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spk_0: good evening thank you for attending today's a page you for two thousand and twenty two earnings call my name is joel and i will be a moderator for today's call recently some portion of the call with an opportunity for questions and answers at the end if you'd like to ask a question please pastime went on your telephone keypad and i like to pass the conference over to our host keep patterson had an investor relations a page please go ahead
spk_1: thank you operator good afternoon everyone today's agenda will include a review of our fourth quarter and full fiscal year results with dave sipes chief executive officer and sam wilson our chief financial officer following are prepared remarks there will be a question and answer session before we get started just a reminder that our discussion today includes forward looking statements about our future financial performance including the impact of the few the acquisition as well as our business products and growth strategy we caution you not to put undue reliance on it's forward looking statements as they involve risks and uncertainties that may cause actual results to bury me curiously from forward looking statements as described in our risk factors in our report filed with the se see any forward looking statements made on this call and in the presentation slides reflect our analysis as of today and we have no plans or obligations to update them certain financial measures that will be discussed and it's called together with year over year comparison in some cases were not prepared in accordance with us generally accepted accounting principles or gap reconciliation of those non gap measures to the closest comparable gap measures is provided in our earnings press release and earnings presentation slides which are available on a eight investor relations website at investors dot eight by
spk_2: a dot com
spk_1: with that i will turn the call over to our ceo they've site
spk_3: thank you kate good afternoon everyone and thank you for joining us today on the call today i will review the quarter of fiscal year using the strategic priorities we outline on our fourth quarter twenty twenty one call at the framework author give an update on the integration of youth and are private plans for the fiscal year twenty twenty three we'd ordered another solid quarter their growth not get profitability and positive cash flow as we continue to advance our strategy of empowering person as company wide through integrated contact our and unified communication capabilities we've made tremendous progress over the past year and are focused access strategy and the investments we have been making an innovation are showing up with several recent contact and are focus product launches for example or reimagine agent workspace with the winner and customer experience innovation and enterprise can at during the quarter enterprise adoption of are integrated ex got platform continue to expand with acts as a our growth accelerate more than thirty five percent year over year not including pews at staff now accounts for approximately thirty five percent of combined a page views a or are and given the few you and upright base we see an opportunity to grow this materially over the next several years our continued focused on operational at once resulted in higher gross profit with fourth quarter non gap service revenue gross margin that a multiyear high of seventy two percent the improvements and gross margins resulted is as sequential and year over year increases in non gap profitability and operating cash flow as a result we deliver positive not get operating income on an annual basis and generated positive operating cash flow for the full year
spk_4: total revenue was within our guidance range as sequential growth and professional services and product revenue resulted in other revenue about the high end of our guides range fuse also have performed expectations are strong customer retention of partner huge man
spk_3: service revenue was hundred and seventy two point eight million approximately point seven million below are guidance range due to a combination of lower than expected see that usage or avenue and flat small business a are are as we continue to focus on a higher margin and longer live business as we look to fiscal twenty twenty three am beyond our commitment to operational discipline the allowed to continue investing in at cats innovation and deliver operating leverage and increase cashflows as a will discuss and greater detail obviously or twenty three guidance rangers for revenue than operating margin implied on gap operating margin of roughly two and a half percent increase from fiscal twenty twenty two given the current market environment where you remain more committed than ever to deliver a robust increases and operating coming cash flow while continuing to grow and i believe we have line of sight to potentially more than double operating margin and fiscal year twenty four digital transformation at our workplaces and increasing mobile workforce are creating a massive opportunity to transform employee and customer experience
spk_4: the through integrated cloud based communications at the only polio and unified cloud based you see in contacts and our platform a by that gap is uniquely positioned to capitalize on this opportunity and advance or industry
spk_3: we are leading the animation and offering customers new percent of a experiences advanced ai german analytics and a modern intuitive interface i believe are balanced approach him back in in that innovation that will drive future growth while increasing operating margin and cast was with the right approach to build shareholder value
spk_5: today's environment
