Q2 2020 Wix.Com Ltd Earnings Call

Ladies and gentlemen, thank you for holding your with Q2 2020 earnings call well begin shortly.

Thank you for your patience.

[music].

Welcome to the Wix Q2, 2020 earnings call. My name is Richard and I'll be your operator for today's call. At this time all participants are in listen only mode. Later, we'll conduct a question answer session. During the question answer session. If you have a question. Please press Star then one on your Touchtone phone. Please note that this conference is being.

Recorded.

I'll now turn the caliber to that your Donald director of Investor Relations you.

Yep.

Thank you and good morning, everyone.

Welcome to like second quarter 2020 earnings call.

Joining me today.

Our Avishai Abrahami, CEO and co founder Nir, Zohar, President and COO, and New York <unk> CFO.

During this call we may make forward looking statements and these statements are based on current expectations and assumptions.

Please consider the risk factors in our press release, our most recent farm platform.

I could cause our actual results could differ materially from these forward looking statements. We do not undertake any obligation to update these forward looking statements.

In addition, we will comment on non-GAAP financial results you can find all reconciliations between GAAP and non-GAAP results in our press release presentation slides shareholder update and our interactive analyst Center on the Investor Relations section of our website investors topics dot com.

I'll now turn over the call obviously.

[laughter] good morning, everybody and thank you for joining us today.

Q2, and with good results and they want one thing that what do you happen to be Scott.

A lot of my investment into doesn't mean peaked in 2018 and grating products like.

I said it will be man [laughter], all combined to get a right. We'd there we do corona incredibly but still broke.

In fact, the best way to measure our goal is.

Looking at the cohort so I was subscription business looking how much according to have a school.

And as far as we can predict the growth well can you do cohort compared to last year.

Q2, who's ever around 90%, good value, which means that the girls break the week.

ER is 90% hired it was last year.

I mean really be summing that the.

Yeah, it's happened because.

All of those elements of compounded himself, but then at grading and love to go up and then having to be more rural because of growing up [noise].

Well I think produces really establishing a new baseline.

For our business.

And of course, because they'll be in a lot of there's opportunities we put a lot of.

Innovation like into support to support all the new customers and lot of investment into marketing, that's where a lot of really what we consider to be very profitable because it because your marketing.

[noise] and ER and out of being we can say that if you look at the globe in countries like on a stronger or became weaker luckily or are we seeing that growth is not changing.

At least yeah during July what pretty much of the said man.

Right.

Oh I Douglas opportunity also.

Thank you the weeks Dean.

Oh, we see it would probably go so fosters a lot more that everybody has to do not bought a customized. This is a really important time for cost too much that's good business because so much more depending on the internet.

So that in many cases, that's now Doreen.

Every new business possible.

And really what I'm, saying they want to get thanks to everybody to put so much as opposed to Joe much gear.

Into but definitely costumers and supporting them in DC and beside times.

I would be I want to add thinking and bring it back to Megan.

[music].

Operator, I think are ready for first question.

[noise]. Thank you we will now begin the question answer session. If you have a question. Please press Star then one on your Touchtone phone if you wish to be removed from the Q. Please press the pound sign or the Heskey, if you're using a speaker phone you may need to pick up the handset first before passing the numbers. Once again, if you have a question on.

A line. Please press Star then one on your Touchtone phone and we're standing by for questions.

[noise] and our first question a line comes from Mr. Mark Mahaney from RBC. Please go ahead.

Thanks, two questions could you talk about sales and marketing efficiency in the quarter looks like a sales marketing increased somewhat materially as a percentage of of collections and then secondly could you just double click on the some of the ecommerce solutions that you've been a rolling out recently how well.

Developed are they up what kind of traction are you seeing for them. Initially that so that's an extremely I don't know powerful current in this environment Oh E commerce, enabling technologies talk about how well positioned you think weeks is for that opportunity. Thank you.

[noise] Oh, Thank you Mark I will stop with the first a question about democracy I think look you know the a the things about the marketing to the businesses like the most amazing seem to happen to us in the second quarter and you absolutely right a marketing investments has increased by I'm talking about a direct.

