Q1 2020 Earnings Call
Greetings and welcome to the bandwidth Inc. first quarter 2020 earnings results call.
At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded I would now let's turn the copper silver to your host Ms. ceremony, Vice President of Investor Relations for bandwidth.
Can you may begin.
Thank you good afternoon, and welcome to bandwidth first quarter 2020, <unk> earnings call today, we'll be discussing the results announced in our press release issued after the market close.
With me on the call. This afternoon is David Morgan Bandwidths, Chief Executive Officer, and Jeff Hoffman, Chief Financial Officer of bandwidth.
They will begin with prepared remarks, and then we will open up the call for Q anyway.
During the call we will make statements related to our business that maybe considered forward looking including statements concerning our financial guidance for the second fiscal quarter and full year of 2020 and to the extent provided future periods.
Plans to execute on our growth strategy.
Ability to maintain existing and acquire new customers and other statements regarding our plans and prospects.
Forward looking statements may often be identified with words, such as we expect we anticipate for upcoming.
These statements reflect our views only as of today and should not be considered our views as of any subsequent date.
We undertake no obligation to update or revise these forward looking statements.
Forward looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties that could cause actual results to differ materially from our expectations.
For a discussion of material risks and other important factors that could affect our actual results. Please refer to those contained in our 10-K filing on February 21st 2020 as updated by other SCC filings all of which are available on the Investor Relations section of our website.
I'd bandwidth dot com and on the Fccs website at <unk> S E C Dot Gov.
During the course of today's call, we will refer to certain non-GAAP financial measures reconciliation of GAAP to non-GAAP measures is included in our press release issued after the close of market today, which is located on our web site at bandwidth Dot com.
Finally, and interest of transparency and these unprecedented times within our prepared remarks, we have estimated the revenue impact of Covidien 19 for this quarter and for a second quarter outlook, which therefore it affects our 2020 outlook. Although we have not estimated any impact for our third or fourth key.
Orders.
Our methodology attributes significantly elevated platform usage above and beyond expected thresholds to quantify current an estimate any future financial impacts as a result of Covidien 19.
Accordingly, identifying any potential impacts in future periods may become challenging as any increased residual usage and the corresponding revenue impact will be inherent to our business and indistinguishable management makes no assurances that we will make further covidien 19 distinctions in the future.
With that let me turn the call over to David.
As Sarah said, we are living in the unprecedented times.
I want to begin by thanking God for comforting those who are grieving lost loved ones forgetting strengths to those who are serving the ask him to Vista wisdom. Upon our elected officials and for a safe and rapid return to work in school for the tens of millions schools lost their semesters.
As in jobs.
We have been humbled by the importance of our mission to deliver the power to communicate during this season of great loss and sacrifice.
We're making sure that health care systems governments businesses teachers and students remain connected with those they need and serve.
Our team has been working around the clock and from locations around the country to serve our customers 24 hours each day seven days a week.
Our enterprise customers play pivotal role in our communities and increasingly rely on our software and network platform to boast to look develop and deliver robust voice, calling audio conferencing text messaging and emergency 911 services, whether they are working remotely or in the off.
Yes.
Oh robust platform and nationwide network scaled in days to meet this 30% surge in concurrent coal demand caused by so many Americans working from home.
Owning and operating our own nationwide all IP voice network proved to be critical our technology teams were able to quickly augment capacity and optimize existing network assets to support millions of audio calls into video conferences voice conference calls.
Text messages and individual conversations and all without any interruption of any kind.
The agility required to add capacity to our network in real time during unprecedented volume increases will only possible by owning and operating our network.
We benefit from visibility into all network traffic, ensuring the utmost reliability and quality, while allowing us to anticipate future capacity requirements on our platform.
We collaborate daily with the other largest nationwide telecommunications operators to exchange large volumes of calls and messages.
In moments such as these are vertically integrated approach to see pass has also been critical to serving our largest enterprise customers rallying to serve explosive growth among their users.
