Q2 2021 Zendesk Inc Earnings Call
We accelerated our revenue growth this quarter to 29% year over year compared to 26% last quarter.
So both of our bookings and our op youll grow by record dollar amounts driven by strong increases in sales to enterprise customers and the continue.
The adoption of centers suite, the changing makeup of our customer base and the products. They use are translating to longer customer engagements with higher retention.
While our record Q2 booking performance and key metrics reflects this fundamental.
So the strength of our business, we have updated our modeling and forecast to adjust for pacing and users usage trends that resulted in quarterly revenue for this quarter than it was at the lower end of our expected range.
And Sheila would have the absolute pleasure.
The net of providing you with greater details on that in a minute.
In what is now a does it so far as the economy, our customers have to deliver the real time experiences that I expected in an online on demand world.
That means an increasing number of people are trying to reach customer service through new channels like social messaging.
Chad.
And that is also why that's 1 of the reasons why whole word of mouth 8000 customers are using the center suite, it's our messaging centric radically simple customer service solution and much more suite is a significant driver of our increase in average deal size all while giving.
Some of more relevant more powerful capabilities.
All of the speaking centers continues to win because we deliver best in class solutions without the long complicated.
We've seen this hold true, particularly for leading gaming platforms that are experiencing unprecedented searches and users.
And support interactions our products enables the interactive immediate help that game is expecting the came up the net this quarter, we added new logos, including the world's largest video game retailer and we expanded our relationships with existing customers such as our good friends from low roadblocks.
<unk>. So now we support more than over 50 large online and mobile gaming platforms that serve nearly 3 billion gamers worldwide.
The foundation of our business has never been stronger and I am excited about both our near and long term growth opportunities and with.
I will turn the call over to Sheila to discuss the key points off the quarter of taking the way Sheila great. Thank you Michael and thank you everyone for your time today, our strong momentum continues in this quarter, we delivered $318.2 million growing 29%.
Of that year over year, an acceleration from last quarter's growth of 26%, both net bookings and total RTL achieved record levels driven by strong enterprise penetration and suite adoption as Mikkel mentioned changes to our booking pacing impacted this quarter's revenue a greater percentage of.
Of our bookings with close later in the quarter than last year and our historical trends. We expect this to become persistent as we continue our push into the enterprise, which as of Q2 has grown to 35% of our total or are we also adjusted our model for certain nonrecurring you said revenue from products.
Talk for which the volatility was at the high end at the onset of the pandemic in 2020, our forecast for the remainder of the year reflect our updated understanding of these trends.
The performance of our suite has been outstanding it continues to surpass our expectations and now makes up more than 60.
Like the <unk> of our total <unk> up from 7% last quarter in connection with the launch of our suite. This year, we made the strategic decision to eliminate our lower and lower our product plans as expected. This decision is causing a leveling off and our total logos. We expect this trend to continue.
Gene first for several quarters as the customer base rotates out of these lower value plans towards suite.
Adoption drives better retention predictability and longer term growth and positively impacts our net expansion rate this quarter or any of our was 120% at the upper end.
Of our healthy range of 110 to 1 'twenty and up from 114% last quarter, we may see any or increase in the near term.
We graduated from the Spike in churn and contraction, we experienced during the onset of the pandemic, but we do expect to stay in this range long term turning to margin.
Gross margins of the second quarter was 79.0% up nearly 4 percentage points year on year non-GAAP gross margin was 81, 3 up more than 3 points year over year.
Gross margin improvement was largely driven by revenue scale increased optimization of our product support.
The gas and our cost and efficiencies from our hosting infrastructure.
GAAP operating margin declined by half a percentage point year over year to -13, 3% non-GAAP operating margin declined by 0.7 percentage points, largely driven by higher personnel costs as we continue.
You to invest in our growing business for.
Free cash flow was $20.9 million in the second quarter.
Now moving onto guidance given our strong Q2, 'twenty 1 results and continued momentum with our customers. We are reaffirming our race from last quarter and raising the lower end of our full.
Full year 2021 revenue guidance, we now expect full year 2021 revenue to be in the range of 1.311 to $131.8 billion, which represents approximately 28% growth year over year at the midpoint, we continue to expect our non-GAAP.
Operating income to be in the range of 96 million to $101 million.
We expect full year free cash flow for 2021 to increase and be in the range of $120 million to $130 million or higher free cash flow estimate for the year represents operational improve.
