Q1 2021 Zendesk Inc Earnings Call

Two our board of directors as we set ourselves up for the next.

Growth phase of growth.

I am excited across the day, two and a share and very pleased to announce that she like Lisa will join <unk> as our new CFO on May 28.

Sheila comes to us from Intel.

And where she has hold by a variety of leadership positions. Most recently she was the CFO and CEO of the data platform.

And also very excited to have Eric Constantino, who join our leadership team.

Previously announced he is joining us as our chief marketing officer, and we have been big fans of Alex for a very long time.

And so I'll use this occasion and this opportunity and to welcome Brandon Gayle C. Johnson to our board we are very very lucky to have you.

And if all closing here I wanted to take a moment to.

So say to express my thanks, and appreciation to and the unit, who is now giving us and.

Allow me to go a little off script here as I also say that it's been an absolute pressure for pleasure to work with you Elena like the financial results speak for themselves what we've done as an organization and speak for ourselves, but also on a price level has been and absolute pleasure kits and Oyu get familiar you hold family your mom and makes a fantastic for Vijay.

Your kid's yoga health and have been so good so Mike go too.

And while these taking the.

Youngest go to the pool.

And really enjoy that it's been really fantastic to get some noteworthy and and we wish you all the best.

And also of course your hospital John like it's been really really remarkable to have you as part of our little family and we wish you. All the best you can produce really well here and we are very proud of everything we have accomplished and and wish you all the best and with that I'm going to let you take everybody here from the Memphis. Thank you Elena alright. Thank you.

And you didn't tell me you are going off script, so like I gotta get the emotion out and out of this script current but anyway.

Did enter 2021 and with continued momentum during Q1, our gross bookings growth accelerated for the third quarter, and a row and alternate and traction right.

Reverted back to pre pandemic levels, we maintain great momentum with new customers and on the and snack and.

Expansion side, our dollar based net expansion rate was 114 up two percentage points sequentially first quarter revenue increased as Michael said, 26% year over year accelerating from 23% and the quarter. Prior revenue outperformance was driven by broad based strength across regions and all sizes.

Of customers GAAP.

Gross margin for the fourth quarter was 79, 6% up four seven percentage points year over year non-GAAP gross margin was 81, 8% up three five points year over year gross margin improvement was driven largely by revenue scale and increase the optimization of our personnel cost and our pre.

Alex support organization and efficiency from our hosting infrastructure GAAP operating margin expanded by four nine percentage points year over year non non-GAAP operating margin expanded by four one percentage points driven largely by revenue outperformance and gross margin expansion free cash flow was 26.

And the fourth quarter now moving on to guidance given our strong Q1, 'twenty one results and continued momentum and our business. We are raising our 2021 revenue guidance to 198 to $1 131, 8 billion, which represents approximately 27% growth year over year at the midpoint.

While our 2021 strategy is defined by growth we will continue to scale our business. We expect non-GAAP operating income in the range of 96 $201 million.

We expect free cash flow for the full year 2021 in the range of one and $5 million to $115 million, which includes expected accelerated rent payments of approximately $7 million related to our real estate changes and San Francisco before we get to your questions I'd like to say that I'm extremely proud of everything I've done that.

This company and has done over the past five years, it's been an absolute pleasure with so many genuine and talented people at this company.

And thank the sales team for always making these calls.

Super.

Super Fun and I also want to thank our analysts and investors for your support I believes and ask is well positioned to achieve its long term aspiration of 3 billion plus and annual revenue and it will be rooting be the biggest cheerleader for the company on the sideline with that I'll turn it over to Marc.

Thanks, Elena and.

And great working with you and partnering with you over the years.

And we have accomplished a lot together.

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

We've been on a journey evolving our product offerings to be more solution oriented rather than product base going forward, we're leading with our news and the suite to that and we're replacing our paid customer count metric.

With a customer logo accounts.

In addition, with the elimination of our chat only offering you can and should expect our logo net adds over the near term will be suppressed as we let some of the entry level channel with customers apart.

And desk over time, we're also evolving our enterprise proxy metric we do believe.

$250000 annual recurring revenue mix.

Metric is a more representative way to reflect our progress and moving up market.

Percentage of support are generated from customers with 100 or more support agents was approximately 45% at the end of the first quarter 2021, but again, we'll be sunsetting. This metric and we will only report on the new metric going forward.

Beginning in the second quarter of 2021, lastly, just a little more detail on gross margin, we continue to realize efficiencies and our cost of goods sold.