Bandwidth has joined the keep Americans connected pledge, we promise for 60 days to not terminates service to residential or small business customers because of their inability to pay their bills due to disruptions caused by the pandemic. We also plan to waive any late fees.
Customer may incur because of their economic circumstances related to the pandemic.
We will remain vigilant in our efforts to mitigate and guard against illegitimate activity on our platform and have expanded our illegal robo coal blocking program and text message filters to monitor block and disconnect fraudulent activity related to the pandemic again, we're honored to be in a.
In addition to contribute to the nationwide response during this challenging time.
Turning to our performance.
We had a record setting start to our year with first quarter see past revenue, increasing 31% year over year driving total revenue of 68.5 million well achieving non-GAAP net income of positive 1.1 million.
The acceleration in our see past revenue was driven by the fundamental strengths of our business and by our ability to serve the increased demand from the customers who offer you cast services and meetings solutions that are keeping Americans connected.
Let's see pass revenue acceleration attributable to our fundamental business drivers is best characterized as broad based growth across all our services driven by continued enterprise migration to the cloud.
We observed markers of momentum last quarter with strong performance from a diverse set of existing and new customers across all our offerings.
Enterprises are growing and innovating on our platform over many years and we continue to attract innovative companies to our platform.
During the first quarter, we grew net new customers, 34% year over year.
Our see pass revenue performance was also bolstered by customers that are experiencing increased demand for work from home connectivity solutions.
This includes business worry providers and customers and you Cason meeting solutions verticals. We observed many of these types of customers for years, including Zoom Ringcentral, Microsoft Google and dial Pat among others, but in this use of working remotely yes in some cases doubled capacity for select meeting solutions.
Customers to keep America connected our top five meetings solutions customers experienced an aggregate 66% increase in usage in March as compared to the average of the first two months of the quarter.
Similarly, we experienced an aggregate 45% increasing usage from our top 10, you cast customers in March as compared to the average of the first two months of the quarter.
I'd like to briefly revisit some of the services we power for this group of customers that are being heavily utilized.
We provide voice messaging and emergency service to the greatest productivity experiences for knowledge workers and now increasingly more to healthcare workers teachers and students among others needing to connect remotely.
If you dial into most Videoconferences these days and use your phone for audio youre likely using a bandwidth number and the call is likely delivered on our network.
If you use zoom phone or have a Google voice summer for life both are from bandwidth.
If you use a you Cas interface like dial powder ringcentral in lieu of desktop phones and Pbxs our platform in networks likely power the voice and messaging components.
Relative to our peers bandwidth disproportionately serves these types of large and innovative enterprise customers, who demand quality and value.
Our unique combination of software network and amazing customer support delivers a value proposition that resonates deeply with enterprise is operating at scale.
We do expect usage from you cast and meetings solutions customers to continue to contribute meaningfully to our results given the trajectory of the current circumstances, we're cognizant that the tailwind in performance for these you Cas and meeting solution customer cohorts will be partially offset by the contraction and usage from small and media.
In size businesses, there were adversely impacted Jeff will provide more detail about the first quarter results and expected go forward contributions to our performance.
On the international front, we continue to progress tool board meeting existing customer demand by extending our world class networking platform into 13 European countries via the same <unk> size and user experience that we offer domestically today in the first quarter, we continued to have meaningful discussions with our largest customer.
There's about our network capabilities in various regions and how we can best serve their voice and messaging needs.
I'm also proud to report that we added two new international messaging customers in the quarter, we will pursue our international mission and objectives, consistent with our profitability principal and subject to global economic conditions.
As a business we are entering a period where fundamentals matter most.
Our business fundamentals are strong and lifting our business to new Heights, we've had a longstanding commitment to return to profitability by 2021.
Given the current environment, we have decided to accelerate this commitment to non-GAAP net income profitability for full year Twentytwenty and have begun by achieving 1.1 million in the first quarter as I mentioned.