GAAP the.
The resulting in stronger collections performance to close I would like to thank Marc Kabi, our deputy CFO for all of the support as I transition design desk. My first 2 months of your have reimbursed why I joined Sun desk, we of exceptional talent with the true passion for customer.
Our success and tremendous growth opportunity ahead of us I look forward to growing and scaling our business building on our strong Foundation you will hear more on this front at our Investor meeting in November expect invitation shortly and with that I will turn it back over to Jason for Q&A.
Improvement in cash Sheila and as we've done for last few quarters, we've put everybody in the randomized our first stop is a broad set of of Bofa. Please go ahead, Amit your mic and turn on your camera.
Oh, great. Thanks, guys, sorry about that.
Excellent well I should say.
1 of the asked the question Sheila just around the.
The the consumption of the move to consumption that you'd mentioned that the impact of this quarter. If you could just double click a little bit on that.
What drove you mentioned some volatility.
In the prior year assumption, but was there any delta this quarter on your expectations on the consumption side for the for.
For Tox.
And so as we looked at it.
The you know kind of the use of today's business. You know, we saw quite a bit of volatility last year with the onset.
All of the Covid and we saw really rapid growth in the usage rates of talk as we started to come a bit out of it in the most recent quarter. We saw some of those growth trends attenuate. So we're really adjusting based on sort of the new environment. We're in.
As we said you know we've got a lot of our customers.
Onset of moved up in the sweet and they're using some of the other.
The other messaging platform so to.
To some extent, it's you know, it's a pretty unusual environment of Covid last year, and then coming out of it of bench and so we're adjusting our models for that.
Got it got it great. Thanks, so much of that and then the net revenue retention of acceleration pretty.
<unk> said it was quarter congratulations on that result.
The sleep of sweetheart lots of do without is there anything else you'd call out there.
From the.
The product side that you're seeing that's driving that acceleration in <unk>.
Particular in some of those hard hit industries that you've talked about in the past are they starting to come.
The meaningful more expansion deals now.
Any other color you can provide on the nice acceleration you saw net revenue retention. Thank you. The sweetest played out of major role and in the net expansion rate certainly and we've had tremendous success with the sweet nearly doubling.
Since when it was introduced in the Q1 time frame we also.
We are seeing them you know some of the industries that were hard hit coming back we've seen about 50% of that come back and then there is a bit of the as we bleed off some of the contraction we experienced during the Covid, there's some effect of that too.
Got it. Thank you so much sure thanks, Brad.
Also.
Okay.
The next question comes from Alan at Wolfe. Please on mute your mic and turn on your camera.
Alan.
Hey, David.
Thanks for taking my question can you give us the.
The sense for what you saw in terms of the demand environment. Both from the first half versus expectations for the second half would love to hear also Alex the selling environment is our surround geos, having a bigger bounce back how the strength in the enterprise versus small business and the Navajo.
She doesn't want to give it a la Colorado you want me to ramble away a little bit here, you Ramble and then of course.
Kind of on the back of your Rambler now like we are really really positive about the demand that we've seen this quarter.
It has been broad based but like all of the enterprise business has been doing really really well.
And.
You can see that throughout our metrics. So we're very excited about that and we see in general just everything coming back like people are really gearing up for solidifying their plans. It's less sick you know it's more of it seems more balanced it seems more prescriptive received more intentional of the brands now diglossia was a lot of hectic.
Zig activities I would say so we feel really good about the risk.
The buy lot of confidence that the Q1.
Increasing confidence here off the Q2, and we see that continuing and globally.
Sure.
Like all regions over the phone very happy about the.
Got it. Thank you for the that color and just as a follow up you know how of the suite for about 2 quarters under your belt that represents 16% of your <unk> can you talk about the main drivers were like limitation behind how big it can get as a percent of exiting the year ultimately like what does success look.
Like related to the suite for the year and going forward. Thank you.
And like we have defense success pair of parameters I think the adoption is is beyond what we expected the adoption of its going really really well and we want to see.
Like we want to see the usage.
Each of the new capabilities following alongside of that and that's going really well true.
But like the.
We see that trend continue for a while and and.
The Don we don't have any constraints, neither and kind of how customers are using it of how they expect to use it or that is that the city.
Hitting any kind of limit true the adoption of what kind of adoption, we can get up the suite.