As we scale, including our data and infrastructure costs. Additionally, and our customer success organization over the past year, we've been evolving that for close to support our go to market motions that include account retention and renewal as well as identifying future expansion opportunities and as a results our GAAP and non-GAAP gross margin.

Has benefited from this evolution.

Excluding the impact from this change in Q1, 'twenty, one our GAAP and non-GAAP gross margins would have been 77, 8% and 83% respectively.

With that we will begin to open up for questions.

And we take these questions and.

And for Q3 randomized and so the first question today comes from Parker Lane of Stifel and let me find you Parker on here. So I can do or you can nominate yourself.

Can you hear me.

Great well thank you all.

Mikkel.

Very great traction with the new suite and two months I think for adults and customers are what you announced could you just talk about how that's resonating with and the entire base. I mean 3000 customers is very solid I assume a lot of those are your more power users and their customers have been very engaged with you for a long time, but as we think about the conversion rate of customers and you know over the next two or three years.

And what are you hearing out there and the field right now and how is that new product resonating with customers.

And we have never.

Launch settlement.

Successful products.

Bundling suite on anything like this before like the reaction, that's really been and beyond.

And our expectation and we are.

Slide the overwhelming so we're very excited about all of the customers using this I think thats a.

That's true trends here like first and foremost we are really kind of is brilliant invested and kind of the <unk>.

And the vacation of really making these things and again to use easy to use very easy to set up very easy script going and then we made messaging, Mike and integral key natural element of the whole flow English you can communicate with your customers decide to key trends, we see amongst those.

Both new and current customers. So we are very bullish about the continued adoption of the suite.

And believe that that will be kind of the default motion for all of our customers.

Yes, and that's very helpful. And then as we think about I think I mentioned and Alright, Paul and me.

And also what you got there.

50% growth in customers and they are about 500000, Inc.

And that primarily customers that have expanded with you or are you seeing much more traction and blending those enterprise type logos now with the suite offering that you Havent blades.

It's both like its I wouldnt like we like our call. Our key business motion is very much and land and expand motion. So that is driving the kind of the majority of our growth as we move.

And by into the enterprise, but this of course also affected by new customer wins that off.

Nacho then they traditionally was.

Alright, Thank you and best of luck and your next move a letter.

Thanks.

Barker of mixes.

Jen Lowe.

Can you hear and TB, yes.

Okay.

Just to follow up on that last question.

Around.

That's the new disclosures on the greater than 10, or 50, K and greater than 500, K and the growth rates, you're seeing there and certainly the growth of Israeli impressive and it's great to get that it's very helpful context.

But if I just look at this period, specifically on one hand, you're anniversarying the start of the pandemic and movement to shelter and place on the other hand, you have suite and a contributor on the large boosting asps.

Just curious if we look at those growth rates for 40% and 50% is that a representative number that we should think about as being and normal growth there or is it possible that there are sort of some comps that might have made that a little higher than normal that we should be aware of when we examine it going forward.

And then I'll touch on the comps a little bit if you recall last year really depend and began to play a role much for in Q2 than in Q1 so for.

The comps get easier as we get into Q2 actuals and Q1.

But that said Q1, obviously was impacted at the very and by the pandemic as well, but in general we feel very good about our track record and Thats why we made sure to provide a multiple year track record of how our 250 K our accounts have grown as a percentage of our total and.

And there is definitely consistent performance there over that period Q.

Q3, and Q4 can sometimes be more seasonally oriented for those type of accounts, but it definitely is strong kind of underlying traction there and is more representative of our large active our large customer activities we are doing.

And then one for more for me just again on the disclosure on the debt 3000 customers have already moved to Sweden and in particular ones that are existing customers that made the move to suite.

And what's sort of the uplift is there any kind of rule of thumb on what the uplift looks like for an existing customer and making that transition and it seems like it's out of the gate and a pretty successful seven per cent of there already is it going to go a lot higher than that I mean, how should we think about that as being a tailwind to our growth over the next year.

So.

We have said and the paths that you can get anywhere from a 10% to 30%.

Uplift from customers.

Theyre going into Sweden, and this quarter, we observed at about a 20% uplift.

It will vary from quarter to quarter and mix of customers coming in.

But there is definitely a nice uplift available to us.

Thank you sure.

Next up is true posture.

Hey, thanks for taking the questions nice quarter and.

Also offer my best of luck to you Elena and your next chapter. Thank you Tom first question.

