecker Backe Thanks, comes Max. The next from from question Wolfe.

Strecker Backe

remarks in you rate that your expansion net has been primarily your driven prepared by Shelagh, So seats. noted

or then And right or much you you have just left? insights us moving this opportunity drive that And -- kind XXXX? that beyond with metric represents? any what still into now in seats, levers help are room how give around will color of what higher figures can you So

Shelagh Glaser

quote Norm. would any say in would we're customer. sold Norm out not So I

that our they're to any they I of the we're get agents, And motion with continue to agents customer to So land-and-expand out as add have. as think I we do we kind want specific going certainly, customers, think tapped at those tools. don't to onboarded

COVID. as are the a Mikkel organizations were back some said, with of that So coming kind there bit impacted of waning of kind

is bring And in. opportunity are on back customers always that's opportunity, all moving Suite an as us for an agents customers they to then So Suite. not certainly,

of get -- in there's prior move about as this we've kind that average, about with Suite can that we quarter, that So obviously people quarters, that. Suite, pricing on to saw And we the talked different too, that's improvement then of it and this Suite. to some tiers increase XX% movement product, time so

we're that So still we range term the that any is to in opportunity. way not think do long but capping XXX% XXX%,

Jason Tsai

comes at question Materne next over the Kirk Evercore. And from

Stewart Materne

investments? payback a went the the like a you There at little seems maybe talk off more thinking on little year? Okay. leverage a bit the you're Day. now, specifically over little a get for of rate can talk you of how Shelagh, But we little more about growth you're you investments just you're go. given you right next And net bit I retention it high where the making like can just about Analyst this operating seeing? know sort bit some just the And those? bit

Shelagh Glaser

Certainly.

think the if So the Norm of that think we've We made, at And the tremendous. of lot that accelerate we about at can one I look that biggest a the we investing things Enterprise opportunity already progress. progress kind is is there we're the think you Investor talked motion Day.

sure Investor And cast that win the supporting make we're in the it's the there's feet all to on an making not about every you day. enterprise talked -- So Day, it's as Norm just the street, investments. deal

customer to onboard So supporting sure our capability. make once that that fully need they you you're

That So And for the we're want investment. think continuing for to our we're We're Enterprise area. big capitalize that. and they making making have we really already in that. investing that seeing, products a acceleration again, they need. us That's ripe because the of is investment lot we a investments on obviously time specifics improve to the

board adhere more of across That's every our have. our earlier enterprises we're the compensation as in enterprises even of doing mentioned for large obviously, the investments then standards that that our because putting want that but serve making place some we're as for investment, consequential to in the competitive I We're want make in helping to will So customer, we're putting questions, it's And sure important investments sort a investing We investment obviously workflow market. into to them. we're talent. properly for some even reliability.

Stewart Materne

Board one quick that. of for discussion and happens weeks Regardless a And what on helpful. you. one value of then maybe on your end about things few and a in Obviously, vote, about balance things like have buybacks That's lot right lot shareholder the like sheet just in balls realize little and of you way? talked leveraging the in and now. your air that bit a a different you have the I

maybe at cash. list So -- of you could the the generating of that's that bottom potentially discussion do points. But on are things front. it you other is There's

was just So that's if to up option, that give I'll punt if that or I come curious too. you want you question,

Mikkel Svane

want to punt Totally that.

upcoming be very, a believe for improve we are to focused the on how vote. think create company is And $X billion run by margins, the we getting here everyone. going rate. -- rate shareholder most growth great can the that's We very higher this that's We building transaction value, and definitely 'XX,

Jason Tsai

question next Wong from Ken Guggenheim. The Kirk. Thanks, at comes over

Ken Wong

back into kind held How agents rebound source Shelagh, And growth. ramp seem much these shortages? should of Or aiming How more are it bringing is about back kind that of labor -- customers? a you what of service gets their back dynamics? business up. possibly think being a reps mentioned helps of lot of like to is back what either as move bottlenecks, customers still own your it does we by

Shelagh Glaser

in see know But that fully way things are between back. both not some know them. all that been act COVID I balancing think that things back. play. still we certainly, the don't hasn't at in I everybody of who We daily come know to able our that those lives, the are was Well, I impacted

part back So is ability back market and But labor is pretty point, of certainly, it. to come to bring people the that your tight.

lots there's of competition for So talent.

a say So balance don't company particular of of I on. which side I it's -- the would know one that. where any is combination probably

Ken Wong

Can remind then just know go touching on have to you that see customer that, And maybe guys logos. that us already it. continue possibly when should we and improve? down. kind dynamic of messaged I stabilize you Got then should

Shelagh Glaser

Yes.

