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FY’25 earnings webinar. As a reminder, today's webinar is being recorded and I will now hand things over to Charles Eveslage, incoming Head of Investor Relations. Charles, over to you.

Thank you, Kelcey. Hello everyone and welcome to

Thank you, Charles. Thank you everyone for joining us today. Our rapid innovation over the years has taken us far beyond video conferencing. Every step of the way has been guided by our mission to solve customer problems and enable greater productivity. In the process, we have very deliberately created a communication and collaboration powerhouse with AI infused natively across the platform. Time and time again we are recognized as a leader by Gartner, G2, TrustRadius and many others. And we are so pleased that in March, Fast Company added

Thank you Eric and hello everyone. Let’s start with some exciting milestones for our emerging products in Q1. We saw additional traction in

Thank you so much Kelly. And like Kelly mentioned where you going to go ahead and move on to taking your question. [Operator Instructions] So our first question will come from Meta Marshall with Morgan Stanley.

Great. Thanks. I appreciate it. And congrats on the quarter. A couple of questions. Maybe just to start with -- you could just give a sense of what you're seeing kind of on the SMB side of the environment, just given kind of commentary from others throughout the quarter? And then second, just maybe on DBNE, you noted last quarter that you expected fiscal Q2 to kind of be down point of the year if that still kind of holds as you look throughout the year? Thanks.

Sure. So hi Meta. As we're looking at the outlook for the rest of the year. As we mentioned we do still expect Q2 to be the low point from a year-over-year growth perspective. And that the net-dollar expansion rate will follow similarly behind that. When you look at -- if you look at the end quarter net dollar expansion you will see that it actually was consistent quarter-over-quarter. So we're starting to see that stabilization, and we think that is a really good indicator that the net dollar expansion rate on trailing 12 months will similarly follow. And then in terms of SME, we saw, I think similar performance across all of our different segments of our enterprise business. And both you heard about some of the amazing customer wins that we had in the upmarket, but also some really nice ones in SMB as well.

Great. Thanks, I passed in on.

Thanks Meta. We'll now move on to Samad Samana with Jefferies.

Hi, good evening. Thank you for taking my question. So Eric, I wanted to dig into the CCaaS side, as you mentioned, the product’s ready for prime time, and we took investors to see it at Enterprise Connect as well a couple of months ago. So I was wondering, if maybe you could just help us understand -- I understand the payment side. But when you think about prime time, how would you define that? Is the uptime gotten better and you're clearly seeing larger logos? So how should we think about what prime time means, right? Should we see an inflection in larger customers going forward?

Yes, it's a great question. First of all, just over two years ago, right, we launched the

Great. Thank you so much.

Our next question will come from Michael Funk with Bank of America.

Yeah, thank you all for questions. Eric, you touched on it briefly with the last question, but would love to hear about the competitive environment today, maybe to contrast it with 12 or 24 months ago. And specifically pricing. And how pricing is changing, whether or not more competitive, less competitive? And then I guess, related to that, if you're seeing more competition from Microsoft on the video side?

Yes. So sorry, you're talking about pricing on Contact Center or overall --.

Really, the entire platform now that more competitors are probably -- likely bundling solutions, just the general pricing trends.

Yes. Overall, I think the only one competitor, they bundled their solutions together, which is the Microsoft, right? So over the past few years, right, for sure, there is some impact. You already saw the number over the past several years because of their bundling strategy. However, if you look at our installed base, like a year ago why we increased the online price, and we do see a very positive feedback in cost of reappreciated our service and also look at our installed base and a lot of customers really like our service. The reason why and the reason why it -- in the customers -- that our customers' employees like

Okay. And just very quickly to your last comment there, you didn't really see price pressure last quarter. Should I take that to mean that pricing is stabilizing relative to where it was -- pricing is getting better.

I think so because you look at the overall online churn right, in kind of historical low, right as Kelly mentioned earlier, right? And also look at our enterprise customers as well because we have a lot of other services upsell entire the product suite. And I think it's a much better position now.

Right, thank you Eric, thank you Kelly. Appreciate it.

We will now hear from Rishi Jaluria with RBC Capital Markets.

Wonderful. Thanks, Eric, thanks Kyle for taking my question.. I just wanted to ask, following up on the CCaaS side. Eric, you made the comment that you have either displaced or beaten each of the top four CCaaS vendors as ranked by Gartner. Can you provide a little more color on those wins? Maybe -- and what vector did you tend to win those on? Was it on pricing? Was it on certain features and capabilities? Do you have that? They don't have. Maybe help us understand and provide more color that would be helpful. Thank you.

Yes. So just to give you two examples. So I have a lot of other examples. If you look at it just the two examples, I do not think just one factor and to let the customer make that decision. You look at first of all, do they trust this vendor now, right? And if you look at the product road map, look at existing feature set, look at the integration, look at our AI features, they also look at the pricing. And all those factors, they think -- because some customers they trusted

Great. Thank you.