Yes, I would say.
The the.
The estimate is that at least 60% of our customers.
And well basically be aligned to suite and the nickel side, it's going.
Beyond our expectation so we might may find over time that there's even more applicability.
Got it thank you.
Thanks, Alan and the next question comes from Kirk returned from Evercore go.
Go ahead.
Please mute your mic and turn on the tumor.
Got it.
Tried to turn my camera 100, let me so.
So I will just have to go with the.
The voice over the over this but yes Sheila.
I'm sure you'll get a lot of questions on this but can you just talk about.
Sorry, Okay, Jason the best May start my video so there we go.
Can you just talk about.
What's your.
Sort of embedding.
And the guidance from some of the consumption revenue because I think when you look at the quarter. The bookings were solid <unk> growth was really good all of the forward looking metrics really strong NRI is obviously up yet the guidance is sort of just coming up at the very bottom end of the range not sort of moving up in aggregate. So after this quarter I assume youre being a.
Our conservative around the consumption part of the business I'm curious sorry can you just give us some color on that because I think that would be probably helpful. Thanks.
Yeah, So and you know certainly as we saw in Q2 some of the consumption revenue. The you said revenue attenuate, where we're baking that into the forecast.
Net.
A little bit of churn that we've kind of captured captured that key insight and then in terms of thinking about the guidance. This is literally my first full quarter in the.
Sure. So <unk> got lots of opportunity to learn more deeply about the business and the contracts of the business and so the way I really thought about guidance was.
And by the Q2 enlightened them as you say with the strength incredible strength, we're seeing in subscription, but making sure. We put you know of.
Kind of a practical range in place as we navigate through through this transition even me personally navigating through a transition.
For the first full quarter.
And the chair.
1 to 3 end of the deep end of starts up.
And I have not been board every minute of it.
Just maybe 1 follow up out of this for your Mikkel, but the customers the contracted last year. The they drew down or are you seeing them come back or they are the adding seats back to the mix.
And kind of how does that shape up for the rest of the year. Thanks very much.
Yeah, let me take that 1 so yeah. As you said last year, we saw a significant impact to many industries that we support and as of now we see about 50% of that coming back approximately 50% that's about the same that we.
Thank you Juan.
We're seeing that so we would assume over the next several quarters will continue to see that come back. Okay. Thank you all.
Thanks Kirk.
Next question comes from Ken Wong of Guggenheim. Please on mute your mic in kind of under Tim. Thanks.
Hey, Ken we can't hear you.
Hello can you guys hear me now.
Okay, Ed sort of of double <unk> gone, so sorry about that.
So for you Sheila.
As we think about the.
The higher enterprise run rate that you guys are talking about so we do see it in some of the Kpis.
And obviously billings looked pretty pretty attractive.
I guess, how should we think about maybe the second half kind of.
The billings revenue dynamic there is there a scenario where perhaps the billings of it will.
Outpace revenue and I know thats not really a metric you guys necessarily guide to but any color on that side would be particularly helpful.
With kind of this interesting dynamic in Q2.
So we're continuing to see strength in enterprise.
That was certainly in Q2 as we said we saw on the large acceleration of deals over 250.
They are so we're continuing to see that.
But we're just seeing that those larger deals take longer to close.
So we saw that effect in Q2, and we're assuming that came the fact for the balance of the year that those more.
Larger more complex deals just take a bit longer to close and so we would expect that that trend continues and we would expect that would continue.
Lots of progress of the enterprise space.
Got it got it and then I guess as we think about that longer sales cycle I.
I guess do you feel that that was partly.
You guys weren't quite ready for for that kind of a.
Kind of of sales kind of negotiation process.
If the potentially alleviate in the back half or what do you think it is just very much just the nature of of as these deal sizes get larger and larger we should just come to expect that the that extended sales cycle is what are what's going to be on tap.
So and nickel has a lot of instead of a share here, but you know my own personal experience is typically.
The enterprise is the longer sales cycle I'm almost any product any industry. It's just you know theres more of approval levels and things like that that need to occur versus a net and the smaller business. So I don't I don't I don't anticipate that the nature of those businesses changes and so we're really just.
Thing that you've got the provisioning that into the forecast SMB and commercial obviously has a much more rapid pace just due to the nature and the goal I don't know if there's anything you'd want to add.
That's why in Chile and Kim.