Sure first question for Marc or Atlanta.

Since you've traditionally had a fairly significant portion of your billings that are left.

Less than a year I wanted to explore the extent that duration is playing a role both in Q1 are embedded in your full year guidance growth rates.

Generally I think we understand you're starting to see larger customers and and existing customers commit to learn and longer deals with you.

Which is definitely great from a visibility perspective, but longer duration doesn't always be and there are uplift and that dynamic and throw a head fake or potentially and flight growth rates to the extent duration and starts to elongate, especially as we're getting into easier compares throughout the year can you just put some color around that.

For the extent that the tailwind for you this year.

Well.

Definitely over time, as we're moving up market.

<unk> longer term contracts I remember that continue and 50% of our business still comes from monthly customers.

And so those are just debt.

And you have to think of the mix of our customers, but it certainly is at least as long as the last couple of years, we've been tracking us we can see that our contract term loan is moving up slowly.

Not going to be a sharp steep.

Steep move but steadily as we're moving up market youre starting to see longer term contracts for sales team is very focused on longer term commitments, which as you know has a positive impact as well to our long term churn and contraction rates.

Okay.

Okay, and then a follow up for <unk>.

Nickel or I guess, a toss up question as it relates to what Youre seeing with messenger and can you give us a sense for either in the back half of 2020 or early here and <unk>.

2021, how often messaging and sort of a key pillar.

Of the customers re imagine contact center customer engagement efforts and and what's the view on how sort of the traditional customer service ticket routing scenario fits into the model and then and addressing that could you maybe offer what youre seeing in terms of.

Messaging volumes.

What's the what's the trend line look like since we started the pandemic as it hockey stick and your sustaining those levels just give us a sense of of that piece.

And yes, we haven't shared any specific stats on that other than saying that is definitely one of the fastest and if not the fastest growing channel for us all of these different both social and private messaging.

Channels and there is no doubt that debt the behavior that is kind of the SP block.

Reengineering rethinking kind of their customers are the very much if thats it and so this new world, we're living and there's no doubt that messaging is front and center.

And of course, we.

Is it.

<unk>.

It also challenges how you think about how we think about our products and that.

And routing and and Escalations and so on and around.

A message based interactions are very different from like an email based and traction and that's of course, something we're working with all our customers on it and a lot of our customers also have to deal with debt.

Current way of engaging with customers and it looks a little different and so think about stopping differently and measuring differently and all these different things, but like we're going through that journey with all our customers and it's very exciting and.

I don't have more specific data on debt to share today.

And we can look for what's it doing it some.

<unk> laid upon and time, where we feel more confidence about kind of sharing these things, but there's no doubt that this is where we see the wireless going in and.

Our customers' inquiries for them.

Yeah that was a great answer.

Alright.

And next question from Kirk <unk>.

Great. Thanks, very much and Oh like L. A atlanta and congrats on a really great run ads and asking and best of luck.

Mikkel, maybe for you and as you all have that launched suite.

Are you able to have conversations maybe at the outset are with customers and perhaps a higher level and the organization and are you starting to see sort of who you're interacting with maybe moving up to a more strategic level and maybe up to the CEO level of customer service takes on a a higher imperative and this new sort of dynamic world.

Dealing with I was just kind of curious if I think that was happening already I was wondering if suite helps accelerate that and that sort of evolution.

Sorry, I think the.

I think the pandemic.

Has it stayed kind of your customer experience much more front and center for a lot of businesses because it changes all year traditional.

And kind of metrics with changes in interest from your traditional way of thinking about the customer relationship. So there's no doubt that.

And at that that's a backdrop for the change we are seeing and how people have to think about customer interactions and have to think about these new channels embracing use channels and building customer relationships and a different way.

I can't sit here and say Oh, yeah, yeah like all this messaging is bringing us into the CEO Bud light.

It's definitely.

We are definitely living and a world where kind of the customer experience and customer engagement.

Overall all of these online and you online channels is much more front and center for our customers.

Okay, and then Marc obviously, our Atlanta, if you look at any of the enterprise metrics, whether it's CRP O. The average.

<unk> about 250000, K, it's all training and the right direction, obviously, youre going deeper with your customers Youre getting broader with your customers and also just curious are you getting into bigger customers, meaning are you landing at a larger customer level more often and you guys and add a lot of success and our mid market and then kind of ground with your customers and I was just kind of cured.