of discontinued prepared mentioned ARR adding I of marketed some new plans. my the than kind customers we're are think I remarks So also in XXx low-end more that those

expect that's year. we continue this So going through to

Our may that quarter. was monitor every But something through in that's we expectation that XXXX. obviously, we'll get

And so high customers. on to focusing we as said those sure impact, make that we've a is before, strategy this high really were return

Jason Tsai

Ken. Thanks,

MacWilliams over at Ryan from comes Barclays. question Next

Ryan MacWilliams

with Mikkel, pending in mentioned the Momentive conversations the remarks, months prepared on over last investors few you deal. the

So been what's far? some people that feedback so main points like on? some focus What's positives or

Mikkel Svane

really acquisition. our my just -- over of I what want going it's couple realized We like weeks. remarks of this that with that like lot here of that's I conversations. we to these a digging -- like said these -- next repeat continue and in in And prepared we appreciate we the investors in engaging to surprised some our investors

really us weeks. in and productive, very next engaging of we we to conversations, going rewarding, it's in it's giving dig believe that's and understand and been couple So the these better over to with it them continue and believe very time

Ryan MacWilliams

the I'm this you're at know the one deal. comes the customer Perfect. intelligence committed event hearing acquisition doesn't next about But have But just X and fully next presentations. on I about steps getting to what last and few it over Zendesk? opportunity potential strategy weeks. more next go passed through, in the you Zendesk over thought

Mikkel Svane

going we to our execute our But that, going strong going like vision path if we're Momentive or shareholder about we the to doesn't revisit believe continue believe and fits on is some And execute very, acquisition and other, to we're through, That's plan be we're strong building the deal different. very, continue certain. vision. into one intelligence, our neatly strategies very We reason of on to to go And to We 'XX to but have have the for customer a for for there. very that. operating kind of build with strong, that. we'll committed value that can

Jason Tsai

Thanks, Ryan.

from Next of comes America. question Michael Funk at over Bank

Michael Funk

you Can now? me Yes. hear

Jason Tsai

Yes.

Michael Funk

functioning, my camera that. is so I apologies, apologize Yes, for not

specifically, your offer where you're in. about you offer. value, offer that earlier you Just came -- I but to view comments going addition excess unsolicited on understand your generate to the the on in not to ability the did say comment

So Momentive the that the transaction and us maybe you some metrics can quantify just come of may and benefits back of benefit for from the that deal? actually

Mikkel Svane

want I keep it level high And to here.

and produced kind an over towards out -- of growth almost the than a with of 'XX, company with our path rate independent billion couple that We as -- higher a building a lot with rate company run too. of years lays we $X have that next better by a material margins,

tremendous value, that we believe shareholder new category well us, value that, very, and going responded and creation from we our as shareholder to believe a of a there. customers Zendesk, can and a building amount very to category leader there's become So by be it's

we focused very are various we we that available us, our presentations believe that laid and in are we're for that on very have So out -- that.

Michael Funk

that to remarks, Sure. we we metrics near-term can of example, presentation, there products, which in value to then made close, you look metrics earlier obviously, excess that the say, should your XX for improve and your No, the close, can months point post prove combination highlighted I creation. the appreciate in it. prior look the and about opportunity, the after Are cross-sell you've

Mikkel Svane

that working monitoring conversations committed with interest our that we have appreciative on be understand of on in them us And and and creating improvements our metrics. in that we quarter-by-quarter, that like will to those very And synergies shareholders' the journey. very, transparent very shareholders about we we're our are our help

Michael Funk

I for the camera. apologize again

Mikkel Svane

you Thank much. worries. so No

Jason Tsai

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

James Wood

Great.

hit during lot a question kind growth enterprise moved bounce COVID wanted certainly business Velocity we've more tracking? about that curve just the now been nice to -- business of got and Small on about First talked the ask a environment. back, the business. that of a kind had harder how normalized has we've I and into

So how maybe on characterize that would trend you line the compares Velocity the enterprise? growth to and how

Mikkel Svane

Do start here, Shelagh? out to you want

Shelagh Glaser

Yes.

happening normal good So plan you more more kind just of we as there. that of we coming you see that we what that normal other we're a Obviously, Derrick, laid think maybe somewhat to saw kind We see growth out. times, than more journey COVID normal growth there, exactly side of trends that sort back into said, growth decline. and of still it's

Mikkel Svane

in to relevance strength markets. other we're the the the And X, continued excited gives are without and been markets very X enterprise that our that execute move can all our in stability SMB, the mid-market business. a we to we that the same time. continue we've into segments. pursuing both growth about our is strategy on We very at winning up enterprise that can over and and of the It like lot last excited X sacrificing strategy X, And years,

James Wood

kind of enterprise XXXX, side, it just sales. the to the aware Got it. on on thinking playbooks into that to fold about go-to-market like going to you'll the of into more about and Suite Sunshine double-clicking highlight? maybe other you're continue other any maybe how thinking bring sounds or focus be And changes to Any new

