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spk_0: good evening my name is simon and i the or conference up later today at this time i would like to welcome everyone to the eight by eight inc said school second quarter twenty twenty one earnings conference call i will not turn the call over to the toy your hide done head of investor relations
spk_1: thank you good afternoon and welcome to a page second quarter of fiscal twenty twenty one earnings conference call joining me today are get burma chief executive officer and daniel water chief financial officer during today's call big will begin with desert highlight of our second quarter performing following the demo provide details on our financial results and guidance actually prepared remarks we look forward to taking your question before we get started just a reminder our discussion today include forward looking statements about a bright future financial performance advantage business product and growth strategy is including the impact of covered nineteen pandemic we caution you not to put undue reliance on a forward looking statements as they involve risks and
spk_0: or case they may cause actual results very materially from and before looking statements as described in a risk factor in our report filed with the fcc any for looking statements made under called reflect our announcers as of today and we have no plans or obligation update them in addition some financial measures that will be discussed thunder call together with year over year comparisons in some cases were not prepared in accordance with you are generally accepted accounting principles or get a reconciliation of these non gaap measured to the club to comparable gap measure it provided with our earnings pressure leaf and powerpoint presentation deck which are
spk_1: elbow on our investor relations website with that monitoring the call over to back
spk_2: thank you victoria good afternoon everyone and you for joining us today idle all of you and your loved ones are healthy and safe
spk_0: we delivered a strong quarter across the board in queue to
spk_2: as be only pure play integrated you can see gas and feedbacks provider in the market today
spk_0: customers a briefing and validating are integrated platform strategy in fact block from customers who have at least two out of our three solution categories grew at twice the rate of the overall market and now represent nearly a third of the companies a are are our new voice for microsoft games solution so tens of thousands of feet this quarter and is one of our fastest growing new products
spk_2: we are accelerating acquisition a new logos as ecommerce delivers thousands of new customers per quarter
spk_0: and or pipeline significantly expanded to both record partner deal registrations and the strongest conversion ever from a digital channels in summary or go to market investments are cheating strong returns and our team executed exceptionally well in parallel we have also made significant strides unlocking operating leverage in the company we achieved at third sequential quarter of improve profitability exceeded top and bottom line guidance and significantly reduced or non gap pre tax loss
spk_2: steadily improving execution resulted in lower customer acquisition costs higher operating margins and better cash management
spk_0: and we surpassed expectations for migrating up our legacy customer base with more than ninety percent of a customer base now on the excuse black one most importantly we remain on track to achieve non gap pre tax break even exiting the fourth quarter that expect to be cash flow positive in the second half of fiscal twenty twenty two looking ahead we have a clear line of sight to both profitability and continued growth
spk_2: as a result we are comfortable establishing full here guidance and raising our ending cash balance outlook for the fiscal year
spk_0: damn will cover more of the financial details later on the call but he and the finance been have made a significant contribution in improving our operating margin optimizing i investments and go to market and strengthening our gash position let me focus my remaining remarks on highlights from the quarter the three pillars of our black from strategy and thoughts on the second half of the fiscal year with regard to a second quarter business highlights are going to market and channel for strategy saw improve growth globally particularly upmarket with mid market and enterprise customers we had a record quarter with mid market and enterprise customers we closed forty eight new deals with a are are greater than one hundred thousand dollars up from thirty deals a year ago this includes twenty two up cell and cross deal illustrating the effectiveness of our land and expand by from strategy at the end of the border we had a total of six hundred and seventy customers with a are are greater than one hundred thousand dollars a twenty five percent year over year increase we had a very strong quarter overall for a contacts and a portfolio including a seven figure total contract by you or t be when when a global recruiting leader that added more than eight hundred contact center city we also delivered several a figure tcp wins this quarter including you significant international add on order from a global logistics company that included thirteen hundred contacts and are safe and thirteen thousand boys for microsoft games the channel successes accelerating as a channel program drove nine of like top ten deals and fifty nine percent of overall new bookings we bark every master agent packs eight one of the top suppliers of microsoft teams to the msp community this is a significant moved to drive further adoption of eight by voice for microsoft games
spk_2: on cloud toolbar program continues to ram with the number of ours qualified to sell employment and support a bade after completing our exhaustive certification program we added dozens of new law or partners including spectral tell in the us and one come and emir in the uk virgin media business closed several new wins with state local education and special districts also known have fled
spk_0: these included asheville district council purchasing four hundred you get a thief blast voice for microsoft team and avon and wilshere mental health nhs trust purchasing over three thousand bundled you gas and see gassy and we were very honored to receive boat the partners choice award top overall supplier for the second consecutive year from intel of his and the international bender of the year award from about in from we are seeing an acceleration in fails momentum and healthy pipeline coverage will grow the cross of domestic and international markets customers and key verticals such as healthcare manufacturing public sector in financial services are choosing a paid x series for the cloud communication need
spk_2: let me highlight a few notable wins
spk_0: we continue to replace legacy of via on premise systems including a notable seven figure t me when with a global manufacturing enterprise with operations in north america and asia pacific disgusting i needed a tightly integrated cloud these communication and contacts and or solution this is a two thousand blush the uk and four hundred plus the contacts and a deal in which a paid with selected for expertise and global deployment and customer service a marquee channel when and a trigger tv deal is with a large veterinary practice they were using several disparate communication systems including myself and we're looking to consolidate them into a single block from to help support disaster recovery and business resilience initiatives we've blunders sixteen thousand plus the deal after a very competitive or and p with several other cloud providers wifi continued momentum had fled as government agencies respond to ongoing covered nineteen impacts a great example is with one of the largest any just community health providers in england a by a good place multiple legacy to let any solutions with our platform for asian facing contacts and our agents and back off his clinical experts the cross two hundred location
