ZM - NASDAQ

Hello, welcome to

Thank you, Catherine. Hello, everyone, and welcome to

Also on this page, you'll be able to find a copy of today's prepared remarks and a slide deck with financial highlights that, along with our earnings release, include a reconciliation of GAAP to non-GAAP financial results. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP.

During this call, we will make forward-looking statements, including statements regarding our financial outlook for the second quarter and full fiscal year 2027, our expectations regarding financial and business trends, impacts from the macroeconomic environment, our market position, stock repurchase program, opportunities, go-to-market initiatives, growth strategy, and business aspirations, and product initiatives, including future product and feature releases, and the expected benefits of such initiatives.

These statements are only predictions that are based on what we believe today, and actual results may differ materially. These forward-looking statements are subject to risks and other factors that could affect our performance and our financial results, which we discuss in detail in our filings with the SEC, including our annual report on Form 10-K and quarterly reports on Form 10-Q.

Thank you, Charles. FY 2027 is off to a good start, continuing the momentum from FY 2026. Q1 revenue grew 5.5%, exceeding the high end of our guidance and among our best growth rates in recent years. This progress underscores the increasing value of our system of action for modern work. To help accelerate that vision, we appointed Russell Dicker as Chief Product Officer. Russell brings more than 25 years of product leadership experience across Microsoft, Google, and Amazon, including leading Microsoft Teams product and data science teams.

He will help drive our AI-first roadmap as we connect conversations, workflows, and outcomes through our system of action. The foundation of our system of action is

In Q1, AI Companion usage continued to scale, with paid MAUs growing 184% year-over-year, driven by strong early adoption of AI Companion 3.0 capabilities. My Notes has quickly emerged as a breakout product, surpassing 1.5 million monthly active users, excluding trial users just four months after launch.

It gives users a personal AI note-taker that captures context across

In Q1, 15 of our top 20 wins included

The customer chose

A great example of this is Baptist Health in Jacksonville, Florida, who in Q1 chose

Customers are choosing

As customers experience the value of AI Companion in

Custom AI Companion also wins on its ability to support agentic workflows. In Q1, as part of MongoDB's upgrade to

Just as Custom AI Companion creates an AI monetization path within

In Q1, we saw it deliver real business value across a variety of customers, including an industry association improving lead capture and lowering costs, an insurance firm automating after-hours and overflow calls, and a law firm managing high call volume by filtering unsupported requests so staff can focus on actionable cases. We also added AI innovation to employee experience with the launch of Seer by Workvivo, expanding from employee communications into AI-powered people intelligence and creating another path for AI monetization.

Seer helps leaders listen to employee feedback, measure engagement, understand sentiment with AI, act through built-in communication tools, and track progress in real time. Beyond these application-level AI monetization layers,

Its Scribe API gives customers and developers high-quality, flexible speech-to-text across platforms with early adoption from BPOs like InflectionCX, validating the real-world value of our ASR technology. We are also extending AI into high-value vertical workflows. BrightHire, which brings conversational AI to recruiting and hiring, had a strong quarter with continued momentum in tech and other sectors.

In Q1, BrightHire landed Figma on its core product to help support consistent, objective, and calibrated hiring decisions, and expanded with HubSpot from its core interview intelligence product into BrightHire Screen, its AI interviewer, to support go-to-market hiring. Taken together, these examples show how we are extending

The same combination of AI context and workflow orchestration is also driving our third priority, scaling AI-first customer experience. The same AI-first platform that powers

By connecting collaboration, voice, contact center, Virtual Agent, Expert Assist, and more, we help customers carry context across teams, channels, and systems, moving from reactive service to faster, more intelligent resolution, and measurable business value. To further bolster the suite, in March, we introduced CX Insights, a new SKU within

We also announced AI Expert Assist 3.0, customer workflow orchestration, advanced quality management for Virtual Agent, and new workforce management capabilities to help organizations deliver better outcomes with greater efficiency.