Marketing investment by about 90%.

On a year over year basis.

And by the way, we're just chemistry should feel with the same K P. I want to someone else. We always had and this is like you.

You know a very very interesting.

You know a effect.

We're very quick.

In aggressive a responsible for our marketing team that actually in in few days a managed to increase the marketing so significantly to answer the demands and still be able to film efficiency as we will in velocity in the previous cool.

So we actually took the opportunity and we did it.

And you know talking about efficiency to date, we've already collected about 60% or even modest 60% or returns overall investment in marketing.

I think though the way actually two Luca teeth.

And I wish I mentioned that about the future collection of the second quarter quote.

And the growth of it is about 90% well. This is that the fuel true growth of four weeks during the second quarter in a basically tends being taught a story.

Which is very similar to the growth in marketing expenses. So I think looking to answer your question about the efficiency of the marketing obviously, we will continue to invest Oh, we look he does a new baseline of growth any investment and you know we're very very excited I'm happy to continue with that.

No I want to add there I don't know if you set us up there so.

60% of marketing expenses that happened in Q2, they've already been return.

In cash back two weeks right. So we think that this is an amazing efficiency was substantially this company usually did dosing just a bit longer. So we're very happy about oh and about the marketing efficiency in this quarter.

Hey, Mark a premier in regards to E. Commerce, I think first of all we have [noise].

I think that it's interesting because we had a we have widened our view on on commerce. Besides the only stores and that's really our stores that are side, most significantly I'm going to talk about it but but when we think about the opportunity around commerce, we think about.

Everything that the plot platform has to offer so he will also go towards the you know the there the restaurant owners photographers and do you musicians and the bookings and events are now mostly online, but also but also events and also a naturally that naturally.

The stores themselves.

To that effect much of the.

Additions functionality to our stores portfolio that you've seen a beach, we'd be we aren't weve advertiser.

As you know, it's actually being you know it's been it's been going on and then we've been working on it Oh, a prior to the to the to the Corona crisis, starting some of them, we're actually released quite to that but but naturally we think it's a huge opportunity and what happened I think doing the end of Q1 than in Q2 with these.

I would shift.

People moving online and I wish I mentioned this oh, we strongly believe and we actually already think evidence to it in different countries that this is not a onetime shift it's it's a new baseline so in our in our mind. What we see now is is though it's something that when it happened over many years.

What's happened overnight and ending to that effect, we think that our core solution. Coupled also we can be experiments and just the ability for people to claim and on board really quickly start selling their services whatever they are whether their services or goods are going to play a huge part in the value that we believe our to our customers obviously want to be very positive.

Impact on us as a business.

Faction girlfriends over 100 per cent.

Okay.

Alright. Thanks for your question Mark can we have the next question. Please.

Thank you. Our next question on line comes from Mister round Joseph from JMP Securities. Please go ahead.

Great. Thanks for taking the question just a quick follow up on on the marketing side.

I wish I in near you just talked about the permanently celebration in the business activity and just you know with marketing accelerating here in the back after the year I think you said similarly similar spend in three Q for accused you did for <unk> you just talk about maybe where you plan to focus the marketing and what you. If you look to get sort of similar results as you didn't <unk>.

[noise] have registered users subscriptions and things along those lines and then any insights on quarterly trends in subs I think would be appreciated I think you in April it was talked about sub addition, screw around 200% for the quarter. They grew 164% you saw a good conversion rate I think for for for net registered users, but any insights on quarterly trends would be.

[noise] helpful. Thank you.

Sure.

Alright, I'll I'll I'll start start the first question and.

And longer to jump in I think generally what what we're seeing.

Of of the acceleration is it's across the cost of all across the board and under the similar the same kind of of.

Very few calls in businesses that doesn't seem before just at a much higher demand with better conversion and eugene tend towards towards going into business.

We have actually and I think I wish I mentioned is also and it was opening remarks, we're seeing in July very similar behavior to what we've seen in Q too.