We will achieve positive non-GAAP net income this year in a manner that balances topline expansion with improved operating leverage our disciplined and seasoned leadership team have grown revenues and profits through 2001, 2004, 2008, downturns and we'll do so again in Twentytwenty.
Many of US have operated together as a bootstrapped anti fragile team for decades.
We are excited about acquiring land from than the state of North Carolina to expand and build a new headquarters here in Raleigh.
This is unique opportunity to realize our vision for the growth of our company and to impact our community.
We are humbled to be in a position to commit to long term growth and grateful that our commitment was reciprocated by the state with tax incentives, which substantially offset land costs over time.
We expect to develop the headquarters in concert with the developer who will bear the majority of the future capital investments with bandwidth committing to a multiyear lease on terms similar to our existing lease agreements.
Founded in 1999, we haven't endured multiple periods of uncertainty and economic lows.
Our focus during such times has been and always will be to serve our customers every challenge we face in serving our customers is an opportunity to contribute more to their success than we ever have before.
Our platform in network, our resilient and under times of duress emerge stronger and larger our team is operating at the highest level serving each other first and our customers always we will emerge from this challenge with increased network capacity and redundancy strengthened partnerships innovative.
Games, and they'll customers some hopefully for life, the passion and perseverance of our people and body. All that is anti fragile in summary, we are humbled that our mission that bandwidth is vital and proud of our team for its execution I want to end, especially.
By thanking our World Class Technology and network engineering teams, who have committed days nights and weekends to do our apart in keeping America connected we are the greatest country that the world has ever seen we will emerge from this season with many lessons learned more resilient to threats.
And more capable of providing opportunities for our future generations.
With that let me turn it over to Jeff.
Thank you David and good afternoon to everyone on the call.
Our business is off to a very strong start and 2020.
And we exceeded the high end of our first quarter guidance on both top and bottom line.
During the first quarter. Our total revenue was 68.5 million up 29% year over year at 4.8 million above the high end of our guidance range.
Within total revenue first quarter 2020 see pass revenue was 59.1 million up 31% year over year, and 3.4 million above the high end of our guidance range.
David touched on earlier, the outperformance and see past revenue was driven by two key factors first broad based growth across all our products as our customers grow their businesses and innovate on our platform.
The fundamental strength in our business drove approximately 1.6 million of see past revenue outperformance in the quarter.
It's broad based growth includes the ongoing momentum from the previously discussed strategic customer cohort of communication service providers, whose migration process remains on track.
The second factor driving our outperformance was the increase usage driven by cobot 19 related remote work requirements, resulting in an estimated 1.8 billion and see past revenue in the first quarter.
Other revenue contributed the remaining 9.4 million of total revenue, which was 1.4 million above or implied guidance and up 13% from the same period last year.
The primary driver of the other revenue outperformance was indirect revenue and in particular, the newly implemented carrier ATP messaging surcharges.
Our team continues to attract new customers to our platform.
We ended the quarter with 1808 see past customers, adding 80, net new active customers in the quarter.
Our go to market team continues to exhibit strong sales momentum, resulting in customer gross additions inline with the last several quarters. However, we did experience a moderate uptick in customer churn in the period. This customer churn was entirely from small customers and had a de minimis impact on revenue.
Our dollar base net retention rate was 126% in the first quarter of 2020, a new record high for our business as compared to 111% a year ago.
We estimate that the increased usage driven by covert 19 and related remote work requirements added four percentage points to our retention rate this quarter.
Before moving on to profitability metrics I would like to call out that I will be discussing non-GAAP results going forward, our GAAP financial results along with a full reconciliation between GAAP and non-GAAP results can be found in our earnings release.
Our first quarter 2020, non-GAAP gross profit, which excludes stock based compensation in depreciation was 34.7 million, yielding a gross margin of 51% as compared with the 25.9 million and 49% gross margin we achieved in the first quarter 2019.
First quarter 2020, adjusted EBITDA was 3.1 million as compared to a loss of 1.7 million of adjusted EBITDA for the same period last year.