Of all.
The revenue recognition is based on the pacing of the bookings as you know in the quarter.
And this model of E based on this based on historical data.
So thats also heavily influenced the what we saw last year.
Last year was.
I would say loss less intentional about purchase of the amount of activity was lessened personal we have more intentional purchases right now and definitely more.
More of kind of enterprise deals. So we see the Margaret Benton and starting to gravitate more towards the end of the quarter the last months of the quarter.
And that is that is the the shifts we've been seeing.
Net that she the has built.
Built into our models going forward.
Makes sense.
Yes, yes. It does thank you Michael Thank you Sheila.
Thanks, Kevin My next question next question comes from Brent Brakeman over Piper Jaffray. Brent. Please on mute your mic.
<unk>.
I am not sure of virtually issue here, Sheila I guess from me listen the sweeteners recently.
Inc is fantastic enterprise adoption really strong the.
The flip side too strong.
Net expansion is it made the contribution from new customers is not ramping maybe as fast as as we think so 1 of the puts and takes relative to new customer lands that appear to be kind of recovering in a more subdued.
Probably the piece here.
And what can you do specifically to drive maybe a reacceleration on the.
New customer contribution here again, a lot of positives in the quarter that was the 1 that is.
The kind of stood out as is.
A question, Mark where you could be more of it it might be tied to kind of the emphasis of those lower.
Do brand customers, but just that metric look a little weak in any color that you can provide would be helpful.
So the 1 thing I would you know when I kind of laid out the 3 drivers of the net expansion rate. The 1 thing that I would also lay out is we do have we are coming off sort of in it.
A period the year prior that had a lot.
The action in it due to kind of the Covid situation. So our intent and our focus is certainly the land and expand the continuing to grow new customers. So to some effect. The the higher end of the range that we're seeing right now is a bit of that kind.
Of that comparison quarters that were impacted.
Lot of can try COVID-19. So that's why we see it really in the short term effect not a long term change in the business model.
I think Brent of your questions was about new customers, we actually had record U.
Customer contribution this quarter.
The app.
Remarkably compared to.
No.
<unk> taken this quarter.
And if the indication you have I don't know what you have the data and what you're pointing to but the.
The amount of logos.
Youre going to CSN realization of that as we had terminated a lot of these.
Kind of the low end.
The plans and we see more and more customers choosing the suite.
And they're migrating to the suites, so thats why youre going to see like of stabilization over the next.
Quarters as that number of logos of stabilizing does that makes sense.
Yes, so it sounds like Theres some noise here as you abandon some of the lower end kind of standard.
1 kind of products, we have to wash, we have to wash through that it's kind of higher churn low end customers and the number of logos, you're going to see kind of a flattening for a while as we kind of washed that out of the new customer logo of land sounds like it's been pretty strong was very strong this quarter very strong if perfect.
Thank you that's great clarification.
Thanks Tommy.
Thanks, and the next question comes from DJ Hynes of Canaccord. Please on mute your mic and turn on your camera.
Hey, guys. Thanks for taking the question Sheila.
Sure.
2 quick ones for you and maybe just to help but.
Uh huh.
The revenue results in context of this quarter can you talk about how much transactional revenue you got in the quarter and then second would just be how much of revenue in a quarter comes from deals that are signed in that quarter.
So in terms of the usage based revenue I heard is the first question that you have and we've talked about in the past it's.
Low single digits, but obviously since its usage based revenue.
And recognized the inside the quarter, so that's where some of the effects of the volatile talk usage came into play and then in terms of.
Kind of our pacing as Mikkel talked about obviously early in the quarter.
<unk>.
We're able to recognize the majority of the revenue and then the later in the quarter. It is most of the revenue recognition that's going to be for subsequent quarters.
So.
As the as we start to move to a model where month 3 is the bigger months as we Miss iron to enterprise a lot of those effects will be for the subsequent quarter versus the current quarter.
Yep Yep Okay.
And then maybe 1 for you. So if we look at the customers that are onboarding over that $250000 threshold and we did pattern recognition on the like are there common characteristics like what would we pick up what's the the.
The profile of the customer of that landing.
<unk> threshold presented us.
Yes.
Well I think its so like our enterprise wins are very broad.
A lot of the mine very traditional industries other than my very digital first the industries like we talked about the gaming industry.