So we believe at least for the time being that that's going to last for the for the second half of the year.

Similar manners.

No.

Yeah. So so.

It was near mentioned I think that will continue to see the trends.

In July you know I can tell you. The July net ads has increased by more than 200%.

So.

Actually we saw moan S. As in July then.

The number.

So are very very excited about it so as I mentioned I think that we are.

The way that we look at it is is a new baseline.

And obviously, we will continue to invest in marketing.

It's not going to be so smart not to do it because it's so so efficient.

And remember when when we all.

When we have such a huge increase that's happening in few days.

Usually it's happened like you know over a few years. So every time, we increasingly investments and marketing we see the response in topline and so on this time the increase was happening in a few days, we increased marketing goodbye, 90%, obviously, we've seen the same increasing the value of the quote.

But.

Any other soft model, we first invested a marketing and it's expensive in the P&L then we see collection then we see revenue.

Obviously, you know to your question.

The next couple of feels.

Film that we're going to generate much more free cash flow.

And profitability as a result of this huge growth that we have right now.

Thank you you're great.

Okay can we have the next question please.

Thank you. Our next question online comes from <unk> Ah Runion from Wedbush Securities. Please go ahead.

Good morning, everyone. Then thanks for taking the question.

I want to talk about the agency push and maybe get a little bit of color on tracks and you're seeing there.

Time that as well with the new E Commerce solution, how that can open up the agency opportunity I got kind of what I mean by that is.

More focused on design agencies.

As in E Commerce solution.

Brought in that E commerce agencies, typically when we talk E commerce agencies.

The solutions, we hear about the most are shopify.

<unk> Big Commerce so.

E Commerce solution kind of intended.

To open up that that market for you and then at the same time maybe.

Little would love to hear a little bit more about editor ask you mentioned pricing and and then that's your letter.

Anything you could sure around pricing and detraction as being with extra early on.

Okay.

Its name here.

Kid off with a with the agent agencies in the partners. So.

Generally for seeing a very high performance.

And this whole sector and it kind of makes sense because.

The huge demand in the growth and then the 90%.

Value were saying that the cord so connected to this huge demand.

But as I said before we have seen it across the board both the people who are looking for to do each of themselves, but also with people who are like.

I would like.

Somebody to handhold them or help them.

<unk>.

In that aspect of <unk> scene.

Also a big uptake in the business flowing towards our partners.

And in fact, I don't you guys are remember, but we used to have.

We used to have.

Place called.

Arena now, we just call in two weeks marketplace.

The place where where demand off.

Of people, who need somebody to help them out and and.

And build the website for them is being met by by our partners computer community.

We have revamped that platform significantly many capabilities for both.

For both sides.

Of the marketplace, then we're seeing really great traction going there as well.

So I think that we're going to keep on saying that for the second half of the year.

And naturally.

In relation specifically to two agencies that bill colmer sites.

Yes, absolutely as we had more functionality and more capabilities, we allowed them to.

To do more.

Our platform.

Will that.

Mean that that some of them will choose choose us over the over competitors.

I think that's absolutely in some cases, yes, all depends on what what are the additional values that people looking for but I think when we add the coding environment, we're adding editor X as in really deep capability into building a very sophisticated website. When you add that to all of the CRM capabilities of ascent.

The payments and it's all bundled in one place then that's a real big value proposition.

So we definitely assume that some of those partners and agencies that deals specifically with commerce will adopt <unk>.

The solution.

I wish I want to talk more about 84.

I think that you've covered question right and I think that.

<unk> is really aim.

Higher and.

Agencies, and the people that that'd be old mostly a lot of the re sophisticated project.

Professional to and if weaknesses, mostly for everybody and we have designers using that I need to X really.

Okay agencies and developers so it's a very separate band.

And I think very different kind of customers at least that's what we're seeing from debater and we're very happy about it because I think it's allow us to give a complete solution.

Not a big part of our addressable market.

I'll, just say about the pricing too I think interesting things first of all.