Our non-GAAP net income in the first quarter was 1.1 million or four cents per share based on 24.5 million weighted average diluted shares outstanding.
This result is favorable to our guidance for the first quarter of a net loss of 10 to 12 cents per share.
The favorable non-GAAP net income variance as compared to our guidance was largely driven by an outperformance in gross profit, which in turn was favorably impacted by the fundamental strength in our business as well as the extensive work from home situation caused by the pandemic that further amplified our enterprise customers platform usage in the quarter.
During the first quarter, we utilize 7.6 million net cash in operating activities and in total we utilize 12 million in free cash flow, which includes 4.4 million of purchases of property and equipment as well as capitalized software development costs for internal use.
In light of the current macroeconomic uncertainty I want to highlight our company strong liquidity position.
As of March 31st 2020 bandwidth had cash and equivalents.
I'd like to expand our thoughts regarding our financial outlook.
We are raising or 2020 annual see past revenue guidance and accelerating or commitment to profitability based on the strength of our business fundamentals demonstrated by our first quarter results as well as the visibility into heightened usage levels continuing in the second quarter to connect people during a time of physical distance.
Oh and widespread work from home dynamic as a result of covert 19.
However, we remain cautious as we consider outlook for the balance of the year, given the potential offsetting impacts of an adverse economic outlook.
In terms of see past revenue, we've raised our full year 2020 guidance to be in the range of 246.8 million to 248.3 million.
Or up 25% at the mid point of the range.
And includes approximately $5 million of estimated usage benefit in the first half of the year related to unprecedented and essential demand for services as a result of covert 19.
We expect total revenue for 2020 to be in the range of 281.6 million to 283.1 million, 21% of the mid point of the range.
Within our other revenue segment, we expect indirect revenue to benefit from recently implemented carrier 80, P. messaging surcharges.
As a reminder, these messaging surcharges are pure pastors and do not generate any gross margin.
In addition to indirect revenue other revenue includes our legacy services, which are expected to continue their anticipated slow decline in 2020.
Profitability has been a long term goal and commitment since our IPO and has become increasingly relevant in these uncertain times. Accordingly, we are accelerating or effort towards profitability and expect to get to positive Nongaap net income this year.
Are pathway to profitability was accelerated do do our top line growth and desire to optimize spend in response to the current macro economic environment.
We will balance our accelerated commitment to profitability with continued investment in sales and marketing as well as r. and d. to take advantage of a large and growing long term market opportunity.
We're estimating our full year non gap earnings per share to be in the range of a loss of three cents to earnings of three cents per share assuming approximately 23.8 million weighted average shares outstanding or 24.7 million weighted average deluded shares outstanding respectively.
Turning toward guidance for the second quarter of 2020.
Expect see past revenue to be in the range of 61.5 million to 62 million or 29% year over year at the midpoint of the range.
Contributes to our total revenue guidance 70.2 million to 70.7 million.
Second quarter non gap earnings per share is expected to be in the range of a loss of one sent to earnings of one cent per share using 23.8 million average shares outstanding or 24.6 million weighted average diluted shares outstanding respectively.
And with that will open it up for questions operator.
Thank you.
If you'd like to ask that question. Please press star.
Okay.
Indicating airliners into question Q., you mean, if I start to if you'd like to remove your question from the Cam per participant using speaker equipment. It may be necessary to pick up your handset before pressing the sarkies.
Our first question comes from the line.
Oh, it's parts with keeping capital markets. Please proceed with your question.
Oh, thank everyone can you hear me okay.
You sound great Alex Thanks.
Yeah, I think Dave and you know to every one of bandwidth in your family Hope everyone is safe and healthy appreciate the message up front I was going to keep.
My question I'll, just ask one question just be respectful for everyone else on Mccall here.
<unk> outcome from from work from home I guess.
Both of you how did you try to model and the the impact the positive benefits your retention rate.