spk_3: turning to queue for i want to find a long time discussing the evolution and rc see with us today and our strategy for this area of our business see thats represent a relatively small portion of our tell the revenue but it remains an area strategic focus for us in the asia pacific region
spk_4: as the volume leader and local provider in that region where in a strong position to extend their lead and drive improved unit economics overtime
spk_3: or stretchy and to diversify the customer base to reduce artillery of usage and focus on higher margin enterprise customers a joke you for the strategy was working well and see path had been solid contributor to enterprise and our growth and gross profit dollars usage by few large customers dropped significantly in the last half of the quarter result in an unexpected squints will decline and see pats revenue of several million dollars the decline as reflected in our service or avenue and enterprise air are while this was a tough see past quarter we're working with existing customers to grow their business and continue to add new customers to further diversify the business we had a speed bump and we're working to actively fix it turning to the u c c c portion of our business graduates or a bus and enterprise with the addition of one hundred and twenty new customers and eight by a the few that was a sham further expand our enterprise customer base and the x cats upgrade and cross sell opportunity with nearly three hundred additional customers for an increase of more than four hundred bringing our enterprise total to one thousand three hundred twenty customers adoption of access has been broadly based across a range of industry verticals and geographic regions including the public sector a few recent examples of new x cat customers include radium which provides industry lady mortgage and wrote they products and services as part of their digital transformation initiative they turn to a pay x cats and a bad boys from microsoft teams to sport over one thousand seven hundred employees the university of salford is a public university and greater manchester uk serving the higher education needs of more than twenty three thousand students the university turned to a by acts cats and eight by voice for microsoft teams to power over one thousand six hundred staff with a robust to me locations and customer engagement platform for hybrid work a by ce cas powerful analytics will help reduce call handling response times of possible burst license and was providing extra support during busy admissions clearing periods think research provides knowledge base digital help software solutions to more than three hundred thousand and clinicians and over eleven thousand to sell thirty in a countries
spk_4: by implementing the or powered a by that's cast with boys from microsoft teams and see pass at them as a p i think research will enhance overall customer experience as a improve agent efficiency and productivity
spk_3: easy a new channels to confirm appointments and recruit beta testers for drug trials and new therapies cross thousand import aspect of our exit strategy some some significant landing span wins and cute or include habitat america how does it delivers premium quality conveyor and power transmission belt supporting businesses and achieving optimal processing efficiency starting as an a by you kept customer they recognize the business benefits or the integrated a by accept platform and added a by see task to gain analytics and reporting insights to better serve their clients a global sporting goods manufacture with some golf most renowned browns expanded their a by an investment bank facing the you the licenses and adding context or ceased to support nearly two thousand employs around the world
spk_4: by boys or teams direct routing solution was also a significant similar to the growth in enterprise customers and the air are as momentum continued to build in the fourth quarter or feature rich direct route a solution for teams continues to be an important competitive differentiator for you see solutions and as big come in a significant driver avenue logos customers choosing a by voice for teams and queue for included
spk_3: one of the uk top ten university the university of bristol who turned to a by that cat and a bite voice or microsoft teams to provide over twenty seven thousand students access to new channels they will leverage the microsoft certified for teams a by contact center for it analytics capability as an integral part of their student welfare initiatives
spk_4: and the indianapolis motor speedway the racing capital the world and home with the in the applets five hundred selected the a bike contact and for microsoft solutions ports ticket office to help drive a premier customer experience
spk_3: customers the an excellent example of our global coverage compliments on boys for team solution the create a strong competitive advantage for up with multinational organizations and the fourth quarter we expanded global reach to indonesia which is another industry first and to thailand this follows or announcements earlier this fiscal year of delivering an industry burst integrated cloud phone and contacts center solution and the philippines and china
spk_6: our cloud based global you can loosen is now available and fifty countries with all cloud public such telephone network support and territories up from forty one a year ago and covers more than eighty five percent of the world's gdp
spk_4: examples of a new global customer wins included trap bicycle track is the largest us manufacturing distributor a bicycle they selected a pay x cap and eight by voice for microsoft teams as a key part other digital transformation providing a global communications and omni channel con