Our next question will come from Siti Panigrahi with Mizuho.

I saw the demo of your

Yes, it's a great question. It's great to know you like a

Thank you.

Moving on to Catherine Trebnick with Rosenblatt Securities.

Hi thanks for taking my question. Can you update us on the partner program. What I'm really trying to dig into is really how you are position yourself competitively against Ring and the traditional partners? Thanks.

Kelly?

Eric, you want me to take that.

Go ahead.

Okay. Yes. So we continue with our partners and with our direct sales organization. We continue to win, I think not only against other providers in the Phone Cloud, but also, as Eric just mentioned, on the Contact Center side as I think several vectors, right? It's around pricing and total cost of ownership. It's around the momentum because of the ease of use of deploying and selling this product. We believe that our partners should be able to see that value in not only the deal -- the end user but also in their deals as well. And so if you're asking about compensation to the partners, we continue to ensure that our partner programs are competitive but also appropriate. We are always thinking about the impact to them as well as to our internal margins. And as you heard us talk about last quarter and also this quarter, we have some additional partnerships that we've been named as the preferred partner migration for not only Meta. But if you remember, also Twilio as well as well.

Yeah, thank you.

Yes, just quickly add on to what Kelly cited. Those are partnerships most of time because the reason why I have all those good partners because customers they ask for that, right? Because they say, yes, they really want to build more businesses with

Thanks, Catherine. And Ryan MacWilliams with Barclays. Please go ahead with your question.

Appreciate it. Kelly and Eric you beat me to it as usual. I was going to ask about the Meta and Avaya partnership. So great to see that they chose Workvivo as the migration partner for their workplace solution. I guess, to double click on that -- do you have any sense of the timing on how these customers could move over? And how do you frame the opportunity for this partnership? And then just on the Avaya partnership, love to just hear like kind of what exactly that partnership is trying to get at? How that can open the door from more customer relationships between you guys? Thanks.

It looks like I know your question now. So thank you for asking those two questions. So in terms of Meta partnership, right, I think Meta is such a great company, works on a lot of AI Llama 3 and it's great and open source. That's the reason why they wanted to retire their workplace for Meta products. For sure, they talk to their customers and understand we have a

Thanks guys.

Thank you.

Baird's William Power has the next question.

Okay. Great. Hopefully, you can hear me okay calling from my mobile. I guess, Kelly for you, can you talk about the enterprise growth outlook from here? Should we expect that trough in Q2 as well and then accelerate? And I guess tied to that -- maybe just help us understand your level of confidence in raising the full year guidance to reflect the Q1 beat, given we are still pretty early in the year here?

Yes. So Will, yes, we expect that enterprise growth will follow the similar trend that we've discussed for the entire company with Q2 being the low point. For FY '25 from a year-over growth perspective and then seeing reacceleration in the back half from there. And in terms of our confidence for the year, we applied a similar approach that we always do to setting guidance, which is talking to our sales organization, of course, looking at the pipeline that we're seeing also the trends that we're seeing with online and what's on deck in terms of initiatives, what's the performance we're seeing for churn? And then looking at all of that putting it together and coming up with our outlook.

Thank you.

We will move on to Tyler Radke with Citi.

Hi Kelly, hi Eric, thanks for taking the question. Kelly, to start off, just on the enterprise customers, I appreciate the explanation on the movement of some of those customers moving into online. I think if I back that out, it's still decline sequentially. So I was wondering if you could unpack kind of the drivers of that enterprise customer number and then how you're thinking about growth for that long term? And then second of all, just as we think about the billings outlook, I think that came in a little bit stronger for the second quarter despite revenue being a little bit below consensus. Should we think about that as kind of, I guess, what are the puts and takes on that -- that would be kind of driving the divergence? Any change in billings terms we should be thinking about?

Yes. So first of all, on the enterprise number, it didn't decline quarter-over-quarter. I just want to be clear, even if you back out those numbers. So it should be up. We have discussed this in the past that as our strategy, especially on selling

Great. Thank you.

We are moving right along, so we will now hear from Alex

Hi guys. Thanks for taking my question. First, I just want to acknowledge, we saw something from you guys this quarter, we haven't seen in a long time, accelerating enterprise revenue growth, accelerating enterprise billings growth and declining OpEx, so just maybe stack rank for us, like if you look at all the things you called out, whether it's Contact Center, Phone, Workvivo, Even the Sales Product and the Quality Management product you referenced in the prepared remarks, Eric, stack rank where those kind of landed in terms of the driving factors or the driving-force behind that acceleration? And then I've got a quick follow-up.

You want to pick it?