Mikkel Svane

they point their truly kind And needs, as they really, at is excited can I being to the to would involved, and reemphasize responsive really more to provide SaaS. here are quickly, seeing think roll their doesn't that to that we -- scale take agile, the about of really up promise to we're very very, that they it. IT years are yet so solutions it but very change, trend a that empowerment quickly, and that that this don't of is almost biggest out very really, attracted where needs have and customer that of an live with transparency about it's can enterprises easier powerful solution, where they to everybody

I and think our right the pandemic, coming now. megatrends driver out this major of of of coming is that's business the one of out a the

Shelagh Glaser

throat, one Pardon The Yes. Building talking. mention partner. that's my growth would I only in me. frog further been for area only And other XXXX other a when there's us, I'm our opportunity. just investment thing was I sorry, other partner our in is we we're out I relationships, -- is a more that the think got thing and putting

further of to partner said, So that kind just add, out building relationship. everything addition in Mikkel I'd

Jason Tsai

Derrick. Thanks,

Our comes over Rhee Craig next question Hallum. Jeff from at Van

Jeff Van Rhee

that. zoom we'll So then operating target for sub, you margin way roughly -- hey, XXX And a margin. since year. per point, of I'd had remember grow basis early to actual a or I 'XX, minimal like for then, think Shelagh, And to XX% couple you points about questions out. of look, give give's that of X/X been we're late I given flattish the maybe guiding think model your I me. 'XX, discussed a

put on view question -- Maybe enterprise. to move what's takes now it versus can there? drive you XX%. is, finger back is little recently. business that the take expensive? would to just since it to exactly a But on the Just Here's on expensive, Can then that's touched perspective to more more changed? to certainly out as your what zoom little a anything you You any give growth maybe drive a what labor particularly XX%

Shelagh Glaser

Yes.

really the supporting see that line. and in out So the growth all -- in the forward, margin. stand-alone scale out enterprises and we we Day to at to so Investing of investment build to then growing obviously, on we're XX% then in and feel profit, an I balance right making sure top the we our been is think that enterprise have our build operating that laid Investor requires the it's eye that it. grow and the the have bottom upfront sure move we're a both, kind always that motion need cast. comfortable long-term lot to then And I and the ambition adopting to model of company's We making get products such need philosophy putting Zendesk we and as we our sales capability to because, out

in the the enterprise, as think, we out, into made XX%. opportunity we And by long-term were felt progress we the struck the And we year, So ambition like we of drove really quite in what I was 'XX which remarkable. this laid is was there. really kind is

them TCO. opportunity. As a they their think that's rapid And what customers really the out, about and the on us big Mikkel agents appreciate time to bring we've ability is to we for pointed for value, that won,

sure want make to we to So opportunity. take full advantage that of

Jeff Van Rhee

Okay.

Suite, the question Suite. one On on

but have the adoption Suite Can of seen? features and you Obviously all at people great incremental what the more you have obviously, What pace about if you adoption. things, you at of since you which So the quantify you previously? on of incremental? adoption look versus get kinds do get -- that learned

Mikkel Svane

things positive. little signs And year the points right highest more bit we're Yes, within we you're the as and full like expansion of But say all like things all also things the see confidence. that now. do capabilities, like said the all adoption that looking can that of the more and these to both and all with We before looks positive degree to we've the a Definitely. have the want asking yes. preferably at it data things agents an like these a about of on here organization the like we in adoption are solution,

Jeff Van Rhee

somebody less of seeing in to QX and Yes. it's QX I QX, growth last to of than let a jump you've Last RPOs. line, order. RPOs remember business. what the quarter the I'll on here Shelagh, historically. Was the get around enterprise, I If one, to of back-end sequential the move loaded particularly seasonality, else kind centric the messaging you're because or look that at seen maybe little

expected? the the were did quarter? bookings the X in there's guess differently, bookings there. hit I in quarter? you what questions expected the seasonality what number you embedded So Or asked in your Or Was you

Shelagh Glaser

for as is with a Yes, It we our a expectations. It's you big big quarter, were largely in mentioned. us. renewal line quarter

change didn't we yes, was. our what any see significant from So expectation

Jason Tsai

Thanks, Jeff.

Pat from Walravens comes JMP. question from Next

Patrick Walravens

quarter. the on Congratulations

So do the most too. Mikkel, just for and Momentive, approaching for think shareholders are multiple might you balls priorities what these to -- with you, air the right sort things the be I X in your X curious, or client you are you, on What helpful third are important there's here I'm your getting parties business, CEO, of core think done? -- focusing as top are now? What who

Mikkel Svane

we losing bunch yesterday. their minds. So published And had a X of kids

big So a now. that's in priority the house

Patrick Walravens

Yes, huge. that's

Mikkel Svane

No.

see operational to our ensure can can we strong think having very do. That built want continue want I foundation a like strong And I'm us that execution discipline, is execute about to we execute. just whatever like the a investors of to team happy that discipline.