spk_3: and our capability to sport over one thousand three hundred employees and nineteen countries additionally a french luxury group with world renown fashion brands turn to a by you cat and a bite voice for teams to support over twelve thousand employees two hundred seventy stores and seventy five off as locations around the globe french speaking sport in france from the few that position was instrumental in when in the business and will lead the deployment we've been excited by the response we're seen from few customers and partners and and european presence is just some examples of the additive impact of the fuse acquisition across the business customer retention among the few space as and strong and revenue of twenty four million with above our expectations for the quarter we moved swiftly after the transaction close to integrate the to organizations and streamlined but combined costs structure as a result fuse was a creative to operating profits this quarter and we are already seen an acceleration and innovation road map as are the teams around the world work together we have made rapid progress of are ex cats product roadmap this year including recent release of significant contact than our capabilities enhancements including a by agent workspace and eight by conversational like you a by agent workspace transforms the contact that are agent experience with powerful contact you mean and handling features to enhance productivity and personalized both agent and customer engagement the browser based design lead user interface delivers a tailored and intuitive experience that uniquely blends contact center and unify communication keep believe in a single application conversation i q extends formal contact our capabilities such as quality management and speech analytics to all a cloud communications users a by conversation i q delivers a i fused automated evaluation reporting and analytics cable always across the organization to improve effectiveness and compliance conversation i to also supports boys interactions or micro soft teams and points to the a a voice for microsoft teams integration an example of a customer in of implementation of conversation i q is thrive thrive is a global software and marketing services company with over forty six thousand businesses on their stats platform supporting more than three thousand and seven hundred employees on a by that casts twenty nineteen derived recently added a by conversation i q to apply conversational a item covered in sites across the company to enhance team performance and optimize customer experience with the to product would release his we reimagine the age and experience and highlighted the advantages of unified platform customer and industry response to the really does has been very positive including the best customer experience innovation award that age and workspace one and we have orders for conversation i hear from our great be the customers
spk_4: even before the product was generally available which it is today
spk_3: it was exactly one year ago that we outlined or long term vision for a by eight and said our strategic priorities for twenty twenty two a comparison of a by then and now shows just how much progress we've made across multiple fronts first we accelerated the ship to the enterprise even before adding the fuse customer base with the few customers added it in enterprise customers now represent more than half of our our the shift and max to higher quality enterprise there are has been a driving force behind improvement and retention metrics or challenge age rent
spk_4: and our financial performance
spk_3: retention into for increased the get from record levels and cute three emery flights are increased emphasis on platform are you a liability include our financially back five nine that fillet as well as investments with made and customer success challenge age rent and contribution is also an all time high with chow counting for more than half of our era we also focused or strategy on the i guess platform and increased our investment or the especially contracts our capabilities as a result we launched a steady stream of product enhancements and new capabilities throughout the year including the march contact center and analytics launches we completed our acquisition of fuse accelerate our progress on the shift to enterprise and expanding our capacity for innovation and finally we delivered continuous improvement in our financial results with gross margin up five hundred and fifty basis points year over year which saved are operating margin target a full quarter ahead of schedule and achieved over thirty four million a positive cash flow from operations for the year i want to take our teammates here at a pay for their hard work and commitment and achieving these milestones we made tremendous progress on the product fraud and improved our financial performance and on track to achieve our operating margin targets for intermediate long term model given the current environment we sell it prudent to continue to focus on operating margin and time or criteria for investment for so favor profit over near term growth but will set the stage for our long term performance this balanced approach is reflected in our twenty twenty three guidance ranges for revenue and margin the trajectory of acts cast adoption and the growth we've seen an enterprise the air are and customers gives me confidence our strategy is the right one to build value for all our stakeholders over the long term the podemos we made in fiscal year two thousand and twenty two to strengthen our leadership increase or innovation capacity and expand our base all created the foundation on which will build long term value for fiscal year twenty three will continue to focus on x cast innovation as was driving sell deficiency and operational excellence across the organization i look forward to reporting our progress in future quarters were incredibly excited by the work or development teams are doing and we plan on sharing or innovation road map