spk_1: this seven a good tv deal with four thousand plus bundle feed bills on a successful two hundred and fifty feet contacts and a deployment are this spring
spk_0: lastly in financial services we secured a seven thousand plus feet up sell deal with a longstanding enterprise customer they continue to turn to a paid as a trusted business partner for the global cloud communication and contact center solutions moving on to my second topic for discussion as you know are open communication platform is the only pure play integrated technology platform in the market today that includes you gas gas and sea bass we are seeing strong growth across each of these three pillars from customers that won't be advantage of an integrated black one first we continue to see strong growth for you cast solutions with customers that want to modernize that eleven a black for success with a you guess offerings has long been our core business that recently growth has been powered by success with microsoft teams integration ecommerce and customers looking for you gas and fee guess combination solutions with voice so microsoft games we have thing strong early adoption from small businesses to large enterprises customers are selecting a fight global cloud to let any solution that works and natively across microsoft team mobile web and desktop applications a bite voice so microsoft teams is an enhanced direct routing solution that connects to a customers tenant on the microsoft phone system providing that customer with pfp and connectivity and global calling plans and forty two different countries worldwide our solution also integrates eight by in contact center and third party enterprise apps including salesforce this quarter we find several hundred customers and sold tens of thousands of voice for microsoft themed feet a great example is when msc mediterranean shipping company one of the world's leading container shipping companies headquartered in geneva switzerland during our me earnings call i spoke about msc previously using twenty desperate global communication systems prior to selecting a paid for integration that microsoft team and global deployment expertise after experiencing successful warm up in germany and the us embassy expanded their global footprint to include approximately seventeen thousand you gas and see get feeds overall based on experience with similar customers we believe that our global boys from microsoft team solution is highly differentiated in the marketplace today we have also seen accelerating demand for disillusioned with a channel partners in all geography additionally are economists black platform remains an exciting self service entry point for small businesses and work groups we have nearly doubled ecommerce revenue every quarter since launch and continue to add thousands of new customers each quarter with without a bite express and paid by neat bro solutions we are now offering a by extracting several of our channel partners as well as with new philly of such as wings were small and new businesses can easily add new gas capabilities as a set up a web presence and purchase other small business services
spk_2: ecommerce is a high leverage economically attractive way for us and our channel partners to bring large quantities of our customers onto the x theories black guy
spk_0: moving to a second solution pillar see gas wifi strong acceleration and demand particularly for bundled view gas gas bills as businesses aggressively shift to operate any were engaged customers remotely demand for cloud based contact center has increased sharply seventy percent of new bookings twelve thousand kate are more him a are our were from customers that selected bundled you gas and fee gas as compared to forty seven percent a year ago nine out of the top can deals where you see and fifteen bundle deals overall contacts and a new bookings goose sixty two percent year over year and represented thirty two percent of total new bookings this quarter we saw more large context and wins as well as additional expansion of our base embracing a combined you see and contacts and of approach to support work from home agents album sales help desk and feel employees we also started rolling out a bank contacts and aversion nine dot twelve important updates include new an enhanced functionality bringing together and preview progressive and predictive dialing mouth
spk_2: this really helps our customers improve connection rates maximize revenue opportunities and me evolving regulatory requirements in the us and uk we also expanded our global reach capabilities with added support in latin america europe africa and central and east asia providing an enterprise telepathy any solution for organizations and forty two countries across six continents
spk_0: after and solution pillar if he path when we had scale globally would be expansion of a programmable applications and eight be eyes to north america and him me leave team double digit sea bass revenue growth quarter over quarter and see signs of continued improvement in southeast asia we nearly double the total number of deals close quarter over quarter including double digit wins from the us and uk
spk_1: new customers including transportation and logistics retail and ecommerce businesses using our sms boys video or chat a p ice
spk_0: we are also seen customers find new ways to add feedback to are open platform to expand communication and custom engagements to meet their unique business requirements one example is a leading uk insurance broker and wanted to extend their ex series you gas and fee gas capabilities to further enhance the customer experience they added r c bass sms notifications to provide information to new policy holders and alert
spk_2: existing customers about are coming policy expirations
spk_0: we are also seen demand for real time performance monitoring to ensure a high quality experiences as a number of virtual of and meetings and work from home requirements continue to increase cause death or web rpc analytic service is uniquely positioned the could be provided ministers will those inside so they can easily address any network related issues we saw a record level of account sign up for our called that solution we signed a new mobile carrier partnership and telia for europe to expand of sms and boys network connectivity we have a network of more than one hundred and sixty carriers delivering coverage globally to enable businesses with us best solutions
spk_2: finally we will shortly be announcing beta availability of gypsy as a service which will be most reliable secure and skeletal video meeting as a service solution and the market building on the gypsy the open source experience this solution and powers developers can add and customize video meetings to their website and real time contactless engagement application them areas such as della help education and rico
spk_0: we have several customers already leveraging the gypsy as a service a be eyes to self post in bed and manage video meetings to engage customers online and in mobile applications we expect to make jiffy as a servant generally available before the end of the calendar year as we continue to explore the multiple growth opportunities afforded by are complete platform we expanded the team throughout our organization including in sales and marketing product development and customer success during the second quarter we also welcome feed feeder as sheet revenue officer steelers more than twenty years of experience and revenue leadership roles in prominent companies such as pimco software ff xerox and oracle young people experience and enterprise software and cloud technology and we believe that he will
