8x8 (EGHT) 3 Feb 222022 Q3 Earnings call transcript

Thank you, ladies and gentlemen, for joining, and welcome to the 8x8 Fiscal Q3 2022 Earnings Conference Call. My name is Elena, and I'll be facilitating your call today. [Operator Instructions] I now have the pleasure of handing over to your host today, Kate Patterson, VP of Investor Relations to begin. Kate, please go ahead.

Thank you, and good afternoon. a our our Sam Chief Chief Officer. include with quarter Wilson, will Financial Sipes, Dave Executive agenda review third of results our Today's Officer; and

there a Following will prepared remarks, question-and-answer our session. be

no Certain with discussed A obligation over call, release these our slides, Investor in closest some as is the reconciliation our Accepted at to Sipes. measures we includes forward-looking involve vary or year-over-year comparisons, these investors.XxX.com. of may from caution our accordance earnings not to in reflect of let products they this cases, the started, website on statements and which be or our Principles actual forward-looking cause and Accounting undue Relations on financial factors you will made turn Generally discussion with risk our get we plans that in call were our you comparable measures acquisition put described slides that forward-looking call the them. earnings have our CEO, I'll GAAP as prepared non-GAAP as update reliance me SEC. about impact in Before on of uncertainties and statements including with business, measures the are in the and to risks statements presentation Any We as results in not today, available materially Fuze that XxX to press and presentation US to filed our provided growth on remind together our strategies. forward-looking today the that, performance, report analysis GAAP. this financial as future statements With well Dave the

thank you, Thank Good afternoon, today. and you for us everyone, joining Kate.

an our our end revenue service the plans guidance a QX, on turn of our the In our and high and of future. above of delivered and update acquisition total for Fuze progress third quarter, fiscal Let's to review we ranges.

target positive ahead achieved delivered plan. fourth for quarter we a quarter cash operating flow the consecutive margin of and Additionally, operating year-end our

acquisition enterprise business also January is This our increases to our market to massive. migrate transaction the base announced adds We for of cloud and which innovation. closed opportunity on communications XXth. resources Fuze, The customer

to We our and global especially XCaaS, beginning see the are investments results. coverage in of and focused our impact channel QX go-to-market in the

today foundation have for we growth. advantage; our believe I well-positioned built pillars competitive of Voice XxX our evolves. are Microsoft with XCaaS market our strong our comments Teams, a Global and as leadership around I We will for frame Coverage. the three my platform,

a customer to customer Capitalizing and to needs single on Turning XXXX Tech discussion eliminate flow CPaaS more silos offerings, across employee XCaaS operating a engagement. organizations for ownership. of cost integrated be was a Innovator XCaaS to information the and the CCaas agile and XCaaS responsive lower provides first. and enabling while speeds for awarded of demand the UCaaS, CRN Award. XCaaS at XxX enterprise, recently platform

to platform. include regions, single a onto bring units examples across Kubota public for America, broad A geographic business now few of is Collaboration in basis, named of ARR our more grow often were Unified best ever Kubota with leading logo ARR. continues Voice and the industrial both delivered expand range of multiple manufacturer XCaaS verticals their to than year-over-year. MarketScape: more and Assessment. Worldwide Additionally, including we leader and land we of deals our year-over-year One sequential IDC agricultural of dollar Teams Vendor a a equipment XCaaS, communication a and Communication North XxX Adoption the and XX% and sector. XXXX ARR On capability XX% growth total is in than construction XCaaS at gaining a momentum implemented recent XCaaS new initiative

for the Borough a by XxX and streamlined second XxX contact communications pilot for to Following XCaaS across total residents than London. to was East Kubota service Center their of enable XXX Center most A XX%, recently led center Contact seats. by of expanded Newham, more deployed County more business selected nearly seats is UC more sought for Working in of boroughs bringing a the support XxX the of cloud than number They XXX single organization. London Excellence, than X,XXX the which win communications successful more XXX,XXX government Texas CCaaS they the high provides the over is fastest-growing Austin, XCaaS with XX XxX XCaaS with counties channel a with Microsoft Voice platform local The metro one one-third X,XXX than availability. to across in users. XXX,XXX residents. Teams Hays XxX with area London's in now. partner, US selected

seats Media-OX, with XxX Looking organizations a choosing CCaaS interact third that with XxX and colleagues. Voice and growing for to the at Virgin Teams. investigates and which to Financial continue Working number in we Teams, business for we XxX of adoption new we as Voice XCaaS we UCaaS consumers between UK, Service momentum. growth now hundred quarter-over-quarter workforces we financial with Customers see had complaints Teams more the business XX% and businesses are the over integration seeing Voice existing with and users In customers that team's announced our user strong adopt to X,XXX seek in Ombudsman for increased surpassed than for distributed quarter, Ombudsman their provide QX of provide the experienced Financial XxX seats. several selected partner, settles XXX,XXX ability as September, Service In services. included our

tight of with Microsoft digital their for integration and their and to receptionists employees they decision advance agent which in with as around Teams integral manufacturer which with chose selected them were products Frontdesk, composed XxX for Salesforce. than XCaaS our architectural Inpro, experiences to with XCaaS XXX buildings, and handling world. tight will voice for support select the Teams call is They a high-performance more XxX. such help advanced empower commercial capabilities global to strategy, routing direct integration Microsoft combined for ability Our

global expanded include the follows integrated and industry-first we industry our our to strong and multinational to differentiates Philippines, also and coverage, to another further an this Turning our our quarter, with announcement earlier The expansion organizations. a of contact delivering solution first Panama. phone China cloud year Philippines third coverage advantage creates which solutions competitive Russia. and In the in center