spk_4: are you one call i will now turn the call over to sam
spk_7: thanks dave and good afternoon
spk_8: we experience and challenges in our see past and small business segments during the fourth quarter which impacted service revenue performance
spk_1: at the same time we continue to post brought improvements in gross margin delivered solid operating income turn few the creative to or non gaap earnings and exit of the quarter with more cash than expected we remain financially agile and disappoint total revenue for the quarter was one hundred eighty one point four million dollars an increase of twenty five percent year over year and inside our one hundred eighty to one or eighty two million dollar guidance range we saw a bit of a bounce back and other revenue driven by the supply chain slightly opening but still can
spk_8: the and and milestone completion in professional services
spk_1: we can weigh one hundred seventy two point eight million dollars and service revenue an increase of twenty nine percent year over year and blower one hundred seventy three point five to one hundred seventy five point five million dollar guidance range as they've stated the shortfall with due to see past volumes dropping during the second half of the quarter
spk_8: when a few large customer start marketing programs in late february and march the short for expectations and see past was approximately three million dollars in lower margin as the mets we are facing some inflationary pressure from international carriers and or favoring margins over revenue growth when they conflict
spk_1: looking forward we are executing plans to leverage are scale than the region to further lower cost and drive incremental customer demand
spk_3: few accounted for twenty three point nine million dollars of service revenue and total revenue of twenty four point one million dollars service revenue from fused with higher than expected driven by higher retention integration has been humming along and i'm super impressed at how quickly we have some back office operations combined we did make a cost reduction in mid february and on a whole use it better than expected and revenue costs and therefore with a creative the naga operating income
spk_1: we have already started moving some initial few customers to the a pipe platform at their requests total a or are was six hundred eighty seven billion dollars in quarters and up thirty three percent year over year since we have started merging the customer bases we will not be breaking up use from eight by a separately for a are reporting but will report revenue
spk_8: enterprise a are are now makes up fifty seven percent of total a are our and with up fifty five percent year over year
spk_1: mid market is ninety percent of they are and thirty one percent year over year and small business is down to twenty four percent of they are are in decline one percent year over year growing our enterprise business is one of the core tenets of our long term strategy due to it's wander commitment higher retention rate and better efficiency ratios
spk_7: a comment about the small business segment declining one percent year over year small business is non strategic for us because of the lower efficiency metric and the absence of context and or means we would expected to continue to shrink as a percentage of total a are or for expense items mentioned below they're all not get on with
spk_3: otherwise noted the fourth quarter gross margin with sixty six point seven percent driven by see past being lower than expected and our cards improvement program that few happening faster than expected total service gross margin came in at seventy two point two percent not get other margin came in at minus forty four point six percent
spk_1: and for the quarter reflecting that achieving cost savings from few in the segment will take longer because we need to continue to use deployments until complete as a reminder other revenue represented less than five percent of total revenue for the quarter of the decline in other gross margin had minimal impact dawn gap operating profit group to four point three million dollars quarter over quarter as we focused on higher margin portions of our business that gas and continue to drive unit improvements and cars
spk_3: looking ahead to the first quarter we expect overall gross margins to be generally flat it's sequentially driven by changing product mix between applications and sea bass
spk_7: turning to fourth quarter operating expenses this is our come first combined quarter with views and that's the reason for the significant step up in several areas that op ed guidance per line item i gave was incorrect and would expect some reallocations in future quarters as i said on last call the total was in line with our expectations we had