spk_2: the instrumental to a progression and grow the vinyl topic i'd like to discuss or observations for the second half of the year
spk_0: we have demonstrated that be a bite open communication platform is fit for purpose at barclays customers digital transformation to the cloud we are uniquely positioned to meet customer demands with a global proven in skeletal unified phone video messaging contacts and an enterprise a i splatter while the competitive landscape is always changing the strategy of having a single black from solution has been validated by the market which will ensure an ongoing source of value for a by the very pleased with our financial progress and are steadily unlocking operating leverage within the company we have aligned resources and are investing and innovation and go to market initiative that will provide tailwind for the remainder of this fiscal year and beyond a key component of continuing operational improvement and leverage has been are strong success with automating customer migrations
spk_2: the migration of a legacy customer base is well i had a plan and week seated our goal of having more than eighty five percent of our customer base on the expiry splat from by the end of the calendar year
spk_0: in fact over ninety percent of our customer base is now on the accessories platform up from sixty eight percent last quarter above target and ahead of schedule and we remain focus in substantially completing our legacy migration program by end of the fiscal year we have already seen a reduction in sharm rape improve customer satisfaction scores and a decrease in support gods from customers migrated to the excuse plateau most importantly now that the majority of a logos are on the excuse platform it establishes a solid base for from
spk_2: expansion and upset
spk_0: this is a significant accomplishment and i'd like to thank the engineering and is that theme for their outstanding work with continued strength from channel partners sea bass rebounding and new initiatives such as boy so microsoft teams were only scratching the surface and penetrating is sixty billion dollar legacy market with hundreds of millions of feeds all up for grabs in summary we are seeing market validation of a block from strategy and steadily improving execution across the company reflected in our financial results
spk_2: we had a clear line of sight and non gap pre tax break even exiting march twenty twenty one when continued strong group discuss school year and beyond
spk_0: i would like to thank all of our employees for their hard work and dedication and achieving these outcomes i will now turn to call over to say thanks it and good afternoon we appreciate you joining us as we report the second quarter financial result i wanted to go back comments that i hope you and your families are well and game safe for car i will walk through our cue to buy answer result and then provide guidance for the third quarter and full year lastly will open the call to answer your questions starting with our second quarter results we are pleased to deliver performance that exceeded died and improved operating leverage and reflects increase confidence in delivering profitability overall results were driven by better than expected performance in you can be gas and are bundle offerings total revenue for the quarter was one hundred and twenty nine point one million dollars an increase in eighty percent year over year and above are one hundred twenty five point five to one hundred and twenty six point five million dollar guidance
spk_2: total revenue was driven by better than expected result across the board
spk_0: looking at our geographic makes international revenue was twenty six percent of total revenue up thirty seven percent year by year and the us was seventy four percent of total revenue an increase of twelve percent year over year our investment and expanding our global footprint continue to pay benefits looking specifically at service revenue generated one hundred and twenty point nine million dollars an increase of ninety percent year over year and above are one hundred and seventeen point three two one hundred eighteen point three million dollar guidance total a rr was four hundred and fifty seven million dollars a quarters end up twenty percent year over year and from solid growth across you can see that and feedback offerings it's called for jury by our continued movement upmarket to larger enterprises including winning at several a figure ppv deals channel would also essential driver behind increasing our reach into mid market and enterprise customers as victors got our strategic investment in channel and product innovation on the last two years are delivering stronger golf and are we can see that expansion into the us a new game as well as voice for microsoft teams is promising during the quarter when from them large channel ideals deals be closed last year and are july two thousand and nineteen accusation of wave sell as we previously discussed be to dynamic get impact growth rate in various channel and customer metrics we provide on the i r metric she these metrics will continue to change as we sign large enterprise fields with longer terms now moving down the piano second quarter non gap gross margin was sixty point nine percent driven by product mix and better than anticipated professional services revenue non gap service revenue margin declined ninety basis points over the last quarter to fifty six point eight percent primarily due to product next as we had previously mentioned sea bass margins are significantly lower than ucas and see gas margins although overall sea bass usage knitting it will increase quarter of a quarter
spk_1: it was lower than expected as the second wave of covert effects in asia pacific were felt while the rebound have been slower than we initially hope we detect continued improvement into the december quarter
spk_0: nine gap other revenue margin came in at minus twenty seven point seven percent for the quarter a large improvement from the niners fifty eight point nine percent a year ago and sequentially improved from the minus thirty four point seven percent a key driver with our continued growth and are flex hardware rental program flex revenue with up nearly fifty percent sequentially and have a positive influence on gross margin we currently expected overall gross margins will be slightly lower the third quarter because of product mix with increase the bass usage as the world reopens or uk and us business ramps and holiday driven usage
spk_2: looking at few to operating expenses we are delivering on our goal of a lining the global business dry both improved execution and efficiency dime get sales and marketing fence continue to improve to forty one point three percent of revenue and que to two point one percent lower than last quarter the comedy