XX ago. compliant a is regulatory cloud-based Our up from global UCaaS now in available XX solution and countries year territories,

provides world's world's to a Teams reach growth global New Suntory, service XxX with region. XX GDP. XX standardized the a that XX% more customer of expanding strategy XxX our and across XXX ALS Microsoft Our customers on support of of global Brisbane, increase include in example in XXX global They XCaaS to their CPaaS continue in our customer Examples is Beam adding covers inspection, wins XX and Limited, testing, a the sites across global services and new in now UC Headquartered as Asia US. is than verification investment, share on Voice users the growing for region. the distilled strong beverages, Germany great revenue Integral for Pacific Zealand integration most one most Teams including and over XxX year-over-year is continued recently Teams Suntory in largest Australia, global added Scotland Jim producers support XXXX, to Australia, added of more An bourbon, another the CPaaS since of world's countries. we to Canada, new employees the employees X,XXX now certification recently licenses and sites Suntory Beam customer Beam best-selling basis. Beam. across countries. over with

and With marketing use more with and more e-commerce platform XxX APIs example, to updates Indonesia's Here, notifications for e-commerce the XxX Sell water SMS as leading in boost campaigns experience than use experience. and XX,XXX Thailand well in than to with for leading Wale uses its not-for-profit enhance a APIs notifications its marketplace For which video promotions, customer million as onetime as users third This APIs well shift metrics, customer reflects passwords. XxX company we've is boosting X and traditional last Ula, only years. is performance England Welsh global Enterprise changes marketing retailers small as The up in operational interaction satisfaction Water, micro SMS XCaaS and organization. accounts the remote XX% strategy, now increased year-over-year. ARR underway. best to several retention total market seen we've while in Teams well customer XX% support customer shift turn, and of culture improving in our provide for evident customer-first our coverage, success also to our integration Enterprise efficiency. ARR the were customer implemented quarter our in our

to Enterprise on much so global the customers among reasons sense. the focus approach the market Fuze and makes acquisition Our are

excited the acquisition who our with by many In acquisition contact customers enterprise we In With the XxX an they for for can about Microsoft XxX particular, to closed, already the solution. Many see are of before base increased center to additional about potential platform. Teams. of opportunity customers large weeks solution customers XX% our add overall installed a two since the about have upgrade Contact even cross-sell number are we solutions for XCaaS acquired also XxX Center customers and created solution a talking provide. closed, the we now

of partners Finally, about of the customers. mutual were complete are solutions already Fuze excited delivering XxX whom our prospect for partners, many more

mapping success report out Although, from and pleased response are that, by teams am customers increase road in to seeing process, map we the early partners. strategies to it's working R&D I accelerate together product still worldwide. that we're are adoption and XCaaS the customer will and integration excited also our our

exciting teams this integrated our third innovation. demonstrated later of discipline the of delivered the strong Watch operational performance, and revenue center redeployed we fuel continued XCaaS customers. for excellence In summary, have expanded enterprise to engineers and and development and contact in some already the our announcements base Fuze quarter, quarter. We Fuze

solutions often customer customers Teams the all the advantages: our XxX competitive to As for global cloud. they and it coverage show, that for wins makes combination compelling three Voice our migrate is XCaaS, as of unparalleled the

globally, We and at our level. and recently continues confident to RingCentral, take she organization. there contribution most as recognize higher that our increase Our lead opportunity. recently to Chief will Strategic but further Channel Lisa we Lisa channel hired of I'm Real, President Global a channel was our scale programs channel Del Vice is to Partnerships

culture, the next for our our I global product to is I welcome CFO. and expanding first, XxX with high-performing growth the over now Resource in the dynamic enter and HR Officer. We to cloud also and a customer recognized announced our companies. team scaling that PayPal XxX executive HR operations turn and fast HR SaaS both culture. Wilson, be we growth. them of Sam will Stephanie Chief company's leading She Garcia leading organization at Salesforce responsible joined as team-first team-first phase Stephanie as the experience at and Human will call first, industries