And you're actually seeing more enterprise for what we can say, a fortune 500, and fortunate to that and global 2000, and however, you want to define.

Define it are you starting to get into those at a little bit more I guess normal cadence.

And I would say that we continue to evolve and and we're doing both as Nicole said on earlier essentially as you know our roots our land and expand so that continues to be a critical motion for us.

But certainly we're starting to see.

He said have conversations at the C level as well as continued to occasionally but land those larger deals, which I think is.

And you can see and and the metrics and the shareholder letter and how that's playing out over time.

So that's that's a good momentum we're seeing.

But again, we continue to focus on land and expand that.

Both are true.

Great. Thank you all.

Thanks next step as Brad sills.

Oh, Great Hey, guys. Thanks, Thanks, so much congrats on a nice quarter.

I wanted to ask about net revenue retention, obviously, you saw a nice a nice move up this quarter still not at that 115 or high teens level that you had seen kind of free previous to the pandemic. I guess my question is two things one what drove the uptick this quarter incrementally where were you seeing more expansion activity is it just simply the suite or <unk>.

And our customers coming back and could we see that metric get back to that kind of high teens level is that is that I know the goal is 110 to 120 zone would be towards the high end, but and what would it take to get back to that level.

And we have Tom.

And that number continuing to move upward over the.

For the year I think there are a couple of things going on first.

A broader product mix.

Kind of is focused on the suite again, we get and uplift from our existing customers, but think about like some of the industry categories that were hard hit they're just now beginning to return to normalcy and.

We would hope to see more normal expansion of just natural growth from those set of customers is car ride share and kind of some of the hospitality and transportation industries come back.

I would say is that.

Through that whole period, if you look at our churn and contraction rates have already come down to.

Pre COVID-19 levels.

So now we would expect the next step to be kind of the expansion.

Expansion rates to come back to those pre COVID-19 levels, which we hope will happen over the next two or three quarters, great. Great. That's great to hear thanks, Marc and then one for you and Michael Please if I may on Sunshine and I know heading into last year. There was a big push with Sunshine a lot to do.

Features that were released and.

And the exciting offering.

And then with the pandemic customers pulled back I think from some of the plans to deploy.

Support and a more strategic way more custom way.

What are you hearing from customers and those types of projects and they are they coming back to these types of.

Projects to think about deploying Sunshine and Zen desk, and a more kind of custom way and embedding and into the kind of a fabric of.

From a front office applications.

And Brad and I don't really have anything new to share on that like all our focus with the suite is also to make a lot of the.

Sunshine components easily available for our customers without having to go into a new purchase conversation.

And also kind of making some of these tools a little bit.

And it's available for heavy and more easy friendly to use for all and majority of our customers.

And so we're definitely seeing kind of Sunshine and a lot more hands today.

I think it's too early for us to say exactly talk about adoption and and but it's becoming more part of kind of the normal and adoption of sameness.

And happy to share more about kind of the kind of examples of usage and so on and that we are seeing maybe later in the year makes sense, yes, absolutely. Thanks, nickel and Elena. Thanks, Thanks, so much and great working with you.

Thanks, Brad next up is Jonathan <unk>.

And can you hear me.

Great.

And it looks like for me too. So thanks for taking my questions and I'll start by saying I will Miss share Elena and best of luck.

And.

And with my questions I guess I wanted to ask in terms of them.

Pricing, maybe just a question more for Michael how much should price play in terms of uptake of the 3000 customers and Youre talking about your simplified it and I would actually hypothesize and it's kind of a discounted because youre still about charging by usage like for messaging.

This charge and buy.

So like how big of a factor was pricing and terms of the uptake of <unk>.

The new customers for suite.

For the foremost, Jonathan and you need to find new microphone.

Alright.

Okay, and something wrong with us.

Alright.

And finally here.

It can go and Thats Joseph.

There's a lot of noise, but.

Okay.

So.

Let me say like if.

If you think about the pricing.

As a discount.

And I'm happy I think we have achieved what we wanted to achieve like it's really about simplifying our pricing and making it much easier to understand.

It's easier to buy our products and much more transparency around these things. These are key areas as kind of we have sophisticated all our products and product operations over the year. So these were one of the kiosk for one of the key demand for the module and simplified these things and.

And it works out opposite it works out like we get we see and average growth and average deal size and not only from like big implementations, but from the.

And the deals we can do with the suite. So we see an uptick.

With the new suite so.