spk_0: should have leverage from our digital marketing optimization of media stand and moving from physical to online events has driven spending efficiencies we have auto added failed capacity and improved sales productivity nadya are indeed expensive came at nine point nine percent of revenue into to vs eleven point eight percent last quarter we continue to prioritize investing in are differentiated technology platform advantage and complete migration of legacy customers to accessories non get teenage spencer's improved to eleven point five percent of revenue and you to from twelve point five percent of revenue last quarter we hope to gain further genie advantage as we scale revenue and related operations a total non gap operating as were up one percent year over year while total revenues group a two percent year over year a clear sign were making strong progress are returned to profitability operating margins where minus one point eight percent for the quarter the best we have seen since the physical third quarter of two thousand and eighteen and we believe we had a clear line of sight to he returned and non yeah pretax profitability and green the march twenty twenty one quarter and future cash generation i would like to point out the do the timing of certain expenses each expand magic will not necessarily prove each quarter in a linear fashion however we have begun delivering returns and expect continued efficiency improvements trend in combined operating expenses as a percentage of revenue on a year over year basis
spk_2: important thing or top of metrics including pipeline coverage rates continue to be good our growth rates remain relatively high and are margin profile improved these results show that we are harvesting the returns of our previous investment in demand generation and the channel
spk_0: we expect to see further improvement in new the economics as the optimize our go to market motions or non gap pre tax loss was three point three million dollars for the quarter ending september thirtieth it was better than a seven point five million dollar guide provided in july and a result of a combination of better than expected total revenue margin improvement more efficient customer acquisition operational refinements and the time in related items such as reduce travel expenses authored by a currency headwind we are assuming the timing events will not really occur when we are giving guidance or an extremely pleased with how to team has been very diligent about each dollar spent turning to the balance sheet total cash restricted cash and investment and the second order and one hundred and seventy five million dollars with fifteen point six million dollars obstructed cash excluding restricted cash balances one hundred fifty nine point four million dollars to to a decline of approximate eight million dollars quarter of a quarter or three quarter trend in usage was forty eight million dollars used in the fourth quarter of fiscal twenty twenty twenty million dollars used in the first quarter of fiscal twenty twenty one and eight million dollars you'd in the second quarter of fiscal twenty twenty one super proud of the whole team we are focused on further reducing our cash burn through operational efficiency economies of scale and improved collections collections continue to run ahead of expectations the operational improvements we have put in are paying off faster than expected further we believe the better than expected collections is a good sign of kobe related risks are manageable in terms of cash for driving in fiscal twenty twenty one we decided to pay our over bonuses or semi annual basis using a higher mix of cash and stock as compared to prior quarters which will increase these are cash usage in the third quarter we didn't expect to see further improvement into the fourth quarter he give cash last quarter we just got our hands that apart from me hundred million dollars or more and task as equivalent investment on the balance sheet fiscal year and given are better than expected financial and business performance we are raising our expectation to over one hundred thirty five million dollars in cash cash equivalents investment exclude
spk_2: restricted cash
spk_0: we understand that is a large job as i said the program improvements we have put in place or performing significantly better than expected
spk_3: we're focused on being free cash flow positive in fiscal twenty twenty two more likely in a second half of the year
spk_0: one final i'd have underlie believe i'd like to discuss the for revenue which increased during the board over twelve million dollars we've started our journey of moving towards building contract in advance of service delivery and expect a bird revenue will continue to grow in the balance sheet additionally we have started a number of operational programs focused on reducing the time between booking a deal and receiving the cash one metric we're starting to get asked more about his remaining perform at obligations are are pl under us gap accounting we disclose this number in our as you see filings each quarter simply arpaio in the aggregate different avenue and revenue backlog for subscription services for the second quarter pure was approximately three hundred thirty million dollars up from two hundred ninety million dollars in the first quarter and two hundred and twenty million dollars in a year ago period or roughly fifty percent growth turning to our financial outlook advantage of the third quarter we've seen good sales funnel metrics the that usage rebounding a new solutions such as voice for microsoft teams and meeting expanding our global footprint on sitting there is a blend of tougher comes from large field closed last year some revenue seasonality and continued uncertainty in the macro economic environment as a result of the pandemic taking all the to recount we're establishing guidance for cute three physical twenty twenty one and in december thirty one twenty twenty as follows we anticipate total revenue to be in a range of one earn thirty two to one hundred thirty three million dollars representing eleven to twelve percent year over year growth we anticipate service revenue to be in a range of one or twenty four to one or twenty five million dollars growth representing twelve to thirteen percent year over year growth yeah dissipate nine get pre tax loss of approximately three million dollars we also feel more comfortable providing for your guidance first some color on servers revenue as expected growth rate in the second half of the year will come down as we were happy anniversary of the weight so acquisition and large channel ideals one last year which creates a tougher com for the balance of the fiscal year we'd expect a bottom human growth rate in three you and an acceleration and forth you we continue to monitor the proving my team situation as it remains fluid especially for the usage based components of revenue more importantly or news service revenue for year guided it again increase to hour prior color of seventeen to eighty percent
spk_2: looking at total revenue we expect to see continued customer engagement shift from different phones to flex hardware rental fails and a by apps on mobile devices a laptops at work from home and work from anywhere continued to be the new norm we expect a slow down and hardware sales to be reflected it other revenue
spk_0: and so we are establishing guidance for full year fiscal twenty twenty one ending march thirty one twenty twenty one as follows we anticipate total revenue to be in a range of five hundred and nineteen two five hundred and twenty two million dollars representing sixty to seventy percent year over year growth we anticipate servers revenue to in a range of foreign eighty nine two four and ninety three million dollars representing eighty to ninety percent year over year growth we anticipate i got pretax lot of approximately sixteen million dollars as a reminder to represent a significant improvement from the fifty nine million dollar non got pre tax loss witnessed in fiscal twenty and so with that let me turn to my final topic and of cats are i are program i've had an opportunity of speaking with many of our institutional shareholders and analyst this was their feedback based on feedback we are planning on making changes to the i r metric sheet the goal is the more effectively report see performance drivers for a dynamic business model