Dave, and afternoon. good Thanks,

improved $XXX.X increase showed revenue our guidance, to deliver positive the were leverage both strong year-over-year during expected pleased Better-than-expected other operating the revenue third chain contact the of and contributing due are quarter above exceeded the performance We of both This for XX% guidance more XCaaS to million, endpoint for product and flow. revenue. quarter was with in $XXX.X $XXX.X Total drivers shortages. million million was than performers. to from cash overperformance offset and and results center supply an shipments service revenue categories the CPaaS generated and that CPaaS, free substantial key quarter, to range. our weaker ongoing

our the growth wholesale $XXX.X XX% about exiting been million, guidance million an quarter's accounted ARR higher. or year, $XXX service revenue X% year-over-year ARR was XX% Total million the for would million year-over-year, increase and up XX% growth Looking to generated end, business Enterprise service for XX% $XXX at above last we Adjusted at have of of year-over-year. range. our revenue, million, year-over-year. $XXX Enterprise and better towards efforts longer Growing quarter-on-quarter. total X% demand business due sequential strategy our and in the long-term to increased higher strong efficiency commitments, ARR, generation of retention growth resulted tenets our one The in approximately of is $XX shifts Enterprise Enterprise have ratios. made XX% up in its or we core

increased margin points to revenue spending shipments and in margin percentage the efficiency. third service accounted versus up revenue. our as some to a revenue quarter professional minus XX we sequentially service of over total XXXX over the margin reflecting and was higher endpoint non-GAAP XX.X%, XX% in services more as points nearly welcome improved The gross significant approximately XxX. other driven the Non-GAAP for came quarter of the XXX third in for previous quarter, basis was basis revenue focus by prepare customers on XX.X% Non-GAAP increased and to decline the investment organization at Fuze quarter our

quarter. for reminder, our represented a X% As revenue the other of total only revenue

profit gross continue improvement other in decline gross cost had impact. the In portions So and of grew business, XX% the as we in total, XCaaS, our to drive dollars COGS. as such on minimal focus unit margin year-over-year higher-margin

ahead be we to quarter, Looking gross flattish margins to expect sequentially. fourth the generally overall

quarter expenses. third are to operating Turning

mainly make We the sales center focused contact cost tight. marketing to and continue XCaaS investments platform within capabilities and in G&A in while R&D, in the keeping

investment target significant increase made last enterprise the four have in the sales marketing We our and XCaaS to awareness quarters over and for programs partner expand customers. to

fiscal year to due exit XX% G&A of Going goods was revenue hit sold, and compared forward, below target in step to sales XX% had at earlier past non-GAAP Fuze. as non-GAAP approximately category in measured than to the margins few this a and addition year X% adjusting QX, the to focused growth growth that spending to dollar year our quarters expected. Total the growth. just cost after and expect we total We by with for up of quarter R&D, of slow up marketing a year year operating the

quarter-to-quarter we to total Going more be business, there throughout slowly spending the total than some can variability. but revenue forward, grow efficiencies a we X-quarter as expect basis drive rolling on

the Total balance cash, investments $XXX.X and million. at the sheet. approximately to quarter cash third Turning restricted ended

$X.X capital. roughly $X in positive the expense of quarter million, restricted and positive collections million flow better we We was an for acquisitions, so were After increasing Fuze a million cash much increasing the several management. cash, on our opportunistically the their raised balance the announced noteholders operations we from indicated million Cash positions free quarter-on-quarter. Excluding interest $XXX.X expected than of was $XX for quarter.

discount $XX the quarter, offering simultaneously the The reduce million $XXX more or approximately and offering our During net of million of cash offset after from shares. by transaction raised $XX in we a in in dilution of X.X paid helped resulted and notes buyback a due million XXXX our X.X% buyback conducted million costs. increase and any

$X raise, the driven million was increased higher-than-expected cash total forecasted. about small by capital Excluding and quarter-on-quarter collections This strong the burn better than by revenue.

service total like balance combined stronger due cash around onetime For to to cash operations mention the expect but quarter, on transaction towards on restructuring RPO purchase, deferred for be costs. we from a Fuze and over $XXX is from the the we second $XX million million advance in quarter. liabilities XX% decline and basis, during up items One fourth I'd approximately quarter, which quarter was as building to revenue, cash the move excluding million up should the item of in was year-over-year delivery. $XXX third

Okay.

January based at had talk the about Let's $XXX the on earlier sent price the total in than shares We consideration closed of the about million Fuze. million and X.X on we or expected. share million acquisition cash approximately We announcement. them in time XX $XXX

the of an moment company. from to combined provide revenue XX for report will the quarters a period first weeks commentary for the As The of expected, in in few first for intend be Fuze about in on customers. quarter quarter we fourth and stub Fuze contribution a provided the will fiscal quarter entire guidance XXXX. We

integrated As companies, items less two especially relevant, we upgrades. like around cross-selling become will further and this

cost the we Next, $XX said and synergies. an can turning expected around basis. was remain in appear week, restructuring over in in announced operating it quarter At a annualized be $XX time the we Fuze this cost quarters a of when took annual We a short-term. fully to with direction a had over be additive small If few numbers. the believe to transaction. time, will but headwind savings, March will non-GAAP to we the in we we that our million money line profitable step will announcement, income a non-GAAP the the million This take operating losing realized. non-GAAP on Fuze to execute We generate though plan,

to revenue XXXX fourth fiscal into further find follows: XX, all into we anticipate XXXX, XX anticipate representing for we as total we the million be continued these. million expect from integrate. we XX% shipments for guidance are of will in we because quarter quarter move to million a representing $XXX.X with believe contribution range we to supply the to Taking we have million, rough that that chain million cost to establishing be endpoint note growth; $XX in revenue issues hardware fiscal XX% Fuze's could be As XXXX, be as $X expect weeks Please this to to XX% we March account, $XXX.X to year-over-year $XXX service other revenue range ending synergies approximately about the down $XXX third period; growth. revenue we of of XX% to and approximately sequentially the about expect million year-over-year