spk_1: guided total fourth quarter attacks in a range at one hundred fifteen to one and eighty point five million and came in at one hundred forty point six million dollars total spending as measured by cause plus are indeed plus sales and marketing plus dna with up twenty three percent year over year lower twenty five percent total revenue growth in the future we expect total spending to grow more slowly than total revenue on a rolling for quarter basis as we drive efficiencies throughout the business there can't be some quarter to quarter variability turning to the balance sheet total cast restrict your cash and investments and of the fourth quarter to approximately one hundred and forty eight point two million dollars excluding restricted cast ballots was one earn thirty eight point seven million dollars quarter on quarter total caches down by about one hundred twelve million dollars better than expected driven by solved collections and lower than anticipated few integration costs as a reminder we paid one hundred thirty two million dollars in cash and five point six million shares are approximately two hundred fifty million dollars in total consideration to purchase few based on the share price of the time of the announcement when the deal closed in january casual operations came in at over sixteen million dollars for the quarter and we remain free tested positive for the second quarter in a row the over performance was driven by conservative cash management strong questions deferred revenue climbed over forty five million dollars up ninety percent year over year and up over seventy five percent quarter core or pl was approximately seven hundred fifteen million dollars for the fourth quarter up from five hundred and fifty five million dollars in the third quarter about one hundred twenty five million the that was reviews and the remainder was from a play
spk_7: back to fuse revenue came in ahead of expectations and the acquisition was a creative to not get operating income we got it to remain not gap profitable and so far so good we expect further cost savings in owning fuse that will take some time
spk_1: next a few short comment about fiscal year two to two thousand twenty two which we just closed we grew up in to the ballpark missile guidance for the year and did a reasonable job managing expenses the gross margin was better than expected mainly due to programs we have been running operating but management a solid but we know we have further work to do you we were cash flow from operation positive for each quarter and returned to free cash flow positive during the year
spk_7: business a team sport and many a page views employees got us here thank you
spk_1: taking the current business performance and marketing firearm and didn't count including the recent performance of see pass we're establishing guidance for fiscal first quarter fiscal twenty twenty three ending june thirtieth twenty twenty two as follows
spk_7: we anticipate service revenue to be a range of one hundred seventy seven million to one hundred and eighty million dollars representing twenty eight to thirty one percent year over year growth we expect it's users revenue contribution will be between twenty six and twenty eight million dollars we just have a total revenue range of one hundred eighty five two hundred and eighty eight million dollars we
spk_3: have uncertainty the billion the supply chain for and point hardware shipments the new changes weekly we are balancing growth with improving profitability or targeting operating margin in a two to two and a half percent range for the quarter
spk_1: we're starting our guidance for fiscal twenty twenty three and a march thirty first twenty twenty three as follows we anticipate total revenue to be in a range of seven hundred seventy five to seven or ninety million dollars represent approximate twenty one twenty four percent year over year growth we anticipate service revenue to be in a range of submitter forty to seventy five million dollars in january when we reported we had suggested revenue would be in the bit twenty percent growth range and discarded confirms that approximate number we bouncing growth with improving profitability and would like to see operating margins in a two to three percent range with a year and exiting above three percent is a goal in closing i remain confident or strategy and market opportunity in f y twenty to we continue to reinforce our strong financial foundation and remain an agile organization
spk_0: we look forward to further gains in fiscal twenty twenty three thank you and operator will now be open for questions think you will now begin the question and answer session if you'd like to ask a question please press star followed by one on your telephone keypad a for any reason is like turning cyclists question please press star followed by two again to ask a question press star one will pass you briefly as questions or registered
spk_9: the first question is from the line of cp family guy he with mizzou hope you may proceed hi they stick my question is ah been up on for sleep on a he
spk_3: and again corrupt and a quarter how would you characterize a competitive environment you're seeing with microsoft seems obviously as you mentioned your feature rich direct routing is doing a great job of new logos but as you called out last quarter how are you dealing with competitors and space and how's that matching up against their offerings
spk_4: yeah this is either side the in a one of the biggest trends we see his customers are looking to integrate teams users with their enterprise communication platforms and they're doing a fundamentally through direct routing and operator canucks solutions
spk_10: we compete in the dark rallying solution and were very popular direct route in solution as you see by a lot of our wins that you know i mentioned throughout the call today it's obviously i mean that a significant impact a positive impact for us additionally we've been recognized and the channels having the best
spk_3: right routing solution in the market and we continue to hone that offering as we look at the other solutions in the market operator can which tends to be carriers are you know national service providers who tend to be less global was feature rich and and side load and that they're and they're only servicing the team's users in the enterprise are offering brings in a functionality to those users as well as powering every employee in the organization not just and teams up you know and point users but also front line workers and contact our users