spk_2: we expect to discuss these changes in conjunction with fourth quarter resolve and so we are providing ample notice to wrap up we remain well positioned to manage the business for the long term and are committed to accelerating our efforts to deliver better financial performance and enhance shareholder value we feel confident in
spk_0: delivering on our financial outlook and of line of sight the profitability positive cash flow and accelerating growth in fiscal twenty twenty two i'm proud of our second quarter performance i would like to thank our customers and our partners for their continued commitment operator we are ready to take questions they didn't johnny at this time i'd like to remind everyone that in order to ask a question please press start than the number one on you telephone keyboard once you're just a moment to compile the to and a roster your first question comes from the line of lung in nyc wounds with stevens inc you line is open
spk_4: a sticky question nice quarter i like from the changes to a cash to action for vic you know i thought the forty new booking over a hundred thousand a or i was telling of the recent poll for in the of markets adoption about version he talk about any further changes you see mer to the be more energized and applied for to think it's coveted and are you seeing any changes you to deals like or like everything it's an urgency of you bought your customers
spk_2: yes and actually what has been quite interesting is as you can see our combination deals where people are buying to out of our three solutions is significant ramped up at seventy percent of our bookings greater than twelve thousand dollars in a monkey recurring revenue what we've also seen is this whole concept of land and spanned with people were made by for example at contacts and our solution and then immediately follow up with are you kept solution and increasing it is starting to also by our sea bass solution to customize the end user experience wanna be interesting trends we also saw was some very large context and or deal if you remember and for my prepared remarks that we talked about a thirteen hundred contact center when and and eight hundred context and a win and several adding four hundred contacts and i wins and so you're just seeing this trend more and more towards large global enterprises selecting a communications platform starting with either a unified communication or a contacts and or so lucian and then adding the rest as time goes on
spk_4: perfect and then all microsoft team
spk_5: theme agape i was headed again here
spk_4: lead the mayan like you on the first major teams direct routing integration the here i know it's still early but you know how as a bite voice your genes help you gauge with some larger enterprise customers that may be equally as a gateway for and have you seen any initial interest for these kids customers and eighty ad on contraction and yeah actually more than initial interest you've actually closed deal like that would be a binding is
spk_2: microsoft teams pulled in a lot of eight by boys because we added the pst and productivity and we get it essentially seamlessly so that from a user's respected been to the be seamless experience and then we saw a tendency for people to add on also our contacts and are so we view this as a very fast growing initiative for as and we think are very well positioned for it
spk_6: i should question
spk_0: he next question comes in the line of which of the layla the even united open
spk_7: hey it's chat tv box for rich good progress on the accessories migration that just wondering what you get to see what to expect to churn as he shifted his base thank you
spk_3: okay so i was the question comes up several times saw the said it had on so it's not that we go to the customer and request that they migrate we usually migrate them over the weekend we let them know way in advance and we see a lower churn rate on migrated customers and annex series customers that on our legacy customers and so we
spk_0: witness that again in the second quarter or we had lower turn rate of all compared to the first quarter not fighting i think given that the rampage the cold never are starting to settle down but in terms of migration we get my continue see the trend that migrated customers have a lower turn charlie he next question comes from the line as michael to limit it wants far the securities he line is open michael touring with wells fargo security each behavior line is open
spk_8: oh sorry
spk_9: apologies those the w function apparently
spk_7: thanks good afternoon appreciate you waiting in there for a second maybe to start off with from the high level
spk_8: you've talked in the past around the importance of only to stack the messaging has sent someone of all torch single vendor open platform get you just help us understand what that means for customers and partners are your positioning competitively given this move towards the more open platform approach
spk_2: no i don't think messages about it's all about owning the stack and the only part that the and as part of owning the fact we provide aid eyes so basically people can change the end user experience and customize for their various business needs we think it's increasingly more important than i did your seen that happen everywhere if you look at the messaging in the new you're seeing people by both context that are and unified communication together and feedback becomes a way to integrate and change the end user experience and so and then on top of that because it's all part of one comments that you have one commentator layer one common way of basically accessing all the various information and is an a common user experience across the entire company i view that as as usually differentiated emphatically as we go into a compliance and security environment as well having one integrated platform under one vendors control we think is increasingly more and more important the fetus function gives us the ability to then ensure you can add for example of video link or a sms a reach our something like that at the end user experience level and do it as still part of that one common pattern
spk_9: maybe maybe one is a follow up for sale on guidance of you mentioned a few things in the script that given the nineteen percent services revenue growth you just delivered in that twelve to thirteen percent you're going for a three
spk_5: is is there anything to any change to call out just year approach to setting targets universe the prior to him
spk_7: and maybe is there anything you can add just out on a i what you mentioned their around the lapping a wave sound similar deal activity you saw last year they care so so we we laughed way selling que to so that twenty percent our route ninety percent of revenue growth and you know welcome queen
spk_0: i'm from of laughing at all had a thing of point of view and well try to call out was the last year's conquest a big tough out there is a big surge between kitchen que three and so we're we're see a little bit of that drop in que three growth rate for but we did put the guidance out for the full year and if you do some quick math you realize that is a real acceleration going into i queue for and then overall we did take the service revenue growth expectation up from the year previously we had that it said said seventy to eighty percent hours and eighteen and ninety percent to forty year overall you're looking at of the around eighteen to ninety percent and know no change to sort of have a good guide and sweetly we give guidance on what we think we can do
spk_9: couple thank you
spk_0: you next question comes to mind of mad and eg i g e line is open
spk_10: the height of the go thanks for taking the question