We margin the on take non-GAAP to to integration year. to basis financial basis beginning quarter-over-quarter expect positive again on the We of at increased on FICA a nine employee-related and believe and but some begin operating remain throughout year. expenses a the we line leverage non-GAAP six will and benefit calendar months show operating the down as expect integration approximately

notes. combination Fuze note These are I as the period mentioned FY numbers ongoing Please stub ranges well QX making. modeling for reflect that XxX XXXX below are we the based Some and of Fuze. investments as on

R&D. keeping We of are majority Fuze's a

expect to fiscal on $XX approximately So, QX $XX million XXXX. combined R&D company for million step basis, to to up a we

of XXXX. On sales for million marketing, step of non-GAAP to to expect to we G&A, million fiscal $XX $XX the expect On QX. to range non-GAAP for and $XX up fiscal step $XX.X million, range a we to into up a million a QX

XX, the for range revenue We so guidance to your some of are to quarter are our integrate. approximately year-over-year can as for outperformance the growth. maybe follows: there $XXX giving to fiscal models you include XXXX are a million, but third full expenses, year reallocations raising adjust quarter Fuze with this $XXX line item we only, Combining outlook we XXXX, above, as guidance raising million March revenue for ending outlook XX% total we

We million, to revenue are representing $XXX to approximately million range $XXX raising service year-over-year growth. XX%

We every We the to quarter raised continue execute year, outlined our business outlook we we trending last our May. direction. QX update and believe that for have this right is in shows our plan the

Looking the only we customer range. X, for begins the year-over-year is We XXXX, rate currently Fuze in ago, Fuze the preliminary this revenue, further April weeks a expect be which service fiscal from and XXXX, including very will a into a view. fiscal on revenue base closed contribution XXXX growth mid-XX% little few

be give when May. results more to quarter able our will details We announce in you early we fourth

is end this me Let made with investments we root. a a to over year business strategy. and closing do. in select concentrated reaccelerate investments have some cash joined Fuze improved operating a XxX to But Since areas beginning Dave the Dave growth The the take and deliver work component key thoughts. and flows. focused our brought profit ago, of have little still to have has acquisition our to are We we

dynamic questions. Voice market With operator fiscal the thank me against We acquisition for achieve well the well and investments in the additions, sales team focused cross-selling turn to for is positioned you, synergies, key in integrating market-leading and Integration. efficiency, to business, XCaaS goals and that, Microsoft Teams upcoming remain leadership cloud these revenue call growing XCaaS, year. reach cost for Global customer are over on we our retention. we that and We to believe our the global positioned Teams including our the With execute for let and are our communications platform, Fuze including and and core large, Coverage, our reaccelerating

question Mizuho. first The Instructions] Siti with from comes Panigrahi [Operator you. Thank

ARR your give of Diamond it's was confidence early to solid obviously I incremental when behalf. is about opportunity. Fuze know could actually was here, us closing the around weeks speak very but, sense is in out. maybe integration to synergies the -- promising the have glad The cross-sell that in your announced? There the of you any on Dave, on I about that after couple print. this guys. $XX It's was concretely question cost is of deal, the some working This Siti's Hey, Matt but that million see talked Congrats first and deal

weeks just the two customers with we're We and deal closed very having positive. ago, and conversations currently, they're

early number I'll to on overall, updates encouraged of Sam well it's quantifiable So the the let talk. give although cross-sell, and too

Yes.

look, customer. is base We're through the far So as customer customer going the feedback by say. I and said, Dave very so from positive, validating would

As closed only weeks two Dave it said, we ago.

got of So the names literally ago. weeks we the two actually customers actual

more all so working to And ready we're that, incrementally change through positive, say, I would numbers. not

the growth thinking modeling mind a there's And it. around on saves. how to costs curious sounds spending anything when the cost year, this about if margins there's XXXX? the inflationary Got I'm for like of promising it in front, you're magnitude we're margin we need keep fiscal trajectory and

No.

it internally. Specifically around we're inflation, look, dealing with

seeing inflation, are increases be we like That's should So dealing deal with. overall it kinds We're that for wage things. we're inflation, within the spending giving of those less to things growth. T&E guidance some us revenue total than

much. Thanks so Okay.

Thank you

The next Please comes Thank proceed. VanVliet BTIG. you. question Matt with from

now nice nice job of the are not through with Hello. channel in incremental only maybe up but Lisa a that for taking where to Good bringing take do here, pushed questions the will built think trying sort the given and the that help program of you run afternoon. from partners big to here experience you've strategy quarter. your what helping I Dave, channel her, improvements you're guess, on or group out? working get stable Thanks

network as the and them the key customers migration to been element overall cloud. Yes. helping We And them with with the worked on see solutions channel strategy. core are reseller the that's is through these our to historically, legacy

a Lisa think with to channel as channel strength aspire added. But the built of excellence shown the of That's lot has bring most that the And ways of of ease with work up our build that already the channel done and channel build for still a as we ease approach well we bring we've into the wholesale agency with to differentiated as we globally. program, I in as we've go. opportunities as I work years strength and experience continue continue to she'll trust the of that and the a and with well a of our of that, it's opportunity to And offering be billing and the operational lot both Europe easiest our been team that and that. so successful to of several there's long itself. the Microsoft to to the see with to we will do still as of -- elements trust and that channel some very US as to on models us channel channel ahead that's this capitalizing and tremendous that's us using do been decade-plus Teams