spk_4: so it's a big trend as the team's messaging application is prevalent in many of our customers a powering that with the communication platform is really would just scratched the surface and it is a big initiative for a lot of our customers today and and so they they they've really you know attached or
spk_9: you know most move towards our direct route insulation
spk_8: that's very helpful thank you and i just one follow up you guys guided to but if the million dollars and nama she can cross opportunity after a for twenty three last quarter do you expect any upside to that estimate maybe earlier and into have for twenty three i'm is about the same yeah think that one as a sam know i'm as we're still at the we think up eyes sizes fifty million dollars
spk_11: now i mean it look the average hill cycle for contact centers twelve months a special with these larger enterprise customers so if anything i would expect you know any that stuff to sort of shopping more physical twenty four i think the market size the market opportunity presented last call was correct
spk_12: we you know further
spk_9: active easily seen container to verify the sort of that's the right ballpark number but i don't think it's gonna shopping time soon
spk_0: perfect thank you so much
spk_13: thank you thank you the next question is from the line of mike funk with bank of america you may proceed
spk_3: the i thank you for the arm thank you for the question gonna couple of i could go back to your comments about the arm margin a prize customers customers and had lower usage in the quarter miss wonder if there are any less than to be learned from that you know what drove a lower usage
spk_14: ability of forecast
spk_3: you know lower usage based on customer patterns is what you took away from that job not event yeah so does dave this is
spk_4: all within our see pass offering and the drop off was from several large customers they pulled back from some marketing campaigns and the second half of you for weren't weren't good standing with those customers and we're working with them for reintroduction the some those campaigns on the market conditions are right for them for for longer term
spk_13: we continue to diversify and braun the customer base their addition of new customers and this we've been doing that we are very robust pipeline would continue to do that with the diversification additionally we already have plans in place to leverage our regional skill to drive lower costs which can then be lever some of these large customers to help support the performance of these large marketing campaigns in the market
spk_3: the they on t that i could quickly
spk_12: yeah i know you mention it came in line with your expectations for think about twenty four million dollar contribution panic by simply take the rubbing to be gave us back in december the and then it adjust for the clothes state and would have implied it think slightly more revenue so tie that back your comment about the the chair been as expected it is the difference there just the breakage post your arm and if so how much breakage where you project team have to be on after the merger close
spk_3: a break is it as a new one on me
spk_12: at the retail term partner the numbers game actually better than we had thought right the we had said hey we thought twenty million for the quarter came in at twenty four million i was actually expecting a little bit more
spk_13: turner little less retention it actually came and stronger than expected the fuse bases and in good shape and i'm really proud of our decency organization has really jumped on top of it
spk_0: living takes to apply maybe some my miscommunication around the math etc but as far as we're concerned it did better than we originally thought for the quarter
spk_15: okay thank you guys thank you mr funk the next question is from the line of madam a so with morgan stanley you may proceed great lengths am a couple questions for me
spk_8: understanding kind of on that the see pass i that you have her ongoing positive relationship for those customers but just as we look forward to your guidance both for the quarter and for the fiscal year just in know what are you embedding as far as are you flatlining those customers are you expecting some sort of
spk_12: come back from those customers and maybe that's the first time and i'll let you go that's not went up in the the second one
spk_15: yeah man it's the same i'll take that once so you know per kind of how we do our usage based component we look at where they exited the quarter and since they were both low for the quarter we ran that through to the next quarter and year so we always try to take sort of the latest data points and run it through obviously they come back it would be a positive but we've generally assumed that whatever low level they're at will continue okay and then i mean similar question does a that had no it
spk_4: well last quarter that you are basically assuming twice industry time for use as you looked ahead kind of to the next year to say that clearly outperformed in your first quarter to take that those are you know too aggressive of turn actually case and then and that you've kind of taken this light and the fact that the if you install base is a better shape into account enter the guidance or just how or we think as turn on the use base as we had throughout cisco twenty three
spk_16: saw this is our our first you know irl quarter with those customers they are in a healthy state and their well contracted so i would say in the quarter they him closer to to industry standard levels i think forecasting wise was probably still conservative looking forward through that