At that no doubt that's like we really like the gate the world of gaming is definitely exploding and like a lot of the award from it a lot of these customers about the with their customer service, but it's also like we're working with.
Breweries and electrical companies and everybody has to kind of everybody has to embrace these new channel.
We now take of given when we engage with businesses. So it's very.
I would say, it's very broad of advertisers is very broad the kind of from NBC in the market also in the enterprise.
Yeah, Okay. Thank you guys.
Alright, Thanks TJ at the next question comes from tailor them of goodness over at UBS.
Please go ahead.
Please mute your line of Taylor.
Can you hear me now.
Okay great.
Thanks for taking the questions so sorry if.
If I missed it earlier, but can you talk about the level of upsell that you're seeing with <unk> relative to the 20% you gave last quarter.
And I guess, how much traction are you getting with single product customers and migrating the suite purchased versus multi product customers and then maybe a third part of that is just on like new logo.
Activity I'd be curious, if you're seeing any interesting trends with speed there.
All of the numbers.
Yeah. So in terms of we're seeing about the same that we saw in Q1 approximately of the 2020% up. So I think we said in Q1 that the range was between 10 and 30 annually.
If I the 20% in Q1 of them, we're seeing 20% in Q2 sales and we're continuing to see that as a positive trend and that you know an average customer value suite versus nicely in terms of the number of products that customers had and then moving to Sweden, I don't think I've got that at hand, but I.
And with the substantial majority of.
Of the.
The customers, the new customers coming in or moving out of this week.
Yes, I think the metric is I think the metric is around 75% of new business is sweet.
Got it awesome, that's really helpful.
Thanks, and the next question comes from Derrick Wood over of Cowen. Please.
On mute you Mike in the current accounts.
Yes, great can you hear me.
Yeah.
So.
I hear the message that the enterprise business.
We're working on bigger deals and it's maybe a.
A little bit more backend loaded in the quarter, but I wanted to ask the question on kind of how to think about the shape of the second half.
Like do you see.
Like more direct enterprise business have seasonal uptick in Q2 and then.
Kind of software seasonality in Q3, and then of bigger uptick.
Before or do you see kind of first half being slower second half included in Q3 Q4 being stronger just trying to get a sense for the.
The shape of the enterprise business and how to think about it in the model.
So our expectation is continued strength in enterprise for the year since we're really.
And still growing in that phase, we don't necessarily I think have quite the seasonality pattern that you are talking about so we're expecting the continued to be strong in enterprise in both Q3 and Q4.
Okay.
Maybe 1 for Mikkel.
I wanted to hear about how youre thinking about Sunshine and I think that.
There was going.
Gonna be a bigger focus on Sunshine entering 2020, Covid hit I think you kind of backed off on it it's more of the kind of advantage ethical sale of evolves, maybe embracing developers and deeper integrations.
And beyond just kind of the application scope.
Where do you think you want to bring that.
A more aggressive, especially as youre moving up market more where it's going to be more critical to have kind of a development platform, we'd love to hear how you're thinking about that.
Yes, so our investments in the.
<unk>.
Independent of the tools has not decreased.
Do we have kind of pivoted some of our.
Net balance.
On the platform kind of aspects of it to make these platform capabilities easily available for enterprise customers and that is also part of why we see kind of the the.
Increasing demand from the enterprise to be of making these tools. So they can extend they can integrate.
Integrate and they can customize.
Much much better using our developer and platform capabilities, so that as our cash.
And of that is the current price works really well in terms of making these things easily accessible for our large enterprise customers.
Okay. Thank you.
Thanks, Eric next question comes from drew Foster over at Citi. Please go ahead true.
Drew Hey can you guys hear me Okay. Yeah can you hear me.
Okay.
Go ahead.
Uh huh.
Okay.
So I know youre using 250, K as the benchmark for enterprise, but.
What percentage of your installed base do you think you have an opportunity to grow your footprint at or above that 250, K Marc within those accounts I mean, it's the name those customers don't really grow the size of the their own businesses today.
So I know, we don't break it out so we havent been breaking out we're continuing to see continued growth in the 500 kv and above so the expectation is that you know.
Over time, we will be able to move some some amount of those customers up and when new presses.
That are coming in at a higher rate and we do.
Don't have the exact numbers on that but in all of our ambition is to keep keep moving up market.
Cool and then.