a still we think And it's today. I is help going experience us ways for So to next the go, have I level. move to positive us to a but Lisa that know been

of kind the see of And offset any both and little at right. Can as you downward Are takes Great. contracts what around us there. new puts Thanks. some down growth are All there? you any churn? on what compression growth mid-market of break SMB are maybe elevated groups, just movement of And then even renewed? sort the -- slower kind of looking contraction Did help that and pricing a then the here. of help that little seeing you a SMB, bit

the is focusing marketing both core really and have you is and and core of go-to-market And inherently to goes exercise in our dollar, our business seasonal XCaaS. our on strategy, sales strategy the of enterprise and our market. small as along higher mortality use incremental Churn business aligned focus, with The is enterprise product. activities Yes. which

Center both the agent customers only have contact If the side, you about the combined, the experience employee experience UC on think and larger XCaaS the Contact center that on need. side

enterprise us taking really as enterprise. advantages well aligned with Microsoft you other XX of Those our as look if So aligns are it global our inherently that at to countries. with and Teams capabilities,

So go-to-market quarter. And that's had leaning we've focusing ARR growth enterprise activities. best we in where and one our of been our this

that then happy build that focus. seeing previous the takes that's about. business, which you're you it mature -- going already as and So that while we think grow to see about going you're it pipeline our Enterprise where talked And benefits time to on work, I deals, see into I'm of we've continued to where some that's calls, pipeline are of

metrics So on important focus that's where our we'll what's us. to

All right. Great. Thank you.

VanVliet. next MacWilliams question from proceed. Mr. The Please comes you, Thank Barclays. Ryan with

Hey, guys. for taking question. Thanks the

like sequential guide Fuze it of compared in strong your previous revenue dollars service terms a quarter from guide Excluding for looks fourth to quarters. the second, added, a

So anything in the given your confidence you for business opportunity fiscal your or anything market that's in XQ?

this team is really I'd love a something got moment, Like, The doing product. say insightful but usual. business its as well. we've great really, to at

Global Our resonating. Reach message is

off. I insightful so, and And paying I are have nothing other incredibly that really great think doing than, made we're just investments we've to say the all

in XXXX? is works about addition That rate about Fuze as think And And should we the me. there anything year-over-year growth for just think we for Fuze and in to XxX. How your guys. been more few or Thanks, the last just standpoint? on excited about know, from hands I weeks in that synergy getting since you're company? it's a in the revenue maybe

All right.

we in we reverse had case the in on that those said right call order. for still had the cross-sell. opportunity, I'll I think I So question, earlier cross-sell now. an modeled Look, That's on mentioned the zero take as

so, I stuff And there too positive things. in kinds there, think, -- is some guidance, those but early of nothing

and year-over-year gets expect mushy, but you And when sorry a Fuze talk say growth we we is little would to it so, what expect from Fuze customers, I'm about that, the attrition. customer going be decline Part upgrade migrate XxX we're natural will or to Part be of of to that over the from them to them revenue side. that will the base.

right the there. And so, I that's think key purely it's drivers that

that Or best how to what's timing the monitor follow can on us about, should like, think going up just get guess, the Like, or progress I way we is track a quick, you the for are there? is that? we that that like, incentivize real I If -- something to that how migration? of

ask So now. me big answer. and I get analyzing thing stuff. that I the choice, force that. choice, number to mean, want earlier. is beg of want going that So sort days Customer that not you both anything, Can it's customer we’re the to you with early. to to something one. we’re any it a worlds. absolutely in still again coherent I'll We stick We customers more make best sure we said of give XX But That's Right?

thing both the that is world trying best of to and one choice forth bring So solution. number

add this decide be that current the to positive a And getting as they upgrade the solution to some breadth that's as and do for they when to happen to expect product, contact of from experience with XxX, happen greater multiple customers, full something both is very as going center to for their platform well continue of XCaaS years. get We platform. quickly a to XCaaS

Appreciate Thanks, guys. the color.

MacWilliams. you, with Wells comes question next Thank Mr. Fargo. The Michael proceed. Please Turrin from

guys. the Williams Thanks follow wanted on Austin the Michael. Hey for is the partial I question. just on $XX million taking is my question for to The fee on the up for This quarter. guide. guide

were I that $XXX to than any think adjustments other the disclosure lower rate. previous as purchase million callouts or we run million previously why or be $XXX modeling? was Are might there accounting

yes. Well,

them. can't. love full I second first stub I the own think at I it's it's take the a off, service I quarter. I'd So can't and to, So but mean, off, time revenue I period, right?

clear mean, another really in that's why step be tried to I you'll script. So see I the --

You'll full of on first be see our 'XX. fiscal full quarter a rate will kind first run quarter of -- the that

you. Thank it. Got

Evercore. proceed. The Levine Peter you. Please from comes next Thank question with

you ecosystem, question three-year that's And service think at just revenue the that guys traction. made XX% you as target, my one investments reacceleration internally organic target? Maybe can and taking partner go-to-market you clarify, expanding obviously, that's an first Thanks guys. gaining second, the the or then above about Great. towards for is, that the first,

really, number? risk the then does get to has reverse work And the what where to is that to So XX% lie?