We have achieved what we wanted here to make the perception of the product much easier much simpler much cheaper and if you will but we are seeing we're seeing all the improvements and <unk>.

Deal size that we had hoped to see.

Okay, great and if I can ask Joe and just a quick follow up in terms of the.

And hopefully you can hear me clearly here.

And through the Mic.

In terms of the improvements you've made.

Hosting efficiencies and the revenue scale for gross margins can we say is that going to be <unk> now going forward or is this more of a onetime thing for Q1.

Well I think we've made some great strides around our gross margin over time.

We had the benefit of moving to cloud infrastructure, and we kind of finish the swing on that there will be incremental improvements will always look for and Cogs.

But I would expect us that will be and the low of 80% gross margin for the time, Inc.

Alright, thank you.

And that's a non-GAAP gross margin, yes, yes got that okay.

Alright, and next up is somewhat.

Hi, great. Thank you for having me on laying out and go look for tier two.

Working with you and the future and I Hope you get some well deserved R&R and the meantime, so and and Marc Congrats on the on the neuro and so with that out of the way and maybe just as we unpack the net expansion.

Can you help us understand maybe how much of that was from the customers that were negatively impacted and 2020 versus just the traditional expansion you would see out of the other 80% on a regular seasonal basis and then I have one follow up question.

I think a lot of our expansion is really showing up from just good healthy business characteristics not all of our customers that had got hit hard last year really return for lease. So I think that we just have a very healthy expansion dynamic people are bringing back employees, which means they're usually more agents were getting and higher ASP.

And from customers moving to the suite and really those are the primary factors here that are helping our expansion rate and gives us.

Confidence that we'll continue to move our expansion rates for the mid to high level, where we were prior to the pandemic.

Understood and then and then maybe.

A different way to ask it relates to the customers that actually did really well that may have been and COVID-19 beneficiary I bought a peloton during all of this and I think there is that and desk customer one when I chatted with what the service part and so I'm curious how you're seeing trends look maybe what were COVID-19 beneficiaries and if you're starting to see how does that taper or are we just continue.

And to compound that growth as well, maybe just help us understand if theres anything thats reverting to the mean inside of that base.

And I'll, let mikkel answer that but I think we believe that a lot of the changes and the market are durable.

Yeah.

I think.

I think that this pandemic and pets.

Taught us something about how to how we can.

It changed a lot and what happens permanently and you'll need a lot of these habits will stick around and there's no doubt that you know.

You mentioned peloton.

No doubt that like peloton bike this year has been a breakout year for peloton.

And the convenience.

Kind of the price should they have brought to our lives and how we can do these things that's permanent and debt.

And that will change People's mindset around these things so and so these are the trends. These are the trends and we are talking about without cross and that's what has changed on a more permanent.

The scale of what a more permanent permanent kind of timeframe with the kind of the convenience et cetera, we can bring to our customers because these things for loss. We never we don't we will never go back to how things were before we will how.

How we shop, how we consume how we watch movies, how we how we get our stuff. All these things will have changed permanently and we will take what we have learned the best from the pandemic and that will play a big role and how we do things.

Going forward so.

And that's what we are seeing and Thats, what we are talking to other customers about and.

I hope that helps.

No great. Thank you so much and I. Appreciate you guys, taking my questions and nice start to the year.

Thank you art and Europe next.

Hey.

Good day everyone.

Can I.

And the growth metrics that you disclosed on the 250 and 500 K are our customers.

Very impressive.

Is there any way, we can get a little more granular and for that is it are you seeing broader seat deployment, that's driving that is it.

Customers that want advanced functionalities, and theyre coming and at those higher pricing tiers, and and just how should we think about some of the growth that you're driving and those larger customers.

Yes, I mean, I can I can start and marker mikkel you can add but essentially we're seeing what we've always seen with just customer start out with us and they grow with us and thats continuing to be true seed expansion through more product adoption.

So that's that hasn't really changed other than let Nicole just talked about which is some of the COVID-19 impacts that are durable are continuing obviously to shop and our expansion rates.

So that that would be just characteristically what we did it looks like we land a customer we expand them, but as we talked about earlier there are certain cases, where we're seeing customers from larger sizes come to us so it's a little bit of both.

And over time as we've now launched the suite, we've evolved our product that's resonating more with these larger customers.

Yeah.

Okay perfect. That's very helpful. And then I know, we've talked to and we've talked about suite.