You know as you progress more into those enterprise accounts I mean mikkel what are some of the other changes you think you need to make other within your feature.
Rest of murder on the distribution side.
The investments that you still have to make the increase your presence there.
Well the.
The enterprise journey as long and interesting and never ending like we definitely like we feel like we are still in the early innings of all of our.
Our enterprise business here.
We still have.
More people to invest in more teams to build out of.
Our partner business is thriving but like we need to take we can still do more with partners both in terms of.
Introduce them early and some of the relationships with our customers and so on so.
I think.
So I feel that it's very exciting to work on because there's just so tremendous opportunity there and and you know, we're getting more and more comfortable in our suits.
Even though the only only of <unk>.
Bottom of Oh, sorry on the tub of EM.
But it's so you know we still feel that the.
It's been a long journey.
Any of US you know growing enterprise that is going to continue for a while as we <unk>.
Invest in all of these things, but we believe it's super interesting and we learn a lot of from it there's a lot of investments, we're bringing back to the products and make available for everyone and democratize and make it simple for everyone to use these capabilities.
We're excited about the.
Hi.
We always of the color.
Great. Thanks. The next call. The next question comes from the Wall Ravens of JMP go ahead Pat.
The back can you <unk> your mic.
Oh, sorry about that can we can we talk a little bit more about.
The usage and talk in and how you feel about that product in general and there was the comment about moving to <unk>.
Some of that usage the other messaging platforms that I didn't really understand thank you.
But I can give a little color and Sheila.
You can support.
Yeah.
And so again, it's a little bit outpacing our model is influenced by the start of a beta and especially the historical data from 2020.
Like all usage pattern they were much more volatile kind of how we saw you should kind of go up and down 2 out.
A lot of kind of sporadic users so that have influenced our model and kind of it stabilizing now.
<unk> net model just bus just didn't materialize the way kind of you know we had a bit because of these historical data. So we are we.
We had to adjust that.
And it's still like we still have high growth from usage, but like it wasn't influenced by that kind of it wasn't impacted by the same kind of volatility we saw last year.
There is definitely like we are definitely making a lot of channels available for our customers with the suite.
And we are having a big push to get an.
Them to use these messaging channels that are getting increasingly important democratizing. The these things through the use of our customers to engage with the customer over whatsapp of Chad.
Facebook Messenger all of these other different channels.
And at the.
Our customers are realizing how how convenient that is.
Both of the organization, but also.
With the end customers the consumers of realizing how can be of that is.
So we do see a lot of customer thinking messaging versus voice versus if you will.
Does that make sense that.
Against the year, no I am sorry about that.
I'm not driving but I am in the car.
[laughter] it.
It does makes sense, but I just there's so much change going in the space right. Now if you look at like zoom buying 5.9 I was just wondering if there's something broader that ex the impact.
The talk no we're still very happy up all kinds of growth in the usage of this but like.
These models where base.
So there from some of the volatility from last year. So we had to kind of just adjust that.
Okay, great. Thank you.
Thanks, Pat and the next question comes from Arjun <unk> of.
William Blair. Please go ahead Arjun on mute your mic and turn on your camera.
Hey, guys.
Thanks for taking the question.
<unk>.
Sheila maybe you know after the labor at this point, but.
It seems like what I'm understanding of if there was a some assumption baked in about usage based products before this quarter and there was a new assumption today is there any way that you can quantify just how much the consumption is driving down your or I should.
Posing a headwind to your full year guidance because of the rest of the business seems strong right I think we're just trying to.
Bifurcate those those 2 aspects in the guidance, yes, so and I won't go into detail about it which probably won't surprise you.
And as we've noted the subscription business indicators are all extremely strong software.
Really across the board strength, then highest R. P O of both short term long term.
You know a significant number of customers over 250, K. So that business is extremely strong. So we're continuing our growth in the subscription business and you know the usage of business.
It's been low single digits remains low single digit so theres not not a significant change really in the forecast on.
On that but as Mikkel said, you know understanding the usage rates 1 year of trying to come off of a COVID-19 pretty unprecedented.
Tuition as.
<unk> has really had us adjust those for the second half of the year, but in total usage remains in the low single digits.
Okay got it.
And I wanted to ask kind of enterprise.
Nicholas from might be for you, but.
The is the partner channel at a point of Ms.
Charity yet.
Are you seeing them bring in big.
The big enterprise deals or is that something that your enterprise.