And the queue to guide coming from this work from home or how do you kind of works through that because obviously, that's coming from indirect customers of your ucas platforms. Your work was so just sort of take a through how you put that framework together.
Be glad to Alex. This is this is Jeff.
So we clearly have good indicators from first quarter and the strength of the business. Obviously those results were amplified by <unk> 19, due to the work from home dynamic that you talked about as people were sheltering in place as we looked at two q.
That heightened demand we continued to see in April and obviously have good visibility at the end of the month with that but our expectation is that that will gradually dissipate throughout the second quarter and occasions, consistent with current governing guidelines to reopen economic sectors and move away from the shelter in place measures and so we have.
And we quantified in the prepared remarks, the amount for the first half of the year to be as clear and transparent as we could and also noted that we didn't put anything in the second half of the year. We think the economic uncertainty is too great at this point and we'd like to take in more data in future days weeks and months.
Before you know we read look at the second half of the year.
Okay. Thank you.
Thank you are next question comes from line of Mark Murphy, We keep you marking please proceed with your question.
Yeah. Thank you and I will add my congrats David I'm interested if you set aside this fantastic strength that you saw in the quarter from existing customers you know, presumably all those customers like zoom in slack and Ringcentral what are the current dynamics in terms of the new logo acquisition.
<unk> not for the smaller customers, but for the larger and more complex projects and are are you finding that those companies will be able to.
Kind of avoid the distractions and <unk> engage in those kinds of projects in this environment.
Hey, Mark. Thank you for your question those conversations that are well along in the sales funnel continue to progress as expected what rancorous about are the earlier stage conversations with the very large his fortune 500 kinds of customers that you're talking about and I think it's too early <unk> no. If there will be an array.
<unk> and features and capabilities that we offer or if the macro will delay decision, making it hasn't delayed the top of the sales funnel and those large enterprise opportunities that are well along our trending exactly as we expect.
Okay, Great and then just wondering how are you able to say how many customers contributed 10% of revenue or more during two one if if there were any.
Yeah, there weren't any more yeah, there weren't any would we still do not have any 10% of total revenue customers. So we remain pretty well diversified.
Okay, Great to hear and then the final question I had is roughly how many customers have shown interest to you in in using your network not only in North America, but also overseas.
[noise] the existing customer phone, we've talked about it links as among our Internet giants being about a dozen or so that consistently have asked us over the years and more recently collaborated with us on joining our international infrastructure. We did announce mark in our earnings report, we had to new customers that are on board.
The the joined this quarter, but but we have focus our attention and intent on the existing customers and of those the very largest with whom we we work well already in North America. So no change in the strategy for international customers.
Thank you very much.
<unk>.
Thank you know our next question comes from line average with meet them in company.
Question.
Thank you, let me and my congratulations to the to the strong performance in the quarter just a quick follow up on the international customers I thought you sit in your prepared remarks that the two you added were from messaging you just wanted to clarify that was messaging and not always at this point. So that was the first question that I had had one follow up.
That's correct.
Got it couldn't you can you characterize the discussions on the voice front in any any thoughts there in terms of potential additions on in terms of voice international customers.
[noise] voice includes emergency service, which here is 911 in there are different variations in the you where we have footprint, but we haven't announced to anything more broadly or involved about voice recently, it's Dayton.
Got it and then Jeff just a quick one for you on margins the eight to P. surcharges should be orange and delude of it I'm guessing. They were obviously you offset that with a very strong performance can you gives a sense of just how much of a a a margin dilution had when they were in the quarter.
[noise] be glad to rich so just starting out with some of the good news. Yes. This was our best gross margin performance in the corridor routing to 51% gross margin very proud of our team for continuing to expand gross margins I think it's especially impressive due to what you highlight and.
That is you know we encountered this quarter as whereas in N.S.A.P. moved forward with S.M.S.H.P. surcharges and those did serve to compress those results again, which make it even more compressed or more impressive rather in terms of quite.