A lot, but I was just curious if we can and what youre seeing and the sales suite, whether thats seeing with similar level of upmarket success with larger customers or if it's still relatively SMB mid market.

Solution today.

And it's still very much like in SMB and mid market solution and say is that as well focuses for us short term.

Longer term across more and more interesting things and I think especially as we.

And integrate the products deeper.

There will be some new opportunities for getting into some new type of deployments, where we answer day, but.

Future.

Future.

Understood. Thank you and congrats.

And our best of luck and the future.

Thanks for origin net.

Next up is Brent price.

And.

Thank you hopefully the mic is working here okay.

Yes, we will start with with Elena and finish with thought with Macau Elena and his first off it's just been a pleasure working with you over the last five years Amazing journey. You had here is scaling the business I think what IMAX and and five years and it was under a 200 and our business when you joined and certainly well over a billion today. So.

The good news is that we.

And we hope you get a break the bad news is there's a lot of board opportunity that would love to have.

Expertise I suspect you're going to be busy and my question for you is the high end of the guide here does suggest growth could accelerate back above 30% back.

Back to pre COVID-19 levels and.

And Q2.

What parts of the business are leading this recovery is it enterprises and international is it higher close rates and you're seeing the top of funnel build here just trying to assess the optimism and what's driving up and yes, you were going into Q2.

Thanks for the question. So so really it's broad based Brent I can't point to one thing and say this is the thing in fact, that's what's actually very encouraging and giving me the confidence when you think about as we started looking at the complexion of the quarter, we start and looking at all the segments. They all performed really well and we sort of looking at all of our regions and so we are seeing.

What I would say a very broad based.

Success across our business, but also the suite is also very encouraging just thinking about you know.

Over 3000 logos already with two months of activity.

And already 7% of our recurring business like that that just is so encouraging for us as well as the increase in average deal size. So all of that is really what gave me the confidence and the guidance philosophy hasn't really changed so we always talk about we look at sort of the probabilities and every quarter has a little complexion between.

Enterprise and SMB, but.

It's really broad based.

So and that maybe for you and nickel.

You talked about Zen desk suite, now, becoming the default sales motion and new problem messaging as an add on but.

Walk me through the appeal hearing.

<unk> suite of billings and the largest customer is appealing to all customers whats, what's so different about than debt suite and you didn't have before that you have today, that's resonating and at 7% and they are today five years from now is it 30 per song it could it be 50% just for.

Moving to understand why is it resonating now and different when you've had this add on messaging component stuff for a while.

Well, yes, I think we're going to like.

As we see a few more quarters, we can talk a little bit more confidence about the trends we feel very good. So far I think you know another what percentage was about is this concept of democratizing.

Technology is democratizing.

And it capabilities that anomaly more complicated more expensive ECS for kind of adapt adopt and use and so on and and I think that's one of the main driving kind of.

North stars for kind of the for the sweetest debt like we it's not just about putting these things together, it's really a Marc it's really about on one side and making these things work elegantly together and making it as easy to set all the call center or a messaging power.

Customer service center on email based of switch between the free and just I don't have to think too much about it.

And you just like you don't have to plan. All these scenarios is relatively easy and technology of the product as guidance and that's one thing I think on the other side is just like we probably have with all of the capabilities and all the features and all of those bonds and stuff. We can do we kind of we probably put too much friction and so the sales process. So it became a little <unk> meaningful.

Customers like we suddenly put too much choice and confusion.

To put a little bit on the extreme yeah. So I think these two things.

Really helping with the adoption of the Sweden and this is why we put all of it from going forward, So and your risk.

And friction in the product and friction and kind of go to market pricing and packaging and those two things combined seem to be resonating very helpful. Thank you.

Thanks, Brad we're going to go into Pant wall Ravens.

Oh, great. Thank you.

So first off Mikkel I haven't been on my peloton and about a month.

But but I am getting emails from one of the instructors, which like Miss seeing you on the leader Board. This youre doing this worked out excellent ex FX ex Olivia.

And I have a feeling you maybe you may be driving that that's an awfully personalized E mail.

And so my question is two months.

Okay.

Medical personnel growth single do alright.

There is you have a ton of leadership changes here right you have a new CFO you have a new CMO the old CMO is becoming your new CLO.

Your president of products is now your CTO and you now have a deputy CFO.

Congratulations Marc.

When did you decide to make all these changes and what were you thinking.

And so it's all like it's.

It's all driven by.

It's not the ultra and buy the same thing first and foremost arenas.