spk_0: i guess looking at the the channel momentum in a still kind of i'll pay thing the overall growth of the company and and in a load the next bookings remains quite high the addition of new channel partners is is pretty high but i guess is as we think about that and than in other guidance for the next quarter and next couple quarters on your your lap your drug my lapping some bigger deals but you brought a lot more partners in to into the network so i guess two part question about that was what's potentially slowing down on the overall growth in in the journal business period and how they're waiting on the total go trade especially for the third quarter and and second on some a big announcement around the bar models maybe a little bit more than kind of just reseller or or guess channel partners out there that are this kind of selling a much business powered that than a focus and in how the market changing around that dynamic
spk_2: okay come on fan all take the first part of it's what are some of the channel metric that number general avec for the bard second half part the question so when i was trying to highlight of my script was simply that in the way that i are metric she worked on bookings it's really based on total contract value and so if we book a very large dealer a five
spk_0: year deal or whatever the concrete that cause of a tough cop and sell as eating clothing the larger and larger enterprise deal than a he really he and rpm which is growing fifty percent year over year yeah you can really see that we can start a habit of back work car or a big deal or couple big deal than a given quarter can whip saw that growth rate number and i just wanted to make investors aware of that right i still think that purest clean it's way to look at our company is looking at a our our growth which was twenty percent last quarter a incompetent are the that business and incompetent all those pieces of never yeah were highlighted on the channel piece is he if you look we're monetizing our investments if you go back a little over two years ago we had literally one hundred and twenty seven active channel partners you know we've we've effectively grown that almost had act with i think we put the magic she'd eleven huh
spk_3: hundred and sixty i'm active channel partners and we had a lot more room to go there i think the a good traction in good momentum and to channel we really like our channel partners we will like where we stand that we definitely have more than the wrong with that initiative that yeah know and i'll echo that i mean fifty nine percent of on bookings was channel
spk_2: and more importantly we have across the board record bookings the key point on bar that is another one that is unimportant area is as you know we made a big push into var because we have this one integrated part of platform and we built a partner portal which allows a bar to essentially we sell our products and we made in investment be both scan source and virgin media business i'm both pipelines a growing quite significantly and be closed deals on both of them and virgin media business in particular had to very large when that i talked about that speaks to the effectiveness of having that one platform because what it allows of our to do is to sell voice video contact center bluff a p eyes all as part of an integrated bundle and they can mix and match to their respective customers and to a large degree it addresses do of the areas which wifi a significant opportunities of good for us which is we want to increase or distribution reach and we want to improve our brand recognition and bar partners have a lot of brand recognition and a large install base and their ability to resell our products because you made it easy for them to do is a key part of our strategy thanks to an enemy of to follow up erosion a lot of success around the overall industry for obvious reasons as a demand is friend than paul for a lot of companies out if you like your but there are you performing in in competitive deals are you still me eating to get more at bats are you are you finding your way into most of the deal the you feel like you should be a part of right now no actually i'm feeling much better about demand generation overall brand recognition and overall performance i think for us right now what i'm seeing more and more often be we've been on a three year journey when we have made major investment in our platform major investments and on demand generation engine a website infrastructure on channel partners and when now starting to see all of that pay off and the also started to see it in terms of the leverage that were able to get so we like where we are it's all about execution
spk_10: a great they get
spk_0: the next question i'm some the line or the middle marshall with morgan stanley you mind is open
spk_11: great length and then i wanted to ask you a question may be first just as he that in the role a couple of months in a clearly there's the talks about begin services organization more efficient door you know the we do have one generation a product that you have to maintain but just are there other areas where you think there's op
spk_0: today it's for efficiency with in the business and then maybe a second question for veg just in a where are you the success in it kind of breeds them as he passes higher margin products and to indicate the failed opportunity vs just kind of aftermath thanks
spk_3: or into i'll take that first one metre i guess this is my my god be fact is a cfl but i believe a continuous improvement so yes there are other years we can improve on there's areas that we've already improved on we can improve moron and you get highlight a couple of on professional services were doing better as i mentioned in the margin and in the script
spk_0: the flex hardware rentals are nearly fifty percent growth quarter on quarter those are areas where it had of low hanging fruit and will continue on that monetizing the channel modify the our marketing investments are key piece on continue to focus on construct for all those had to thank you know what we're really just focused on continuous improvement on each dollar that we spent i ate the make it so simple but it's really that simple
spk_2: yeah no doubt i'll give them a good kudos and as well have been on and theme the done a great job across the board
spk_12: i think you saw it also in terms of how the team is executed in terms of overall margins improving our politically professional services as well as other margins you also bottom line improvement you've seen kak improve deadly the all of those trends are underway and we were bring in all the the efforts in place to make sure that there is continuous improvement across the board
spk_2: the other part i think what you were talking about which i think is exactly the strategy we've been on which is this whole concept of an integrated platform adding we talked about the fact that you can see guess
spk_12: represented approximately seventy percent of our bookings greater than twelve thousand and a are our and that he and that actually going
spk_2: twice at the market rate and now represents a third of the overall company our are so that's one part the second is increasingly those customers than i'm asking us for the past eight the eyes so that they can change the end user experience a gave you one example of a recruiting company which added see that to go out and do it series of laugh to all of the various candidates who then click on it and can and then become part of a campaign which can then be talk to our contacts center we are being a significant interest in our video offering which is why we will be making jazz and just the other service available very shortly were literally and minutes you can add a video meeting link to somebody the embedded application