I'll Dave part maybe let take All right. the that, of the risks. first and I'll about talk

we like So growth, like we history or side reading too organic much And weren't We've the company. growth the be. just revenue XX% done I to the of clear is it's I it both you're into what inorganic. expect think in --

very guidance, clear sales this the is was asked tried lot I to That that gave In terms our growth improve when the need marketing make we efficiency. has rate. naturally work, to the what of thing lifts question to and a I long-term

part of And the invest, is on one strategy. that to that how favor we work higher growth rates. continue But drive where has continue the things work to that we in so to our that's of key to one invest areas a of that's we

well where and XX% Enterprise XCaaS. And be been very improve on which it's selling of drive And we've at as and we a we'll earlier, I've as growing sales that's our seen quarter. is keeping progress get that more acceleration we of than marketing customers, XX% now success where talked that customer over your year-over-year ongoing and here as that every improvement And have I ARR a have to happy. about but today. we've record It always the and multiyear made this retention those quarter would we driven lot customers efficiency had risk,

XCaaS business adoption So to elements and and the customer our also to drive key drive and the differentiators that accounts, doing to those the Global. over with Teams time are large drive of of Enterprise retention

And one, it I didn't then call, question. last don't you know but on missed I housekeeping RPO just a us give catch if can the it. I sort the one of number?

$XXX I million. it's said

Thanks guys. Great. again

comes next The question Stanley. from Levine. Morgan Meta Mr. Please you, Marshall proceed. with Thank

consider kind headwind just of business I guys the was could made exiting the know maybe give you of this business as the Great. opportunity churn just to the guide? maybe or smaller services growth to have note wanted we either just wholesale efficiencies the you end a on that just from business that Thanks. or business. question if quarter organization we to into mindful the or smaller through what Clearly, there for Sam, anything you just or that services And any should be of and additional the deemphasized of? around then change as as Dave. Just Should the of deemphasize book business? organization

Yes.

the growth. business the So from headwind the about -- wholesale was exiting service X% revenue

the the -- think would if the said growth exited flat. total about three that higher the revenue assuming service points have business that percentage I hadn't we I So was and in script

correct? to guidance, And same the

Yes, yes.

Fiscal QX? Okay.

Yes.

to headwind. is we're we product box of the And and for organization to the through question SaaS as that go and your one of Obviously, reorganization business, our striking deployment out more business, thing then we're little progress We've of customers. on the organization services make configuration as made easier, a But creates And inherently bit on revenue revenue we some strong creates for deployment, on easier business. the obviously, focused of opportunities that. that service implementation, component TCO But a believe of strong advantages, customers.

will for us continued business. focus be as that a So a

Got it. Thanks.

Markets. Marshall. with Latimore comes question Please Northland The Capital Michael Ms. from proceed. next you. Thank

Thanks. Great.

retention, On a the just record you data that? little on give more can revenue

area it's retention I And the really credit across of the Yes. saw Churns seen, great Terms enterprise that. key highest mean, lowest some decline last the we've retention. are been even card seen we year. board. the it's rates before Dave's year. We It's last arguably across really ever to our I the down a rates come saw mean it down. pre-pandemic board. come we've basically, of focus

well We've enhancements. last really customer those, what made the trends our year doing I happiness. product organization investments customer there's are getting macro Obviously, we're think as as And off. affecting possibly here are for critical think, paying in stability significant greater success those I other and over usability,

UCaaS verticals in then between -- material difference -- two? any is is or of vertical XCaaS versus, mix there And business similar the are much the similar of the between is invention the terms vertical that of XCaaS they the are say, in the or independent excess vertical, Great. pretty

into the our talked contact blend users. We user. center verticals and the capability and focused of a date, about contact center one of those. to front as on on us similar we UC focus bringing the UC been For between informal as desk have user lot product in We cues

verticals. -- high is us, there for -- are there's we crossover a So in

led that the Our XCaaS. core is vertical being market buying in also EMEA and out

it across seeing we're So the board.

Yes. Thanks.

Thank proceed. you. Mr. Sutton comes The from Latimore. next George Craig-Hallum. question with Please

glad you're continue focus hear to to going heavily on I'm to you. R&D. Thank

in product about does forward? going that bringing a different this road mention look you the can in result couple developers other a how just as years did move? of map over a large In talk You product part, influence few of words, how the might

brought new, but a able into planned. for nice have to to we from core able key And perspective. put making to force it's am our profit the this basics them Team's obviously all say, resources R&D we What create organization. to able an we on, been to it I innovation product happy -- next our focus we're is months. Sure. -- does XX profit over do product contribute over those us on relatively innovation as XCaaS, multiplier And And of obviously, the being Reach. team. to We've right, that on it well, align are will able we pillars and incremental that This we've areas we're -- covered, and is our as Global

made year. have of the progress across already in We those all last

first So pipe. go some some desk And on our personas that. additional that foray additional see what over initial personas, months. was with very the is into there there. we AI are admin capabilities, velocity of front ideas and around polish omni-channel And nine-plus of focus we'll have the increased that integrations organizations, for deeper But that managing additional and an or areas like already things are additional you'll innovations innovation the in next large very, usability

planned quarter stay for So late tuned couple I for have say, a the would I right? say of this announcements interesting specific, would we and

details. Thanks, guys. Appreciate the

Thank you.