Yes, sure. Let me talk about revenue and you can talk about sort of the business momentum in general. But

Alex’s that's a great observation. I think to echo what Kelly cited, that momentum is boils down to our product strategy. It's actually the two key pillars. The first one is the

And Eric, maybe just on pricing. You got asked this question a couple of times. It feels like you're talking about it being stable. You also raised price and you didn't see a real change in churn. I guess, I know you don't like raising price too many times. But if you think about just the strategy of continuing to add a tremendous amount of value, whether it's through consolidation or incremental functionality like sales or quality management is the -- what is -- if you look at the ACV uplift in those two accounts that you called out for Expedia and MLB, and you look at that across your pipeline for adding those types of features, assuming some kind of attach rate. What's that opportunity look like for you guys?

Yes, I can talk about business side, Kelly, feel free, if you want to chime in on the revenue side. I think this is Expedia is a great example, right? And they deployed Revenue Accelerator, right? Again, -- those are Business services, right? it's kind of, I would say -- it's very compelling service, right? We are not against comparing to our competitors, we are dramatically lower the price. That's not our case because there's a huge value. AI is part of that not like Workplace, AI at no additional cost, right? However, AI is playing a very big role for all of the business services, right? And also most of them are enterprise customers, right? And the reason why I think we are doubling down all those business services, pricing is kind of not like when we offer a meeting service many years ago, right? It's the better pricing, better product, better service. However, here is a very different story. Compete against any other competitors. Also, the price is also a customer like that as well because they do not want to use

Yes. In terms of the revenue upside, Alex it kind of varies by product because certain products have much higher ASPs, for example, like

Great. Congrats guys. Thank a lot.

Matthew VanVliet with BTIG, has the next question.

Hi, guys good afternoon. Thanks for taking the question. I guess on the last point, as you include more AI Companion in the mix. How are you -- how do you feel like that's actually monetizing maybe more seats, a larger opportunity at those individual customers than maybe limited by only phone or only meetings? How is the Workspace and sort of bringing all this together helping drive deal sizes higher?

I think AI Companion to not only to help our Meetings, Phone, our Team Chat is across entire

Thank you.

We will now hear from Ryan Koontz with Needham.

Thanks for the question. First, a quick housekeeping one. The reclassification of customers, is that expected to change any of your KPIs like [NER] (ph) like that, those in the right direction at all?

I mean no significant. As we mentioned, although the number was pretty significant, the revenue shift from enterprise to online was only $4 million, and we as we indicated, it didn't change because it was so de minimis, the impact on net dollar expansion calculation, for example, it didn't make up -- it didn't move it at all.

Got it. Helpful. And Eric, maybe a quick strategic question on events. Any update there in terms of how the ecosystem is building out? I know that's a complex market to penetrate, any update you have for us there. Thank you.

Yes, great question. I do not think I gave a few examples about that. But I can tell you,

We will now hear from James Fish with Piper Sandler.

Gi guys. Thanks for the question. Maybe just bridging the Phone and Contact center Opportunity, whether, it's kind of hard to probably parse this out in the entire installed base. But -- as we think about those greater than 90 Contact Center accounts over $100,000, maybe could you go over the overlap of adoption between following Contact Center, how that packaging of the two is going together? And if you guys are starting to see that pipeline or backlog increase for cloud conversions across those spaces relative to the last year? Thanks guys.

Yes, sure. So yes, Kelly feel free to chime in. Because if you look at it -- when we started, we saw -- we look at the quarterly the Contact Center the deals we won. We thought it probably most of the customers will be the existing customer, right, either Meeting customers, the Phone customers, however, that's not right. And quite often, some customers, they are not a Meeting customers, not a Phone customers. But they became the first customer to deploy the

We have one additional question, which will come from Michael Turrin with Wells Fargo.

Okay. Thanks for squeezing me in. Kelly, you had a few comments on tightening discounts, tightening grace periods, just as things for us to be mindful in terms of the model, I'm wondering if that's somewhat standard operating procedure for

Yes. I think that the discounting we started working on being more thoughtful and disciplined about that last year. We've talked about that several times before. And you're starting to see the impact and the benefit of that rolling through the results this year, which makes sense as customers are coming up for renewal, especially some of those ones that are on annual accounts. And then in terms of tightening up the dunning period, I think that it's just as we continue to mature as an organization and really be thoughtful about not only what's good for our business, what's good for our customers -- as well and seeing that -- it was just the right time. And we continuously go through and look at our financial and accounting policies and make sure that those align with what's right again, right for the business, right for our customers as well. I think it's more about that and less about sort of anything else that's happening in the business other than just being thoughtful and maturing into some of those policies.

Thank you.

And again, that is all the time we have for questions today. That concludes our questions. So I'll turn it back to Eric for any closing comments you might have.

Yes. Thank you all for joining us today. I really appreciate, and we are working as hard as we can to truly deliver happiness to our customers and partners. And also I'd like to leverage this opportunity to thank every [