Showcasing the strength of our full system of action, we landed Chelsea FC, one of the world's most recognized football clubs. They selected

Also in Q1, Caliber Collision, a leading automobile repair provider, chose to deploy

We also saw a strong full CX platform win in Japan with Resona, who selected

As customers increasingly adopt

Thank you, Eric. Hello, everyone. I'm excited to be here with you today to share

In our online business, Q1 average monthly churn was 3%, as compared to 2.8% in Q1 of FY 2026. Within our enterprise business, we saw 8% year-over-year growth in the number of customers contributing more than $100,000 in trailing 12-month revenue. These customers now make up 33% of our total revenue, up one point year-over-year. Our trailing 12-month net dollar expansion rate for enterprise customers in Q1 improved to 99%.

Looking at our international growth, our Americas revenue and EMEA revenue both grew 5% year-over-year, while APAC grew 6%. The EMEA growth rate was predominantly driven by year-over-year changes in foreign exchange rates. Moving to our non-GAAP results, which as a reminder exclude stock-based compensation expenses and associated payroll taxes, acquisition-related expenses, net gains or losses on strategic investments, and all associated tax effects.

Non-GAAP gross margin in Q1 was 79.9%, up 70 basis points from Q1 of last year, primarily due to our continued cost optimization efforts aligned with our long-term target of 80%. Our non-GAAP income from operations grew 9% year-over-year to $509 million, exceeding the high end of our guidance by $17 million. Non-GAAP operating margin for Q1 was 41.1%, up 130 basis points from Q1 of last year.

The operating margin improvement was primarily driven by the accounting amortization change we discussed last quarter and our gross margin improvements. This was partially offset by the second year of our shift from SBC to cash bonus compensation. Non-GAAP diluted net income per share in Q1 increased to $1.55 on approximately 300 million non-GAAP diluted weighted average shares outstanding.

This result was $0.13 above the high end of our guidance and $0.12 higher than Q1 of last year. The EPS growth reflects strong business performance, effective cost management, as well as anti-dilution efforts across our buyback program and stock compensation management. Turning to the balance sheet. Deferred revenue at the end of Q1 grew 5% year-over-year to $1.49 billion, above the high end of our previously provided range of 1%-2%.

For Q2, we expect deferred revenue to be up 2%-3% year-over-year. As we discussed last quarter, larger and longer duration competitive takeouts in phone and contact center can include grace periods that affect deferred revenue timing. In Q1, fewer contracts than expected required such terms. We continue to expect some quarter-to-quarter variability based on the timing and the structure of larger deals.

Looking at both our billed and unbilled contracts, our RPO increased 11% year-over-year to approximately $4.3 billion, driven by non-current RPO growth of 19%. The strong growth in non-current RPO reflects our continued success landing larger, longer-term multi-product platform deals. In Q1, operating cash flow grew 7% year-over-year to $522 million, representing an operating cash flow margin of 42.1%, up 50 basis points year-over-year.

Free cash flow in the quarter grew 8% year-over-year to $500 million, representing a free cash flow margin of 40.4%, up 100 basis points year-over-year. We ended the quarter with $7.7 billion in cash equivalents, marketable securities excluding restricted cash. In Q1, we repurchased 4.2 million shares for $362 million across the preexisting $3.7 billion share repurchase plan. We've repurchased a total of 40.4 million shares for $3.1 billion.

Turning to the guidance. For Q2, we expect revenue to be in the range of $1.265 billion-$1.27 billion, representing 4.1% year-over-year growth at the midpoint. We expect non-GAAP operating income to be in the range of $508 million-$513 million, representing an operating margin of 40.3% at the midpoint. Our outlook for non-GAAP earnings per share is $1.45-$1.47, based on approximately 304 million shares outstanding.

For the full year for FY 2027, we're pleased to raise both our revenue and profitability guidance. We now expect revenue to be in the range of $5.08 billion-$5.09 billion, which at the midpoint represents 4.4% year-over-year growth. We expect our non-GAAP operating income to be in the range of $2.065 billion-$2.075 billion, representing an operating margin of 40.7% at the midpoint.

In addition, our outlook for non-GAAP earnings per share in FY 2027 is increasing to $5.96-$6 based on approximately 304 million shares outstanding. As a reminder, future share repurchases are not reflected in share count and EPS guidance. We continue to expect free cash flows for FY 2027 to be in the range of $1.7 billion-$1.74 billion. As indicated in our press release today, we are excited to announce our board has authorized an incremental $1 billion share repurchase.