spk_0: next year as we get more cars under our belt to it will have a better feel for
spk_13: the long term propensity of those customers on retention
spk_12: because perfect are handed off thanks i've been thinking this marshall the next question is from the line of peter levine with evercore you may proceed
spk_17: they do take my questions the sam if i think about organic growth more to anniversary fuse mitsui we think about the model call it you hide things twenty percent
spk_4: oh i'm an idea be a little bit aggressive right now i mean you're asking me out for plus quarters and so i think right now i'm a little bit more conservative than that i'm i'm looking at something maybe in the mid teens type of number thirteen to fifteen percent right now is where i would start out
spk_3: yeah i let me let me get a little bit more further ahead right now but as for i would start
spk_0: you can and then i'm yeah i think twenty five thirty percent of revenues come from international you anything you can share with us in terms of filth like older you you're using deal big load aclu delays to you any incremental color on the irrational front given the current environment and kind of what what are you factoring into your guide thanks
spk_13: yeah are or international is predominantly am uk and a pack with our success business so we've talked about the seat has business on you say it has trended well am the last quarter consistent with previous it continues to grow
spk_18: oh quite robustly for us and we have a good brand and concentration and and focus and public sector in addition to enterprise in the market so we haven't seen any adverse effects i can from macroeconomic trends in that market
spk_8: because the hip thank you mr levine the next question is from the line of george sutton with krakow you may proceed
spk_3: against the law james your it's thanks for taking my question ah appreciate the collar on acts cat beings thirty five percent of your air are but understand a curious if you could provide any detail on the percent of your customer base it on x calf and potentially
spk_11: you can quantify the up lead from a customer going from just uk tax cath
spk_13: or i'll take these in not in reverse order subject and we've said a son and i think a previous call but generally will we see a you cast feel we see it roughly fifty fifty in terms of the dollar amount of ucas relative to the dollar amount of ce cas of obviously the number of seats is
spk_12: is is different but then the price difference of the seed sort of works itself out and magically through empirical data just comes out to be roughly fifty fifty is a good working trend and then in terms of the number of customers and our install base we didn't provide an average gave you that thirty five percent of our a are are obviously it's skewed more towards our enterprise customers
spk_18: per our strategy of moving up market there's more of a propensity to buy so in terms of the number of customers
spk_0: just giving you some color it would be a smaller number of customers than thirty five percent but a larger in size
spk_13: make sense and they're not service margins were bred and the corner and take years without sustainable or as see pat sort of comes back although comment a little bit
spk_4: ah well see past came back really strong they they may come in a little bit i mean we've been running a lot of in the days where did a lot of gross margin proven programs and so you're seeing those float through we also had and this is a huge shut out to the fuse team
spk_3: if use gross margins we were able to start transitioning those faster to our our costs structures than we had expected originally so i think it's a combination of moving pieces there with that the benefits is being our internal programs and getting fuse move closer to our martin structure faster than expected don't take my questions
spk_4: thank you the next question is from the line and teams breed with william blair you may proceed
spk_13: thanks to the question of years you seen a change in the jails environment
spk_3: humans are the bit and start to go good at a chain sort of how the a marked from the gather thanks
spk_12: ah to they sipes out a we see where progress to me an upright segment and were see normal deal cycles i would say relative to what we saw free covered and customers making those decisions to move legacy solutions to cloud and finding the right up integrations that i talked about earlier especially with microsoft teams messaging apps and integrating those into their communication platforms so i would say that deal cycle seem similar to what would have been pre covered and that in of nine twelve months for it frame for an enterprise account and know pretty normal progression of those deals
spk_0: and it made it understand sanders from model perspective the a pretty good jump up and g and on a squirrel basis i you think about that in terms of closer to try to take from their views the ah thanks
spk_19: ah so i tried to highlight this is one of the mistakes i made when i gave that per line guidance last quarter we didn't get some of the classifications right so to think that it over time you'll see some reclassifications the that she had a into our indian sales and marketing getting more in line with what we thought and the second part is there's just so
spk_7: some i and i try to highlight this on the last call in the in the pews call it just gonna take some time to get some of the g and a
spk_11: costs back in line we have to finish for example twenty twenty one audits on fuse in those are the things and there's just some time associated with ads i think those are his comedies reclassification and longer term cost savings that i've talked about in the past