Please with Sutton. comes you, Mr. next Thank proceed. The Blair. question from Breen William James

Thanks taking the question. for

of little the supply bit a mentioned had some issues. You about chain

got if how and Just alleviated a itself? all around the and seeing at of right little maybe business some wondering to sort starts the you're cycles it change that as you've impact does -- your Thanks. it sales chain to supply of bit

Okay.

happens. what here's So Yes.

place to a smaller think schedule. to because have upfront, they seeing it some think are have slightly we effect. some deployment does I I orders have different It's But hard quantify. Enterprise customers

there may demand. had There's is long a certainly that we've that back be if statement. so of pent-up time a got you largest backlog, in the will, we've some And and orders hardware,

As week alleviated. say that point it to every we there's now. I on we be alleviated I'm but manage that right not in really, it day, some have that, can the alleviates, nothing the next that every going four horizon hoping something quarters, it's concretely it's still at designed

it adjusted that you've basically, environment you're haven't change, hasn't necessarily working yet? just come the completion So seen you now a a to to but

Yes. a I mean, there's change.

a to like meet their the said, of we the deployment months order hardware order orders would couple the think a as and than been of orders, when because some in first just placing a I little smaller enterprise bigger have they get think needs. they'll are probably I I place second they're more here

flexibility we're option And more great for a approach of to building create customers. hardware

about you base your of customer the cross-sell then the bit just And the large, difference of Any customer qualitatively, size Fuze. size real to Okay. little small, a their with et cetera? mentioned base, in relative

Well, in average --

company? the the In terms of size of

at Yes. each side, other. little that segment, the On their they're But to -- any in was business customers component sense. small if If our a of both companies that. Enterprise larger. we had their a very Enterprise average, -- have look the larger Enterprise and on size segment our similar comparable. We But you very makes are

Thanks. Good. Okay.

Colliers. Thank comes with proceed. Trebnick Please Catharine question you, Breen. next The Mr. from

good taking for thanks question. my Congratulations a quarter. Hi, on

would time Thank that relationship growth? of Black why some you me wondering with good talking seems pursuing Teams. be spent it you. and you aren't Voice with avenue about Microsoft So And I'm to a another

Thanks, Catharine.

So good. think on I always is like opportunity, the do Team's more it partners is

see that through all And and platform both very UC CC So our us. with to communication users lot we're Team's have and open that enterprise system do strong create a have a as is just for to larger a relationship. that lot we're we attached Team's adding an routing, help The that across itself value to of our relationship they We that contact is are think doing our doing with powering integrations through relationship honestly. and opportunity touched. their And we obviously, usage, coverage. important an And we're these employees, don't in lightly still global and a penetrate Salesforce I center, direct that platform, products, overall. overall a regard

right. Appreciate it. All Thanks.

Thanks, Catharine.

Thank Please Trebnick. comes from question next proceed. you, Ms. The Power Baird. Will with

the a quarter. starting service guess, revenue Maybe in upside the I questions. with thanks. of Great, just couple

or in into and color we strength Is and And within wondering within any is as guess, areas it move by driven of get really was could there? CPaaS if seat? it Was any particular then indicated you CCaaS. there CCaaS, color just the Any just sustainability QX? we that upside, other and Sam, CPaaS other think, usage? products that I I

on Southeast Asian CPaaS So side, the it usage. was

And got the over We've there. great few some earnings mentioned I so new has brand calls. last Dave we've names presence mean, I think a big customers. think pretty I won some

up side, to ramp usage. it You on flowing those imagine up. the they usage show just was Center through as minute then starts as Contact can And

up, it up world is business And that and so just on, do shows going a more more the feels as like I opening lot activity sustainable? there's and correspondingly Yes, it's think usage.

a a growth then And look great. weaker. bit out. I primary That's at just the ARR you I think the I looks called that's Okay. XCaaS know as accelerated. And focus. you on ARR SMB question growth. know that mid-market you and touched as like on, It

one big that acceleration of or the is more how we I offset ARR So a get to key What do guess when questions than question was an are any think inflection one rough some can big the where XCaaS time ARR point to to mid-market an to growth? in drivers points help and about line that. in pressure SMB that, of the of drive

other. days, each us at if to three give eight just minutes? little four answer humor look bit We're right? So of like drivers, I an -- and sorry, you the months, want and Or hours key of Dave wondering the you today. a six

what's driving grow making to off. seeing are generation, with there. branding, pushing rate. growth of the Yes, it's the continuing faster things all and the those look, in we're the paying in we're overall really kinds We're So the it in investments first line in is than demand channel

year up. becoming a it's from on, And tenants that now. of business, is overall I'm wants one of every our hoping because percentage in rate the company what Dave our a call drive the exactly a So, business, keep percentage growth this of driving been towards excess larger it's bigger we of the saying he's it to point of and

Great.

Okay. Thank you.