Obviously, when we tried to determine the pricing we looked and try to look at other.

The other kind of.

For other kind of solutions that offer.

Solutions professional crowd.

We spoke with the customers themselves obviously, we looked at other other companies will look at what the Dolby does under cloud.

And it became do you think is great value for for the for what you get the editor X, we need something but nobody else does which means we kept the freemium offering.

Which in our minds is very very strong.

We introduce those new pricing new pricey relatively.

Lately, so we still cannot talk towards specific numbers on results, but we are we're very happy what to what we're seeing in terms of the adoption.

Alright.

Thank you. So can we have the next question. Please.

Thank you. Our next question when it comes from Deepak must have on it from Barkley's. Please go ahead.

Hey, guys. Thanks for taking the questions two questions.

First one given the success you have seen with ecommerce another offline business has come into the platform can you provide an update on whether G. M. We is right now on the platform and what the penetration is four weeks payments at this time and then the second question lay out what are your factoring in in terms of T. R O Y N sub growth into the.

Three give guidance compared to <unk>.

<unk> levels I mean, you have seen pretty nice delvings over the past few months some of that good moderate over the next few months in the back here are you expecting some efficiencies on marketing to moderate.

You keep marketing spent a current levels and tobacco. Thank you.

Maybe pack so in terms of.

In terms of the of payments.

Penetration, we're seeing a very wide adoption of it so over 80% of.

The eligible newcomers in terms of the territory's are picking up experiments.

And I can say that generally in terms of the of the of the Geography's I'll experiment is very diversified so not focused on in one place.

So we're seeing a really nice uptake there.

We're still not breaking apart specific numbers around around gmg, but we'll probably do that in the future.

Deeper this is a little with regard to the T O Y and investments in the third quarter.

<unk>.

Think that look we provided the range for the guidance switch basically take into consideration.

You know the uncertainty, but but I think that for the third quarter is very small. This is why are we.

We've chosen.

Provide the guidance for the third quarter.

The way that we actually look at it is a new baseline.

With the same <unk> Hawaii.

As of now it's basically you know continues with.

With the same kpis.

With the same efficiency, we've seen in the second quarter.

And some of the growth is actually a stronger in July then the second quarter an average.

And I think that the most important thing the way to look at it.

Value of the quote which actually continue with your strength again I want to emphasize the fact that the second quarter generate a 90% growth.

In the new code, which the way that I am looking <unk> like a new base line.

It's amazing growth and this is like the real pule growth of the company during the second quarter, we obviously expected to continue.

The first quarter as well.

Alright, guys.

Thank you back okay in the next question please.

Thank you.

Online comes from Mister Nick Jones from City. Please go ahead.

Great. Thanks for taking the questions.

That's on the.

Press release.

You introduce Facebook advertising to us and.

Scale integration, what the extended ecommerce Lucia if you talk a little bit about.

What type of kind of additional advertising.

Capabilities.

Potentially looking to add for Ya.

Current and future solved within an area that we should look for additional investment. Thanks.

So currently this is avishai.

And as I understand questioning you asking about what.

Tools, we give our customers to market their business is that correct.

So.

So let's look at it just the only place we actually.

In active way managing the advertisements of our customers when I do use AI to do that and we might extended to additionally platform. However.

And one of the thing that we do is that we support pretty much every.

Maybe advertising cartoon that you have and we hope our customers.

Like material.

And content to put on those.

Which is usually the hard apart and so for example for example, if you wanted.

It is videos right. We have the AI based system that will create videos that we know very efficient marketing for you to put.

On Youtube to put on Facebook to put in any other places to put video advertisement. So this is currently a lot of our focus. We also help you be closing the loop, which means that if you have a website. We're gonna puke track twist arrived allowed to open.

With them.

We allow you to.

Send him a notification if directory me the card and not my rely on it.

Close all of the loop in order to facilitate.

The new business and then track at all.

We do weeks to send.

So that's currently a focus and.

With the exception replaced.

Where you just put money and we do everything automatically for Ya.

Alright, Thank you alright.