spk_20: thanks
spk_12: thank you mr green the next question is from the line of willpower with barrett you may proceed
spk_19: hey guys this is charlie relic on for well thanks for taking the question same sort of both the free cash flow is strong number and a quarter as you think about that for the rest of the years we think about a growing off of the queue for levels or or house we think about that
spk_21: i'm we like to see a continue to grow as they've mentioned we are very focused
spk_19: and and right now little bit more biased a margin which means rule a bit more biased the generating free cash flow there are some not african selling items that a floater on cash flow
spk_18: that will influence a little bit of will be a pure highly correlated thing to non gaap operating margins but it'll be pretty darn close and since we expect non gap operating margins to exit above three that our target or we like to see cash will grow throughout the year awesome thanks
spk_8: and then on the you and yourself get some for more like it and i'm like i team directly
spk_12: the
spk_22: did you just talk about the economic union economic than a see that you went through the direct routing
spk_0: pathway vs just a direct sales of the of the tape a platform it was there a difference in the revenue or the profit
spk_23: and also if you can just give us any color on the size of that business or you like the percentage of me logo that came from teams in the quarter or something like i'll be really helpful that
spk_13: ah okay much about economics so it's boys were teams and so what you generally see is it is a smaller a s p because it's our
spk_3: microsoft teams is handling the chat and video portions of a while we're handling the boys but the margins we built the scuse we built the product to be margin agnostic with the rest of our business and since we're selling this to a lot of larger enterprises it's kind of being made up and just the sheer size of lot of the deals were closing
spk_12: in terms of the number of new logo that cetera we didn't report that on this call and i'll take it as advisement for future call i will say last call we did suggest that see count grew forty percent quarter on quarter and we continue to see very high quarter on quarter growth and see counts around teams and so all this kind of levy with that tidbit and
spk_8: promised maybe next cobbled will give you a more solid quantifiable answer
spk_12: rape a couple think that thank you
spk_24: thank you the next question is from the line of rind coots with need have been cope you may proceed
spk_25: i think the question
spk_0: seventy call give us on the other revenue line in terms of by margins arab special services and supply chain out the got that going forward
spk_13: thanks okay to to thing here are a number one is so this is when it when i talked earlier about longer term time period to sort of get all the costs aligned with use or other revenues is one of those areas where you see that obviously when we purchase use we brought him on board we needed to continue all their existing ongoing deployments and so we've got a very large professor
spk_3: services organization that we brought on and over time will will right i that if you're in the prison service organization i'm not saying we're doing crazy
spk_4: i'm simply saying that will get it transferred around and moved around and fully utilized which right now it's finishing up deployments for use customers and then on that hardware side boy that's a tough one right now we had a little bit of a relaxed of the supply chain kind of need quarter been a quarter mid quarter and that it kind of tightened up at the end of the quarter again so on the supply chain side that's a real difficult one and when we see the revenues drop there are costs are relatively fixed i know it does that sound weird but a lot of it as people are fix for that line item and so the margins is go get worse and then when the revenues increased we can give them economies of scale out of it so or the other revenue that tough one it's an area we
spk_13: are a little bit focused on but i think longer term you'll see improvement in margins there gotta pick up
spk_4: thank you thank you the next question is from the line of map and fleet with btg you may proceed
spk_26: he get up know they stole my question on a go to work at the zoo cause business a little closer and and just kind of see where are you seeing the most traction
spk_4: a and if you're finding some of your existing the be exercised customers looking at adding some of those capability either and maybe even can a net you use cases that are popping up across the system thanks
spk_3: ah yeah a sea bass tends to be southeast asia for us and and some europe so country singapore indonesia thailand as well as ourselves into european countries mostly a p i've driven cells with some cross all costs as a son on to contacts on ourselves that are looking to do
spk_4: you know primarily as a customers actions and to contacts on are like call and text campaigns that that's where we see that integrated or center job synergy with her ex just business
spk_13: or wonderful and then as you look at the the context and or market as a whole i am your heart are you see in terms of praising trends and the ability to to continue to cross our at existing customers that maybe and i'm are just now getting around to migrating legacy
spk_0: contact centered to the cloud yeah so obviously were having a lot of success there with x cass continuing to grow robustly thirty five percent growth and now thirty five percent of our air are are we are putting a lot of innovation and to that i meet you seen
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