And think and vote I -- course, that's the that's for get now. top thing. then, things And get the one with. think to that's need everybody to about So think I the done we key of right acquisition to

Patrick Walravens

Okay. just a I it's And follow-up, can add only then if Great. somewhat related.

curious, another work? big does do big deals of software. like such in big solution? and that in that these are companies how do standardized customer you You're on that companies really are supposedly closing on How just deals I'm standardized supposedly in Salesforce's kind engagement And get

Mikkel Svane

a put specific anymore. nobody like -- like, I term on Like standardized is does wants those handcuffs that's this think don't on a 'XXs I -- to Pat, that voluntarily. nobody the nobody vendor from

And actually, -- SaaS at taken And care those with that think the and been We've that like, of are early that promise like, we playing and now. others. the some of choice things. the they right at Because businesses So good public technical kind of software, had. no, that's focus of very today with whatever on out I the playing more And others. and like we SaaS has promises kind -- like good of always I solutions of software. the get that that are realization what all on, see can lot much so the cloud a they usually on are focused integration of us, of think back-end

So they're mind for top of not anymore. businesses really

Jason Tsai

Taylor question last our McGinnis And Great. comes over UBS. at from

Taylor McGinnis

want Suites. just to I focus on

non-Suite been growth year-over-year. of the have at the over course, But that million, with sequential So solid. really of uptake I means the declining now XXX has guys experienced part business, and ARR guess that been you has Suite

we lap stand to provide existing like being then installed maybe the question, in just So color should part about logo new we to base a of in runway how of next the And that to and context migrating second we on there when the maybe terms start lot can that, with you the a Suite where year? strong that think not Suite. and about adoption talked just you've

maybe you opportunity about talk still there. So can the

Shelagh Glaser

Sure.

I in got we growth certain know and there's that in So Suite not a still Suite. our a lot we we Suite. XXXX. we've set expect like on who continued said days We've feel might of of think customers we're runway, adopt early

as Suite. on said, anniversaried we're think, even Mikkel I year X not

are of their know think We finding as needs, for of Suite that. I if fits -- lot solves declarative lot them. problems So don't Suite and we about feel customers a right, a

time, we're adopting for year open of XXXX every Suite grows, very gives I always a and which lot obviously, customers because great to line And still customer to we're happy customers. point, largest another it bring if And our want you we will, business, But be solutions really we them becomes providing as our XXXX to strong value of Suite that we in think that over very Suite, happen is of value. is. over think to think your So time. growth have

Taylor McGinnis

looking guide Got it. so is just XX, second modest full year a question And then it's XXXX the the for at at when decel. my only for

impact embedded some assumptions can know to like. that about to on like thinking order earlier, when that So these variables what right, I that and you lap have you you see contribute to or look of provide any Suite And some some in could of talked color that of about Suite, other growth, hey, the the there?

is the guide So perspective? that to risk from any there

Shelagh Glaser

I we're really with very feel guide obviously, us that the comfortable to providing. And mean, we execution So is important always.

in strength question like guide certainly first feel adoption line in strong traditional good, one guide. this Suite, got continued To I think we So isn't continued have. asked. doesn't is in grow I that it's with on we've we the that that yes, of X key certainly sight. And in enterprise, SMB opportunity the to and good of -- of continue your get assumptions the the the is for like sight guide business question to we line along And Suite strong mid-market. and said, any our I There also feel move the Suite then have

we be XX did get forward, confidence what in every to performance last we to XXXX. days you build the XX Our to the with the we And expectation days. is then similar for use help going

Taylor McGinnis

quarter. the in Congrats Awesome.

Shelagh Glaser

Taylor. you, Thank

Jason Tsai

Great. Thank to over you, turn call everybody. Mikkel. back the I'll

Mikkel Svane

forward transaction leaning more the to in the look forward a engaging and here, have we with to but and, everybody metrics don't Momentive, here, so of like very say. much like of that quarter both acquisition the appreciate I much course, strong we also on going upcoming Again, complete. us

this. about tough So our proud all thanks sick, Congratulations, and in quarter. today. so was joining QX by families Very were Omicron the world affected in a everybody, many fantastic so team. had we a of parts children much, QX us teams, and This and friends thanks, where for and and

you. Thank job. great a did You

Shelagh Glaser

everybody. Thanks,

Jason Tsai

you. Thank

Shelagh Glaser

Bye.

Zendesk (ZEN) 11 Feb 222021 Q4 Earnings call transcript