Okay.

Question. Please.

Thank you. Our next question on line comes from Mister <unk>.

Walmsley from Deutsche Bank. Please go ahead.

Alright, Thanks for taking the question first can you talk about where you are in terms of gross margins for Wicks payments. When you see the large pick up and volumes are gross profit margins getting closer to sort of a normalized right for payments business anything you can tell us about where it is today, where it'll get two in the next few years.

It would be helpful in second one.

Shareholder letter, you're talking about expanding the customer care team.

Can you just give us a sense for how revenue returns have have been from the customer care team what aside some kind of a pickup and volumes is informing the decision to kind of expand that and how much. We should we should be thinking that you guys spending.

Over the next few quarters in years on care. Thanks.

Okay, So let's start with.

With the first and second question here will join me to spook throw some of the trends.

That we feel about the customer care with regard to the experiments you're absolutely right.

The gross margin has improved dramatically in the second quarter because of the scale.

I believe that.

We have more room to improve it's over time.

Scale continue to grow.

But obviously, we are learning more stuff and improving it I think that's right now.

You know when we're looking at the gross margin of payment is approximately 30%, but again I believe that there is more room to increase it.

And the overall the beautiful solution is interesting I think that we're going to see more payments.

You know topline coming in the next couple of years, but at the same time, we're going to introduce.

Functionalities more services.

That are going to contribute to the grilled small generate.

But I do expect the doctor continue to improve and against the second quarter was.

Truly.

Quite significant improvement.

Which were gone through the customer care.

No we were very lucky to increase the head count of the customer care before in order to answer that the huge demand and you can elaborate about it but we intend to continue with that because obviously.

We are serving right now, but more than 180 million users and we're growing by 9 million users every quarter. This is something that we need to take care of and obviously you know to provide a good service to our customers as we always did.

And we already started to see the benefit of it remember when we're talking about the growth of weeks in the second quarter and going into the second half of the year.

Oversleep well returned in terms of the investment.

Maybe you want to elaborate more about it.

Sure.

So.

They will mentioned.

Just imagine where we would've been now had we not made that investment last year. So naturally.

The games remind me again from this investment so far I'm not exactly as we planned to begin with because we had the surprise.

Of the of Cold in 19 coming in and Reshuffling our program.

But.

Obviously, we are very happy that we made that investment because it allowed us to meet that huge demanded.

Spot.

Bike of new growth coming from these new court.

Can I remind you it's not only that they are much much bigger than size. The intent of the people who are joining us is much much higher towards building a website.

I think their business online running their business online so naturally we need to be able to support that in support that in high quality.

I think couple that it also people who are buildings things that are much more complex now on weeks with.

And the stores and with the partners so naturally having a.

A big size qualified.

Care organization is very very important.

I believe is that.

Since the grocery sustainable also will be the additional investment we're going to do into care.

And that will also be matched with the approach that you spoke about in the past, which we have not we have enough to where we are still we're still.

Training and working on that will also allow us to get even more value coming from just speaking and working with our customers proactively.

Okay.

Okay. What can we have the next question. Please.

Thank you. Our next question on line comes from Josh back Keybank. Please go ahead.

Thank you for for taking the question the thing that really used to help to me was.

The collections growth and that's accelerated too.

Much of a low thirties percent level and Q2 in Q3.

Shareholder letter I know that you mentioned, you're seeing a higher mix of annual and multi year contract. So I guess my higher level question is.

Do you see this as a structural change that you expect to remain in place and at what point do you think this elevated collections growth can translate into revenue growth.

So yeah for now we think that this trend will continue at least you know for the second half of the year.

It's really hard to trail.

Beyond that but I believe that this is something that will continue to the second half of the year.

And.

Yeah, I mean business sneak longer come solution. So obviously you know most of them are choosing the.

The non monthly yearly the.

Two years plan and obviously you know, we really really happy for that.

And which were gone to the revenue remember that.

One four collect the yearly plain then we need to recognize it over the year.

Meaning every quarter.