This reinforces our board and management team's confidence in

We are encouraged by progress scaling customer experience and the early momentum across new AI revenue streams. We remain on track to surpass $5 billion in revenue this year while maintaining our focus on profitability, cash flow generation, and shareholder returns. Thank you to our customers, investors, and of course, the entire

Thank you, Michelle. We will now begin the Q&A portion of the call. When I read your name, please turn on your video and unmute. As a reminder, in an effort to hear from everyone, please limit yourself to one question. Our first question will come from Alex

Hey, guys. Thanks for taking the time and taking the question. Congrats on a really solid quarter. I guess maybe, Eric, first one for you. When you think about the execution that you're seeing, particularly both on the AI products and particularly on, you know,

Alex asks a really good question. you know, speaking of

As we further improve our, you know, the

We co-innovate with the customer in terms of product innovation, AI features, and also the business model as well. That's why we have high confidence.

Excellent. Michelle, kind of maybe just a two-parter for you. Really strong execution on billings. I think some of your best outperformance that we've seen. For you guys in a while. Maybe what drove that? You referenced, I think, some of it in the script, but maybe just how much of it was better execution and demand environment versus maybe some other stuff? Online, maybe a little higher churn than we've seen in some time.

Yeah.

kind of maybe a little bit of a Tale of Two Cities. I'm curious if you can just unpack both of those dynamics.

Yeah

in order.

Your question is in part, you know, sort of what changed on the deferred revenue as well as just broadly what we're seeing kind of in enterprise billings? Okay. Look, in enterprise billings, Alex, it's exactly what we've been talking to investors about. We're diversifying our product set. We're working on churn. Churn year-over-year continued its trend of going down. We're working on AI monetization. Look, I think you can see that across the three parties that we talk about, right?

Much progress from MAU going up 184% and additional customer references and even new products coming in in AI. Certainly Eric covered a lot of the contact center. Maybe I'll add in my favorite of high double digits that now for the second quarter in a row has even increased on top of that. Look, broadly, the answer is durable revenue from the enterprise that's driving it.

With respect to the sort of deferred revenue, maybe I'll add a mechanical element. Look, because I think for investors, we may see more variability in this. We saw a 5% growth versus the sort of 1% to 2% that we guided at, because we just didn't see the need with the nature of the customer contracts to kind of leverage those early grace periods that I mentioned in February.

Look, those grace periods are great for

As investors can see, we said we would stabilize our business in online, and we've done that, both in terms of revenue as well as just in the nature of our online business is far more stable. Look, it's a nominal uptick in churn in online.

Thank you, guys.

Okay.

Our next question comes from Siti Panigrahi from Mizuho.

All right. Thanks for taking my question. Just continue the Alex question. Your revenue accelerated 5.5% this quarter. I think that's one of the best growth rate we have seen in recent years. You talked about some of this AI monetization pitch queue in my notes. How much of that acceleration is attributable to this AI monetization versus broader enterprise deal activity that you saw? How should we think about the durability of that pace in the back half of fiscal 2027, given your guidance implies some kind of deceleration in the second half?

Yeah. Perfect. I'll go ahead and take that one. Look, 5.5% growth. We're super pleased to your comment. It's among our highest and a beat of high guide. Look, it's important to note that some of that was FX driven. In terms of modeling and thinking about future going forward. Maybe let me break it down by enterprise and online.

From an enterprise perspective, what we're seeing is very durable growth and the drivers, many of which I touched on in the Alex answer, but let me add a few here. We saw 7.2% revenue growth in enterprise, up from 7.1% in Q4, but that's with a 60 basis points impact of that white label churn, right? Clearly product diversification, AI monetization, moving up market, moving into new channels, all the things that we've said, and working on churn as well.

All the things that we've said would be sort of durable elements with investors, we're seeing the fruits of. From an online perspective, we saw a little bit. Mechanically for investors modeling, you do see a little bit more of the FX impact in online, just because it's a little bit more international based, and we faced an easier comparable with no price increase in the prior Q1, but we'll have it here. You will see we're still projecting online to be a slight growth on the full year, but you will see some decel in the growth rate in Q2 through Q4.