This announcement was of course, not something we had planned and.

And we did try to nail her to her computer and but no no success. There. So we did some changes there for spy elite and his departure I think the rest of the changes. We are doing is that we are kind of we are complementing with the team and some great times covenant.

Covenant and the team and some great John and we are shaking up a little bit possible organization, where we believe that like some of our some of our product people to get closer to our customers and closer to kind of some of the cultures, we have kind of nourished in more.

Some of our customer facing operations at the same time and it's also very important debt.

We have a CTO for enterprise engagement and that we can play a much more kind of offensive aggressive play there and really kind of lean in on and are the gray space. There is between kind of product capabilities and like what how customers want to use products a day so.

It's all driven by our ambitions true.

True.

Our growth ambitions is all driven by <unk>.

And our ambition to have a stronger storyline and the markets will be much and must have been a partner for the enterprises and of course like building building and a company for future growth.

And I asked the deputy CFO and that's the first one day.

What was the thinking behind that.

Well I think that.

And so.

And I don't think it's a first for.

First and foremost I think it's also just like I think it has brought and will bring a tremendous amount of stability through the transition we are doing here.

And our way of kind of making sure that debt.

And that transition that theyre somebody to support both the outgoing CFO and the incoming CFO and can be a connecting tissue for the rest of the both leadership team and the team and the finance Finance organization and then I believe that it will set us well up for the future true to have more.

And off mall leadership more.

And more people that can kind of think big and so what we want to do with our teams.

Thank you for that perspective that was a lot of information about not only for Marc.

And then.

I got it I got to keep moving that we got through for people. So thanks for that.

For the great questions and.

Derek Europe mix can I, just ask you guys limit to one because we're going to announce and otherwise.

Oh.

Shoot Okay, well do better next time and keeping the meeting going.

Yes, well and I just wanted to say you'll be matched it was great working with you and I hope to cross paths down the road.

And maybe then Nicole I'll talk to you.

And escrow late and then what is normally our demand generation and event for you guys I don't thank you.

Held a virtual event this year. So yes, we'd love to hear just kind of how you are investing in marketing and in different areas of demand generation, and then and I know Alex Hasnt started yet, but you know.

You have a new CMO coming onboard and and what are you expecting out of her in terms of new initiatives.

And I think everybody and everybody and that takes extra and a lot of people are thinking about like what is what is all up and how should a future of and strategy look like and lights of different behaviors and then also to ensure that we can also celebrate together, but I also like understanding debt.

And there's a lot of waste and calories, we didn't plan for a related this year because.

That would be about and now that we would do so or have an event. So and that's definitely not the time to have a big online event, sorry, a big offline events and.

And we have created we have.

C of smaller events on the iron and that has worked out really really well for us we have much better engagement and much more targeted and much more focused and much more interactive and that's worked out really well for us how we think about it for the future, yes definitely that will be going ahead.

Alex involved and figuring that out.

Thank you.

Thanks, Derek Thanks for understanding too Dan Reagan and for BJ.

Hey, guys. Thanks for taking my question.

So I get the strategy of putting messaging at the core of the suite with the goal of driving utilization before focusing on monetization.

And then the pricing dynamics.

Are there any stats that you can share around utilization that would show that you are seeing traction adoption.

And then how does this compare to your initial expectations.

And I don't think we have more staff to share like we shed some we had a report out.

Early.

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

So I can I can refer to that but we don't have anything on the new sweep its still too early days to kind of share data for.

And that.

It makes sense got it alright, thanks, again and Elena our team wishes you the best.

Thanks, Tom.

Alright, and next up Ken Lowe.

Okay.

Hey can you guys hear me, Okay, I can somebody get the video gallon, yes, we can hear you fine.

I'm a lot.

So I guess I just wanted to touch on the strong billings dynamic also really good the current rps growth and the mid thirties, if to what extent should we should we lean on those particular metrics as a potential leading indicator of revenue growth maybe not this year, but maybe first half of next year and any thoughts there would be great.

Yes, I mean, I'll start I would just say our <unk> continues to be a great proxy for us in fact, I would I would encourage you to look at and that because our billings. As you are as you know many of our customers are monthly and that billings number can move and then.

And any given quarter, but <unk> is a good proxy press and.

In particular, and just but just remember it doesn't always it doesn't always capture all of our customers yet to look at a couple of different data points, but we definitely encourage you guys to look at RPM, and especially as a proxy for enterprise.

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

Thanks, Ken next up.