And so on so so I believe that up in the second half of the year, we're going to see that differed revenue is actually increasing to reflect the change between revenue to collection because collection going to grow much faster than revenue.

But eventually it will be catching up.

No it might take one year two years about it obviously will catch up and then you're going to see also.

The <unk> looking profitability in the <unk>.

It's actually gonna already going to happen next year.

So so yeah I mean, the same trends continue and it looks really really good.

Okay. Thank you and if I can just sticking one more the neutral.

Stripping addition, so I know in April I believe it grew 207% and then for the full quarter.

Grew I believe 164% so it seems like it did moderate a little bit.

And may and June but it sounds like July was quite strong so any other.

Color you can just give us on the progression of.

Net add growth and then help us to think about.

Conversion from existing versus new customers.

So I think.

Generally speaking.

There's always some change and.

Mix and seasonality and things like that but but but.

From a wider perspective, we're seeing we're seeing.

Keep on saying hi number of minutes now bad.

Also in July as mentioned and.

We highlighted is also in.

And the PR that.

The just the first half of this year is already reached almost the same number is smith.

Sounds of 19, so naturally you.

You can see a very clear a high acceleration there and the expiration is coming both from the from the new cards, but also from the existing coins, meaning that everything is accelerating and performing better.

Because it's kind of makes sense, it's being driven by by this this this.

The coven 19 prices on both the on the financial side of it.

And old people, whether they were excuses before it started a lobster have the need to move online and that's also why you see that kind of acceleration.

And.

I think the other thing that is worth mentioning obviously that.

We see the huge increased both on the net subs, but also in the cord value itself.

So I think both of them couple together means that we're going to we can we can we can look ahead into elevated growth.

<unk> and the second half and probably a much better.

Okay can we have the next question please.

Thank you. Our next question online comes from Mister bread Eriksson from needed <unk> Company. Please go ahead.

Hi, Thanks.

It will follow ups first when you're I guess, when you're Salesforce is talking talking to agencies about Corbett what are the areas of pushback. If there are any of why they wouldn't used corvid versus say other competing solutions and then.

Just a follow up just within business solutions, just can you give us any flavor relative growth rates, maybe a rank order between payments G Sweet and then.

Thanks.

So.

This is obviously I think that day.

What can we mostly here.

With Scott Covid is that it needs a better team works abilities for many developers to work it wants to get it.

Some debugging tools and these are the things that will be addressing in the next six months hopefully.

You'll get it to a point that.

That is.

Solving the beans and actually.

Adding some benefits to our customers.

And for question number two.

Alright.

Yeah with regard to the growth.

Although G sweet is the largest component.

Our business solution.

The payments is growing faster.

Oversleep really really foster and also offend.

I think that the way to look at it is juice with usually will continue to grow the same level of.

Creative solution growing.

But we are going to see payment is going to much faster in the future.

The same goes for <unk>.

Okay. Thank you give me in the next question. Please.

Thank you. Our next question online comes from Mister Jason hosting from Oppenheimer. Please go ahead.

If you guys. So I'm going to ask it seems to be the the biggest question right. Now is given comments about cohorts strain record user and premium ads and collections per sub acceleration in the quarter why isn't the third quarter collections guidance stronger is there a specific headwind that you want to call out.

Is it shift new cohorts lower priced branches I, just think everyone's looking at the guidance and just obviously this was a stellar unbelievable quarter why the collections guidance is not stronger thanks.

Yeah. So so Jason this is a little so first of all the guidance for.

The third quarter is 30 wanted to 34% when you're compared to 34, obviously tub in the growth.

The second quarter and look you right. There is there is some uncertainty about the salt quota that obviously, you know and we've chosen to provide the guys in for the third quarter, but we also.

In a way to be also a little bit conservative about what is going on right now in the world.

So, it's obviously, taking it into a into account.

If everything is good and everything just happen everything continue the same way and.

Especially around with everything that we do right now obviously, there is an upside to the third quarter, but at this point of town feel very comfortable with regardless that we provided.

To the extent that there could be I guess, you would say like macro factors what.