Suffocation on total margin it was about half a percent compression related to 80, P. and you can see in the other margins if you've looked through the press release that you know there was about a 4% compression related to that segments specifically.
Great. Thank you for that think it for all the disclosure in clarity on on how you're thinking about the the coping numbers and graduations geckos.
Thank you rich.
Thank you I next question comes from line F. Willpower with Baird. Please proceed with your question.
Okay, great Yeah, I can say a couple of questions for you I guess I Wonder Justice. If you could provide perhaps any further I don't know qualitative or quantitative thoughts on how you're thinking about you know second half economic impacts or maybe just you know thinking through you know you for their numbers around winters, you know the bad debt fraud.
You know <unk> you know payment issues are you alluded to at least you know minimal those far but how about you know maybe turning through April <unk> any kind of thoughts around your exposure to the broader travel hospitality retail investors in particular.
Mm.
Glad to well, so I'd I'd start by saying, they're probably been a <unk>.
Never a more challenging time for us to predict a back half of the year due to all the economic uncertainty that being said you can see we had a lot of success in the in the first quarter and second quarter, we've rolled the strength from first quarter results and in our guide implicitly in second quarter and so that's flowing into the back.
Half of the year, but you know we've taken as we said no prepared remarks, a cautious approach to do in the second half because there's a lot of variables that I think we can all appreciate that are outside of our control that could influence the economy in a in our customers. So that's how we got to sort of second half results in terms of of.
Yeah.
David highlighted that we are.
Part of keep America connected pledge, we're we're promising not to disconnect or terminate service with small business customers and will waive any late fees. There. We have had a number of customers take advantage of that but it does not amount to a material number within are are bad debt or or account.
Receivable and then third I think was exposure related to hospitality and those things our business is not built up that way hospitality travel ride hailing what have you. We have very limited if any exposure to there that being said you know we do have some consumer oriented business.
That would include also job search platforms point of sale solutions that appear to have some negative impact in there, but I would characterize these as relatively small pockets of weakness and they are far overshadowed by the benefits of other users that we've seen over.
Right in in the first quarter results.
Okay. If I can slip in a second one I you've got a nice you know balance of cash on the books, which is you know say great and in this environment.
But probably more than more than you have to have so I wonder just how you're thinking strategically about the use of that cash you know are the things are already looking at this this environment, maybe creating some additional everyday opera Saturdays or do you wait to get through this environment first.
Yeah, I I think we'll that right now we're all watching the fluidity any uncertainty and hoping that things coalesce around a bright future and recovery that's not shaped like an l. and we're very grateful that we have the cash balance that we do it represents optionality.
And it it's something that we we don't think there's any urgency is not burning a hole in our pockets where team over the course of 20 years. It's done one acquisition, so primarily builders, but we are opportunistic and we'll be looking for the right opportunity if there's yield and strategic combination with our course strategy.
But there's there's no urgency <unk> again very fortunate ungrateful that we have in our balance sheet.
I think you'll.
Thank you will.
Thank you know our next question comes from line.
<unk> he's probably we can question.
Oh, great. Thank you and let me add my congratulations and best wishes to you and your loved ones.
Thank you bad for the question, Yeah, 111, I forget what's her name so for Jeff stuff I heard you right next Manson went from 113% last quarter to 126, this quarter and 4% of that came from cope with 19.
What drove the other nine per cent.
So most of that would come from just the fundamental strengthen the business a number of customers.
That are doing very well and expanding their platform usage. The other thing that I would point you to is if you look at that and you take the total gross.
And then subtract the dollar Bayes net retention percentage, you'll see that our new logo growth went down a little bit there's chords in line with a year ago, but it's down sequentially in the corridor and that had to do with a handful of customers that are sizeable that hit their one year anniversary and came out of the new logo cow and.
Into existing customers and part of the dollar Bayes net retention. So it's really that one two punch sort of that produced the great result for us even if you do normalized for the covert impact.
Okay, great. Thank you and then gave when I do one of these video meetings.