spk_12: that will then become available over on of a general availability by end of this calendar year so sea bass we view as a great addition
spk_2: to our overall platform and we're also seeing significant opportunity for margin improvement particularly as we move into voice and video services for see that
spk_13: great thanks
spk_0: and better your next question comes on the line of peter living with ever for the line is open
spk_10: thank you to take my question do not regret when good quarter says we think about rape me week celebration of the go to market investments you may internally forge expanding the part of ecosystem clear gaining traction here's a look at your pipelines what's your company to your sales or being able to deliver the last mile
spk_2: i'm going to be brought on board
spk_3: as hero who have a lot of confidence and steve eager the team overall is executing well we've had the universe our last quarter from a bookings perspective was very strong and we continue to feel like there is a good opportunity to continue to improve from there so it is all about execution for us i like where we are at i like about
spk_2: that the investments are finally starting to pay off and i think now it's all about execution and i of all it added you know the pooper the numbers right we had a great quarter we have cited service revenue total revenue margins everything right so yeah we have extreme confident that we convert the pipeline into a future revenue but i will add one other thing which is which i think it is that a team one also recognize which is an ecommerce team we introduced ecommerce something a little he for leave little a little over a year ago that and thousands of know there's a quarter which meet the low end of the market people can literally click on and have a fully functioning you care system right off the bat as well as meet bro and so
spk_10: that becomes a great onramp them to our overall exteriors platform so it also allows us to free up our sales team to focus on larger and larger deal which is in part and parcel of our strategy over the years
spk_0: great and else let watching something it'll about color in your pipelines about by the dropped color accuracy a changes in south africa
spk_2: your change accentuate customers during the fourth quarter now we have an election around the corner colored cases are spiking gear across the globe sick curious if all is uncertainty in laughable laughable the years having any impact what you're seeing any changes are basically about your result and and got into given us i would think that but if any incremental color it would be great idea
spk_14: last quarter actually one of the good things about last quarter was it with a very normal quarter with normal puts them take than it was business as usual
spk_0: you not like to see that continue
spk_5: he next question comes on the line of might not have more with not not land capital management your mind is open i accept it or thing is see more and more a bigger deal show up here get to see am
spk_1: in terms of i gets vicky the said it was sort of business are easily get to that go to i'm looking kind of linear idiot wow that it putting should attract you expect by month
spk_2: i can do that at all because when i'm back a little better than expected so he was left back and loaded than we normally have antarctica is is he did he had those on allows you to basically flat right everything was kind of at executive as they said it was finally aired he was actually a little better than expected and then my going back your comment about the first part which is as you know we've been in this journey to move higher and higher up the faq in terms of mid market enterprise deals but we also wanted to make sure we were able to serve as a small business customers in a very efficient manner or ecommerce has been adding thousands of logo that the lower and and then me luck which frees up the sales going to go up to mid market and enterprise deal than so you're seeing bone and of the building service and the fact of the matter is you have one platform which allows you to go from small the of all the way to enterprise level deals and you can mix and match he got voice video chat contacts and our blood dk be eyes now to our he got acquisitions so bad
spk_10: we've seen the land and expand portion of it also be a very significant growth driver going for
spk_3: great and i'm i'm small business anything at any change in churn in this father the category
spk_15: are we did migrating and says i mentioned earlier you know we're seeing lower turn rate on migrated customers i thing as it turned down in the second quarter and and you can see the cash right cash is going man that he was better than we expected for the quarters our collections are really no problem
spk_0: can i get you next question comes on the line of jane breen with william blake he landed open
spk_12: thanks this one are you in as you think about this color roads alas any changes are seeing the channel it as
spk_7: these companies are of adapt to which happening and and i could cetera
spk_12: you can get into really potential researchers recently year
spk_7: danica inside
spk_2: just wondering how does how did actually capuchin no i i think we've we've enjoyed our interactions with a channel as a matter fact i think our brand recognition within the channel has been going up quite significantly we are also starting to see that the with of that channel has also adopted our ecommerce engine so far there some
spk_0: low and deals child partners are now starting to put that on their website so far small customers they can actually go in and service them there are also doing these large we call them blitz days where channel partners and eight by folks go out and reach out to prospects all over the world of and that's been extremely well received
spk_9: were also starting to see much larger deals come from the channel we've seen a lot of eight figure tv video coming from the channel which means the channel is starting to feel more comfortable that we other partner of choice
spk_0: and and with respect to just geographic dispersion keys talk about your were sales are coming from globally and on dominating isn't it yeah have you ever get i meant to happen if if you look at our international business with a thirty five percent year on year so are predicting that method we made and growing the channel specially and in the uk a really paying off my in the kitchen virgin
spk_16: the but in general we are seeing stronger growth internationally them we are domestic you as but i don't want to downplay were seeing growth in both market part of it is if the us market so much larger it harder to get a bigger growth rate number off of it
spk_0: great thanks
spk_17: he next question comes on the mine as city had a grant he with the g o line is open but thanks for taking my question and i good to see progress in a business
spk_18: a couple of question for some microsoft can't and good to see this early settlers you talked about tens of thousands of fit so how would you characterize as sets of it is more in the us are outside the u s sudden geography and also get any particular segment but in this modern mckay
spk_2: and like
spk_19: no actually to global and it's broad based and fits you've got more customers you get midmarket customer lucky we even talked about thirteen thousand a deal microsoft teams win so yeah a good it's broad based and it's go
spk_17: okay as and been
spk_2: we'll keep hearing in on my pretty good job positive feedback on your technology and in a platform that you talked about and you are making progress and the go to market side now that to join us hero i'm ordering what sort of changes we should expect i got got a martyr initiative so i'm i'm thrilled to have steve seager onboard them he the former defensive end of a hand he has that kind of mentality i think our team is a strong team that generally and plate and the brings that we have brought everybody of century under one roof and the bring that intensity to kind of