What would that be is it are you worried about like for all the new businesses coming online.

Old customers canceling I mean, just maybe be more specific.

What that concern or what the downside scenario could be relative.

The upside thanks, I think we're mostly afraid of what world leaders would do.

We don't like cover it.

Comedies Corona is something that we didn't expect.

That part of the word that will give you kind of.

Reaction to eat in with different flavor of efficiency and the one thing we're not sure about.

More than anything.

Well deleted would react lobby the result economy, obviously, no stimulants need to support.

And the populations in a lot of the countries.

And it's very hard to dissipate, it's kind of like.

Equal Morris.

Do do a lot of building.

<unk> enables sites unit customers and I, just customers need to have money so kind of like.

We felt very uncomfortable not knowing what would leaders that season.

Allow biggest fears.

No two blinked any specific country.

Beyond others as being <unk>.

Less predictable.

Thank you Jason can we have the next question. Please.

Thank you. Our next question on line comes from you. Mr. Can one come Guggenheim Securities. Please go ahead.

Great. Thanks, Thanks for taking my question I, just wanted to touch on your investment in the customer care organization. It looks like you guys are going to expand that out to Denver.

Previously that investment I'm supposed to generate about five points of incremental growth I'm, just trying to get a sense for kind of where we are on in terms of progress there and then whether or not this expansion should also deliver some incremental growth.

Okay. So the fact that.

When we look at the growth of the second quarter, what will be the grilled for the full you.

Compared to where we were back on February so obviously, we manage.

To deliver growth, which is higher than 1st%, but we managed to do that only because of the account that way out of the support meaning that.

Without it.

Really really hard to deliver this.

Growth.

So we will continue to do that because we received that we are.

Having more and more demand for a product. So obviously, we need to continuing to invest support but again I think of the return already have proven.

To be higher than what we actually predicted because also time of change.

Okay got it and then if I could sneak a quick question just on on churn last quarter, you guys talked about.

And a negative negative churn was that something you guys saw this quarter as well and to the extent you did any thoughts on how how that trend micrographs going forward.

I think that's what we saw cohorts actually I didn't even more.

Normally do which is more than offsetting.

Change that was there.

To begin with now normally weird.

Tiny bit of a negative June and it's actually it's grown and we're seeing that he continues.

December rate the rate of the negative church.

Improved meaning.

I'll, even better so we actually doing better so less than we have more new customers bus cohorts.

Then ever before.

Great. Thank you guys.

Okay.

Okay. Let me in the next question please.

Thank you. Our next question line comes from Mister Brentsville from Jeffries. Please go ahead.

Thanks.

We are there any common seems from a G. O perspective that you saw where the demand was coming or is it pretty much across the board.

Pretty much I would say pretty much across the board, obviously, we've seen specific fluctuations around specific.

Specific vertical.

And.

In the U S. In Europe, we saw some fluctuations in countries opened reopened and re closed again in specific for specific vertical but generally.

We're seeing I think that high very high demand, especially in the U as in Europe.

Great.

I know you guys keep talking about the new baseline in the perfect storm.

I think some investors are a little concern.

The sustainability and predictability of the storm.

And then we're in and.

Beyond the July quarter, and you're seeing good results, but what gives you conviction.

Kind of continues even if we got a vaccine do you feel that.

The tail ones are so strong that as you keep saying this is the new baseline and it doesn't really matter what really happens in the health care side. This is really just the inevitable shifts online.

So I think there's a couple of factors the first factors that within a lot of the growth.

In the supporting products.

Three coffees right. So and this is something that was an enhanced during butt thing that.

There's no reason it would not continue to grow after so that's probably the first part of it with the second part of <unk> countries and reward where you see that.

<unk> is pretty much stopped and that there is no nothing that actually the theories gone people.

Back to mostly normal.

And we're seeing that a girlfriend those countries.

Stayed the same as it was now we don't know to predict is that the sick with lost for the next five years, but we can say that day, we matrix that we have today show that there's no reason that things will change.