Alex Zukin now.

Hey, guys.

Thanks for taking the question so.

Elena or for Mikkel, it's unusual to have such strong enterprise activity happen and so early in the year. He as you all know enterprise software Q4 business, what do you ascribe some of the successes at more bounce back is it better sales talent as the demand environment.

What how would you kind of categorize it and then how would you talk about your pipeline and what Youre seeing now for the rest of the year underlying some of the confidence because if I look at the CRP of bookings it looks like you actually accelerated.

In Q1 versus almost every quarter last year on your toughest comp.

Yeah, I'll start and Luckily and definitely chime in I mean, I think Marc said it earlier at the end of Q1 last year and just remember we sort of.

COVID-19 started to hit us towards the tail end of Marc loss share, but I would.

And I, just give kudos to my sales team their resilience through through the pandemic and exiting Q4 and into Q1 executing like a machine and we've really invested in hiring reps early and that was part of our strategy has always been the higher early to make sure. We have that quota on the Street January one.

So I think that that's part of it the other part of it is we're seeing success across all of our regions, which as always.

Generally help for right instead of having we look at the regions and the portfolio and when they all performed well and that obviously helps with our results but.

And that's what I would call out is really that as well as.

You're starting to see a little bit more optimism and I don't know that will completely out of that was for definitely starting to see more optimism with our customers.

Alex I'm, just going to add if you think about last year. When you hire early and you keep people and their seats they become more productive and.

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

Perfect. Thank you guys and.

<unk> Atlanta, and looking forward to working with you again wherever you land.

Thanks, Alex.

Great.

Thanks, Alex next step as a standard.

Okay.

Awesome.

And for everybody to say I'm going to stay off video.

And the.

Elena.

We'll definitely Miss you I was it was awesome working with you all these years so.

Best of everything and hopefully our paths for crops and the future.

One one quick question for me and I wanted to come back to Sunshine CRM.

For a for a second.

And.

And maybe just.

How are you guys thinking about the product into 2020 one.

And what are your expectations internally as far as the adoption.

And then the contribution to the revenue growth for this year from Sunshine CRM.

And could you just remind us what are what's your latest thinking on on pricing for Sunshine.

And I'd say around specifically.

Going into this year. Thank you.

Yeah.

And so our.

Plans for Sunshine is primarily focused on getting into people's hands, and having people and start using it more naturally as part of and.

And extending.

And.

Building capabilities alongside.

And the suite, so, making this really really accessible and making very very easy to use is kind of our key focus for this year.

We still have like once you kind of grow out of the basic capabilities as an up sell opportunity.

Which is of course important for us, but I would say right now and more and we will be for this year much more focus on getting it is and some people and getting them to use it.

Got it thank you.

Thanks, Dan and our last question today comes through Chris Merwin.

And you.

And yes hear me, okay. It looks like I can't say need for video.

Early on right now.

There we go okay. Thank you very much.

Yeah, well just in terms of my question let.

Wanted to hear a bit more about the F&B business based on the new enterprise disclosure and we can see the incredible growth youre seeing and the enterprise segment.

It would imply slower growth for for the rest of the business can you just talk a bit about how much of a focus that area is for you I mean should we just think about the enterprise mix continuing to go up and up and up and yes that that F&B areas can eat more covered by other vendors and the future. It just curious how you're thinking about that debt set customer segment strategically.

No I would just say, it's really important to understand that that segment continues to be important to us we in fact invest and making it super easy and for those customers onboard with us because a lot of those customers and as we talk about expand with us over time and so.

There's not a scenario, where we become and only enterprise company, we will always focus on.

And to grow our SMB business as we know a lot of those ultimately turn antenna price. It doesn't mean, we can't go up market, but we continue to and to make sure that that experience that web try and buy experience is really efficient and that we can continue to onboard those customers.

Chris one of the things that's important about that segment as we have a lot of graduates out of SMB into commercial and some of them. Even go into the enterprise over time, because they are growing rapidly from the successful and internet businesses ecommerce businesses. Other companies that we do business with so being relevant and SMB is always going to be part of our story.

And I think a very.

Important kind of driver of our future growth.

Okay, well, thank you both and when all the best for you and your next chapter.

Thanks, a lot price.

And I wanted to thank everyone for joining us and again. This is bittersweet for me because this is my last call with Elena, but it's been a great ride Elena and.

Thank you everyone for listening into this and this call today and we will see you all next quarter take care.

And I guess.