spk_20: take it to that next level we also see bar being a very strong good driver going forward and ecommerce as i indicated allows us to go after the low end of the market in a very cost efficient manner so as of and i am i like where we're at it's all about execution
spk_0: i thank you thank the
spk_10: thank you your next question comes on the line of angel came with calm your securities the line is open
spk_5: and i think state my questions like why of note that the migration that really dollars
spk_0: were originally aired once again i get there any factor outside of over at that
spk_2: dollar and migration path your expectation thing i mean look them the biggest factor is an awesome engineering and be that steam on they found a way to completely automate the process that exam alluded to it in the pad were in essence what you do is they have found a way where you can take a customer that was on a legacy platform literally map it over to a new blood
spk_0: warm do all of the prep work beforehand and the over a weekend literally a switch gets flipped and the customers now on the new platform and they are going out of the user interface from their perspective on the pitcher functionalities a very similar it was a phenomenal teamwork and they migrated tens of thousands of customers of the last couple of quarters of that's a great accomplishment
spk_9: we also believe some of the ip that they develop have opportunities for migrating other customers that may not be on a bite back from in the future and the whole goal here is to make sure you automate the process
spk_3: your next question comes on the line of will power with baird he likens open it's his trailer elegant your well thanks er squiggles than an or to that one also been you can talk about your gross margins expectations medium to long term and given a lot of moving pieces contact and are growing strongly he pads and trend strong and you catch trend and video coming online to to actually think about that putting out
spk_0: that all the other does not get it into super her question and and i'd love to give you an incredibly i could you would answer is really to movie pieces here at our see that business growth for product mix perspective that drive down gross margin at the same time as flags and are professional services scale up that a positive influence the gross margin so roughly we
spk_2: model it flat to slightly down winning think path passes a little bit larger towards and by slightly down i mean and the point nine four percentage basis points that's generally how we think about it over the next day four quarters or so and then after that you'll have the that and give you an ability of her
spk_21: thanks
spk_12: your next question comes from the line of jonathan comes with somebody inside scoop your line is open
spk_22: narrator think you're taking my question them and congrats on a good quarter i wanted to dig little deeper in terms of the video
spk_2: you know in them the faster the youth he talked about like a number of users for the a by a the video on the meetings pro i'm just trying to argue that they don't they're often just trying it on stages of have you been using this as a and lead in for the ucas see can't sales is or is is more have been am up sell afterwards we're just kind of get better insight into the interplay between that and the more established and offerings to to have thanks they found the amp yeah no video as you know we're still had several million users the main point on video over the last quarter as we talked about has been how to monetize that and it read three very good approaches number one increasingly it has become be onramp to bold our eight biting spread as well as overall you can he gets
spk_23: outcome for that's worked extremely well for the second and then eventually customer lead they increasingly like our video gypsy as a servant as a way to embed into their own applications to add video capability and so we've already got settled pilot customers are on that as well
spk_22: we've also got a very robust open source community that is continuing to innovate on that so far as video has become increasingly away where we as part of a bundle it's a different cheated offering it's an on ramp onto our exteriors platform and just the other service allows us to monetize by putting again
spk_2: atlas eventually into somebody else is larger have where they are able to literally do it and minutes and developers are we've gotta love that indicated several data customers on it already she gamekeeper
spk_16: meetings pro more am
spk_0: as an on for now out without the and more monetize a gypsy as a service
spk_24: that's correct
spk_2: you can break
spk_0: thanks you next question comes from the line of one comes with black securities you mine is open
spk_3: what question
spk_2: like a piece of the the you cast came out there is in the the carrier business lines i wonder how you view that the carrier opportunities to sell him like label product or or you prefer and really displacement typically with your own bread you're just like okay if i would i would answer that question for a two pronged approach that we have never won his arm a lot of a curious a traditionally still to bars and or had a large var component to it so that others have our program that that discussed earlier the second one is with ecommerce and even with mercury stop in our a p i've we have the capabilities of white labeling selling to etc in other discussions have occurred are occurring will occur at that try to like you everyday the and the that
spk_0: but we have the ability with for hippel manager express we can white label it if that's what a carrier chooses to you that is a self serve it with zero touch onramp to you cash and then progressively move up from there i will tell you for sure carriers are super interested in the idea of self service zero touch no no
spk_2: human being involved that type of stuff and at a lot of the activity we're seeing when we mentioned that they were starting to have the ability to movie commerce into our channel
spk_0: and them in and you can look at example a virgin media business in athens their standardizing on our platform the going to their install base they can you can't against of the gothic unhealthy best they can sell it for small business customers were ecommerce offering so we are increasingly fee carriers as a route to market by them essentially call labeling our products and or white labeling our products because we believe our platform is hugely differentiated comprehensive and and fully integrated and from their perspective it becomes a one vendor way to go to market with multiple offerings the off thanks thanks and like that thank you your next question comes on the line of george such and with craig helen you mine is open
spk_3: thank you are one interesting thing that i don't think is been addressed his the decision to pay more of do bonuses and cash where she started only give an interesting move he talked my the logic behind that yeah think that one so look i'm like he became yet at though you know that and in a june
spk_0: i heard a lot of concerns about cash i think with the latest numbers really taken off the table and we've yeah we're talking about erotically by million dollars in cash not including restricted cash exiting and for our on the path the castle profitability so time to start to turn our attention to things like stock based compensation those kinds of things to make sure that work very shareholder for
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