Great. Thanks.

Okay.

Give me in the next question please.

Thank you. Our next question online comes from Sterling.

J P. Morgan. Please go ahead.

Yeah. Thanks, guys you mentioned the multi year I was just wondering what percentage of.

The business was multiyear in the quarter versus what you've seen in previous quarters and then when you look at the conversion to premium subscriptions, especially given that huge number of new registered users. How would you characterize the conversion rate where you happy with it what do you think can happen to that conversion rate is we look here.

To the back half.

Hey, starting this is a little so in the second quarter.

The number monthly we're up about 72%, which is higher than the past, it's usually was around 68%.

With regard to the conversion rate so it's actually increasing the thing that we mentioned that also.

Last quarter, but it's actually continue.

Yeah, and sturdy when you think about conversion, usually we need to think about two factors right.

One is the product itself.

Whether it answers that uses needs and whether they are blockers.

Stopping to use it from from being able to do what they want to do.

In terms of the anything environment itself and second is whether they can achieve what they wanted to do in terms of the business functionality and said I would say is the intent how how high of the intent do you use our hadn't been they got to us that will actually get them to finish a website and then move to a premium I think what you've seen in about four five months.

Is that all of these are on the uptake so the product obviously as in our control.

M as in improving significantly you you've seen the widely used the team put together into shareholder update.

But also we've seen a huge increase in terms of the intent of the users.

That are coming in and obviously a much bigger need.

That comes with the hiring 10th.

Got it thank you.

Thank you Darling give me on the next question. Please.

Thank you. Our next question when it comes from debit card from two of Securities. Please go ahead.

Yeah. Thanks, a lot a couple of questions. So let me just on the.

Customer care expansion.

Do you have a inclination to do it more in house or Saint using an outside.

So much provider.

And then maybe we just talk a little bit about the promotional intensity how are you pulling on the promotion labor.

You increase your marketing spend 90%.

Innovated Sneer I'll take the first I'll take the first one.

As a customer care.

We believe that going forward not immediately but going forward do we will prefer the in house approach to anything else just because <unk>.

Dean customer care to be critical of course function of the business.

And.

There's one lesson learned throughout.

Corona is that we want to be able to control. It. It doesn't mean that will not work with third parties and with with a.

Third party vendor, but we definitely going to see also growth.

In house solutions that can you have there.

There's a promotion at.

So we know that we always adapt and test and change our marketing activities based on on the data.

The performance of it.

Naturally.

It's a big shift and change in the courts and the size of the cords and we.

We're testing and new or different approaches all the time.

We will not sure more than that obviously, because we never shared too much on the marketing site.

And how would do it.

Got it thank you.

Operator, I think we have time for one last question.

Thank you our last question comes from Jonathan Keith from sudden insight group. Please go ahead.

Great. Thanks for squeeze me and guys.

Taking my questions wanted to ask about.

Just pricing in general.

For the premium did you is I guess part promotion as part of.

Your efforts to something new subscribers, you provide any discounts to new subscribers.

Or even to the partners any any advance payment cheese or in that area last quarter, you talked about your paused price increases.

I'm, assuming that's still the case now and did you even cut into that four Q too.

Thanks.

And how to.

The first question about.

Discount when we do promotion.

We do provide discount with the customers for newcomers.

And sometimes not just to new combos, but it's really depend on the test, England, the country and what kind of promotion we want to.

We wanted to provide.

But obviously, it's based on a certain terms like for example, only to annual subscription and so on.

So this is something that we do and you mentioned before we do a promotion.

Based on many test and we adjusted based on the size of the quote and so on.

And with regard to the to the price increase.

Still pounced for and so nothing new happened to.

Okay, great. Thanks for the color.

Hello, guys.

And thank you I would I'd like to turn the call over to make your Donald for closing remarks.

Alright. Thank you everyone for you anything else today. We appreciate your time, let me look forward to speaking with you again soon that's a good day.

Okay. Thank you ladies and gentlemen. This concludes today's conference. Thank you for participating you may know disconnect.

[music].