Your direct enterprise sales team is still handling.
But we are seeing pockets of it.
But it is not.
It is not.
It is not.
I would like something moving executed well on it everywhere, but the online you have pockets, where it's working really really well for us and as I said before this is definitely 1 of the areas where for so many reasons for the customer experience for the success of the projects and all of these things we want to get like we wanted to give that motion much more engaged and like the partnership.
We have been building and are working like that they are working really really well.
The customers are really appreciating the kind of the.
Quick time to value of that getting out of it and having a partner right on hand, and how quickly they can move in these things so.
It's definitely something we want to see a lot more.
Perfect. Thank you.
Thanks, Roger next up is stands Lawsky from Morgan Stanley. Please go ahead Steve.
Hey, guys.
Any.
How are you.
Okay.
<unk>.
Good day, everybody Sheila great too.
Great to meet you.
So a couple of questions from my end.
I realize you're reticent to kind of quantify the impact of the consumption changes for the full year, but is there a way to put the possibly quantify the impact on the core in the what you saw in the quarter.
I, probably won't go into that much detail.
I think as we've said the.
The kind of the a couple of headwinds that we faced in Q2 that we adjusted for the full year is just the.
Really as we move up market that timing on subscription and it's just going to be heavier towards the.
The end of the quarter and then the usage piece.
What we had expected kind of some continued growth both of them based on what we saw in Covid, we just needed that growth for the balance of the year.
Got it.
Would it be fair to say that outside of that consumption.
Chen component changes.
Did everything else come in essentially above.
Above your plan.
Okay.
So.
Inside the quarter, the 2 effects for those 2 effects.
And so.
With that.
Of the underlying indicators of the business with long term underlying indicators of the business. All are trending really positively right. We talked about the suite coming in more positively than we thought it would come in.
But kind of the record.
The improvement we had in booking so.
The key long term foundational underlying aspects of the business are all trending very well, but obviously you know you've got you're in quarter revenue recognition that really all comes down to 1 of the timing of the deal closure is in that usage is obviously real time revenue recognition.
Got it.
Last question.
I know I realize you said that.
Youre, a little bit newer to the company and there is obviously still.
Lots of learning.
Is it fair to say that you may be.
The slightly tweaked the way you approach guidance setting now versus how the company has done it in prior.
Quarters.
Well I think its objectively true that I'm brand new so we my first 90 days inside of this great company and so there's a lot still from me to learn.
A very.
Our strong business, that's continuing to gain momentum so certainly as I thought about guidance.
To make sure that it was informed by them kind of the learnings that we had inside of the Q2 time frame and you know make sure of it put guidance out that aligned with that so I would call it balanced.
Got it alright. Thank you so much guys.
Thanks.
Thanks, Dan and the Ross.
Question comes from Chamade over of Jefferies. Please go ahead Marc.
Hi, Thanks.
Just maybe a couple of questions on the on the large customer side of it.
Data point around 50 customer accounts contributing $2.50 day can you help us understand how many of those were new to us and ask for the first time in the quarter.
Versus customers that let's call. It cross the threshold that were already existing customers.
So it's a combination of both I don't think we're.
Prepared to break it down, but we saw both new customers come in as nickel had talked about earlier are quite a few of them.
The large.
The accounts that we were able to close in the quarter and then as you know our history has been accounts graduate yeah, we get in companies where in the early days in the graduate from SMB the commercial into enterprise space. So we also saw some graduations into that space too.
Okay, Great and then just as I think about.
The 8000 customers adopting the suite of can you help us understand I know there were a couple of other suites skus that existed previously where we are in terms of either migrating or upselling those customers from the existing suites to the 1 that was rolled out in February and how should we think about that opportunity.
The the way we've thought about it is that we think at least 60% of our customer base and suite.
It will end up being the offering for them and again, we're early days and we've we've been we've been really pleasantly surprised at how quickly the sweetest been adopted 3 of the customer.
The race so.
Our current expectation is we've got a lot of a lot of room to go in the suite adoption.
Great I'll leave it there and congrats Sheila on the.
The new job and look forward to asking the questions for several more quarters.
Absolutely.
Customer growth.
Last question Mikkel do you want to any closing comments.
No. Thanks, everyone for joining today and the congratulations on your first the earnings call here. Thanks, everyone. Thank.
Thank you. Thank you.