Launched yet at the beginning I get three choices you know number one do I want to use computer audio number two I want to Dallas 800 number number three do I want the vendor to call me.
My understanding is number two and number three is what you guys would power what I'm curious about is in a rough ballpark, how often are people picking number two or number three.
[laughter].
So if you've been on these conference calls you are seeing what we are seeing and as users of these conferences, what I don't have in our law log of calls is how many video participants there were on any one of the conferences that we supported or powered so we've got very clear vision into the audio.
Component. So my answer is actually more informed by our own business experience than it is any particular long file historically, what we've seen is when you have a conference in five people are more someone's in the car someone's outside of a place with video and they're calling in I don't think there's any significant change to that ratio through this season in fact.
There's been some video fatigue, and perhaps folks are choosing audio only more what we did see initially it was a a spike but then a significant.
Continued high use from the work from home dynamic and so what hasn't happened Pat is large abandonment of the audio channels through this video season, even though why fires.
Obviously supporting a lot of video and so it remains a very robust and healthy dynamic for us in that customer base.
Ah Great I mean, that's.
Personally I I can't take any more zooms. It's you know several days just you might.
Just dial in more I'm going back the old school, but that's really help yeah.
Well thank you.
Thank you are next question comes from the line.
So with Morgan Stanley. Please proceed with your question.
Great. Thanks, guys. I know you made some investments last year to kind of improve the margins conferencing and just wanted to get that sounds you know are the conferencing lie in general margin or creed, or or dilutive understand that you're getting a lot more you such a cost of the platform.
In general, which is helping margin and then maybe second question on that international Aside you know with all of that Bill about activity kind of complete I think it was but just were there any restriction to kind of any bill about that you wanted to do in the court or just based on kind of not being able to access location. Thanks.
Hi me to this is Jeff I'll I'll take the first one and then let David take the question on International So yes, we have over the last year plus Ben vesting heavily in our toll free platform and it's paid dividends for us and we just it's been part of our.
Margin expansion.
Through out that time, as we're going to turn down a yield period and getting getting benefit from that investment overall toll free as one.
Of our voice products is is kind of in line with our general averages on voice, we said before today messaging is a little bit higher than voice on this but toll free is great business, both top line and gross margin for us.
And on your did you ever follow up on that meter before I answer your international quite know that's helpful. That's awful.
You bet, you're right, we built out the physical infrastructure in London in Frankfurt that supports the voice entry into the U.K. and the you, but there's no question that the Lockdowns and travel restrictions prevent us from doing many of the meetings with regulators and other participate.
Carriers, with whom we interconnect and business development. There's no question that the lack of travel isn't impact and the inability to be face to face at cadence that were used to we factored that into how we think about the remainder of this year in our guidance, but but candidly that it has had an impact.
Great. Thanks congratulations.
Thanks Mia.
Thank you ma'am I find a question for me.
Katherine Trebnick was starting company.
Question.
Okay. Thank you for taking the question and congratulations on a very good corner and likewise I hope you're all healthy too. So quick one on international granted that you just to discuss some traveling.
Travel restrictions are holding things up is there any other insight you can give us or parse for us on where you expect that grow to be like for this quarter can you give us display the domestic versus international did you have international revenue this quarter and when you really.
They didn't have the travel restrictions when when you expected to pay sin and then with it.
You know once removed do you think it would be a hockey stick or one take longer time.
Hi, Cats, and this is Jeff I'll take a a crack at that so today you know international is not a large part of our business. It's not something that we breakout explicitly obviously in our q., you'll be able to see that revenue that'll be based on where customers are built but I would characterize.
Things generally tracking to plan and we've included the international contribution in our overall guidance and I'm, just noting that we did raise guidance in in this quarter based on the strong performance for Q1, and what we see coming up.
Alright, Thank you okay rap.
Thank you Catherine.
Thank you, ladies and gentlemen, that's come from the dark you any session and bass concludes our call today. We thank you for your interest in participation you may now disconnects Airlines.