Oppenheimer. Horan Tim Thank you, comes question next Mr. from Power. with Please The proceed.

the think you very it's just Thanks, channel guys. a I bit deeper? implement? to are where Can your the are would of I you and think little a Where go channel that lastly, legacy do you into terms channel. in just different the there? that are execute developing kind ability processes kind of market? in you than we guess like And inning Teams to penetrate And of what on

sorry. came I Teams ask channel? the you Can I'm Did first say part muffled. you little a

Yes.

the Microsoft that supportive? channel systems you integrator basically, -- on kind Sorry, Microsoft into yes, developing Teams, kind legacy can where are of a sell of

Yes.

going with I'm -- last to So and the part. start

do ways plans, And have and really see whether Communications. you operator do, I fraction Teams is right? just look calling think it's And early and the Microsoft using think small in that there's at that's routing as think, solution today to I differentiated. it that, where there we're attached users different you I we early all or direct is what's when what -- but we're routing, are predominant the that, for predominantly do I connect or a a messaging, MAUs when it's it, lot think attaching Communications they're direct Enterprise of so Enterprise to

really sense we opportunity. yet the got been I on and quarter-over-quarter capitalizing Obviously, we've have into So I We this this. think we capitalized but on channel don't growth, it. XX% think early, had we full

whole overlap mostly riding I our to there's for us. is initiative something think your channel there, that channel and so, a current in partners key set is And a additional that of is We've but there to relationships, point. exploit been

will things we've we we we is SMS do called improve your those really we as on capabilities powering this. be the time it, center obviously, And and something go here coverage ahead global by facts, to giving of these bring When it it. all like doing contact employees, employees, working do enhanced and that's been advantages over that. so And that we used

So, lot been success. of having a we've

bigger opportunity success for there is think here. an for a I much opportunity

support and with quality the you provision product are customers and to just and ability of where Teams? And the

And that's is are our quality where work on great service customers reliability we it's question. predominantly come uptime service We those tenants, of Yes, -- a provisioned of we -- from. and core deployed.

we I that. do would so have an And to say ability

out than and but else of high those high I that think for anyone it's do We some in better figuring are to still core components, reliability us environment. a special sauce quality a and

you. Thank

Thank from you. proceed. Bank The of Please comes next America. Michael Funk question with

Thank you Yes. good for A here. It's be taking could. question. if couple the I to

the the enterprise change First that can in and give deal comment any and funnel the late you size then of stage? kind funnel, early on of on

for I -- initiation. was recent thank a it. you appreciate It the don't We Mike, read. look, great first,

those we metrics. of look, funnel kind Second, don't give

we it listen to think know our -- competitors would be our I inappropriate with certainly calls.

it now. the think out to I right so be And just thing wrong give would

try time can one I just least. at

been So kind of adoption different market CCaaS. you versus on for over peel the the apart of inflection kind in gains? just there terms question have adoption. the of UCaaS Can rates broader and having the of broader market success of time enterprise in Obviously, share you're acceleration that

the been movement this scratched cloud at have It's migrate has time. for accelerated it. almost the we but been latter to The to over occurring ones barely point. the enterprises decade, a And

that's partly investment lot solutions. on greater of because still there's the solutions. cloud think large is acceptance into over legacy And it a where solutions also -- innovation a going people enterprises But are so but realize mandates. And the legacy seeing work-from-home of partially, causes we the I

cycle move their choosing years. are people a to when replacement to future platform XX still this obvious cycle. be platform, That cloud up could think becoming X I next in So replacement to to it's

to regard, think increased. that run has propensity So it's the to a in but long still cloud to be going I move

into you're modeling some maybe are of Understood. modeling quantitative you in modeling more breakage earlier, And kind You mentioned Fuze acquisition? much are you How in? how churn. breakage much then, the

we breakage right? you churn, mean by -- So So

Yes. Sure.

I rough small norms taken their estimates of and what and looks have So base some industry doubled it. like, mean, you I've

safe, the I've doubled that's churn rate for average So been and industry running I just to what model. be through their portfolio, the

Appreciate Great. guys, much. Thank so you, it.

I one think more time operator. have we for question,

Please proceed. from The comes last question Ryan Koontz Needham. Absolutely. with

on I it's bit give little bookings. an help things like it us that? like terms ARR? stands us of sounds it any to that increasingly Can you on Q-over-Q? more, a can you up new that and Thanks and XX% important question. back hear of as wanted there? for of give bookings enterprise in part Is more color Teams percentage a I your double Is where Any new the

Yes.

mentioned I think in -- user XXX,XXX we and said the it XX% of we we All the is number quarter-over-quarter. deals London it five we Borough launching a also. important went Beam what also seeing but said first of and quarter quarters on bookings, we of The today users that, both and Teams expand that up are ago, Newham. land I expansion had have is new but -- and Suntory even then

So and land-and-expand. we're new seeing it in both

That’s Thank Dave. helpful, you.

additional Q&A time, I no team this and are closing management conference the session. the There questions pass will concludes to that back at the for remarks.

for much time your a those very today. available replay on there's There's web, -- record from a a and There's you replay thank days. the

Fiscal Earnings you XxX Conference the participation. XXXX Call. concludes That QX Thank your for

disconnect may You now lines. your