Okay, great. Thank you.

All right.

Our next question comes from Josh Baer with Morgan Stanley.

Excellent. Thanks for the question. I wanted to ask about Custom AI Companion. A little bit more about the path to conversion. Just what are some of the features or the use cases in Custom that are really key to that conversion? Also wondering what can be done from an in-product perspective or from a sales perspective to help to drive that conversion.

Yeah. Josh, this is a great question. When it comes to Custom AI Companion, we have a few key features like enterprise agent retrieval, and also the workflow builder, and also the agentic builder as well. Some customer like workflow or agent or enterprise search. All three are part of the key features for Custom AI Companion. Speaking of how to leverage Custom AI Companion-driven product usage or maybe when the customer use the product to discover the Custom AI Companion, I'll give one example.

Today, when you schedule a

Excellent. Thanks, Eric. Maybe a quick one for Michelle. I mean, low 40s operating margins and free cash flow margins are obviously excellent. I'm just wondering from here, where can margins go and, if they can expand, what are the largest sources of leverage?

I think, first of all, just to give credit, maybe I'll even add one in there. We're super pleased with our free cash flow generation, had a strong Q1 in regards to that. Operating margins +40, best in class as you know. Also worth noting that our GAAP margins are equally important. Look, we're going to keep working at that.

Maybe I'd say, on the COGS front, we continue to make sure that we've got an always-on kind of efficiency, so as the AI costs spike in a good way with usage, we've got offsetting measures against it. I would say a lot of internal capital allocation, making sure that every dollar and head count that we deploy is sort of to its best ROI, and is oriented around those three priorities of growth that we talk about with investors.

It's not just a frame to talk to you guys, it's how we run the company internally. Look, I would say broadly AI. I'm super excited at what Custom AI Companion has done, even in the finance team, to reinvent things. Look, we are our own customer zero, and my favorite example is in contact center. We've been able to remove costs out of our own customer support organization at the same time that we also raised our customer CSAT and improved our response time. Making sure we're using each dollar to its best purpose, being our first own users of AI, and then continuing to kind of work on margins.

Great.

Yeah.

Thank you. Congrats on the consistent-

Thank you, Josh.

performance.

Yeah.

Our next question comes from James Fish with Piper Sandler.

James, sorry, you are muted.

Yeah. Hey, thanks for the question here. Maybe on the CX side, you guys talked about some strength here, and Salesforce launched their own native voice within CX. I guess, how are you thinking about the impact on

Yes. Yes, Salesforce is a great customer and a partner, We are entering into this market from different angle. Their strengths really about CRM, and the marketing cloud, and so on and so forth. We entered into this market based on our customer feedback. Many customers already deploy our UC solutions, our meeting solutions. Naturally, the next step, really about a contact center, right? You look at a contact center, it's more like a conversation centric, right?

Rather than the system of record centric, right? That's kind of our key differentiation. Plus, we have an infrastructure layer. When customers call the agent, the infrastructure layer also our UC system. Quite often, if an agent wants to turn on the video, that's also our strength as well, right? With AI Companion or Custom AI Companion, I think we offer a very differentiated CX solution. Plus

Then James, on your comment or question around the win backs. I think a lot of them are because of this sort of better together across the contact center back into

Got it. Thanks, Eric. Thanks, Michelle.

Thank you.

Next, we have a question from Michael Funk with Bank of America.

Sorry, guys. Give me one second here.

No worries.

Yeah, a little.

It happens even on earnings calls and every day.

There we-

out there. There you go

There we go. Thank you all for that. A couple questions for me. You already touched on it briefly, Michelle Chang, but wanted to hear more about your success moving up market in

Yeah. Maybe, Michelle, feel free to chime in, maybe address the CX. We built a very scalable CX platform, right? Because quite often a lot of customer, they want to deploy CX, they would like to leverage the channel partners. You look at our top 10 deals, 10 out of 10 are channel-driven deals to sell enterprise, meaning from go-to-market side, it's already scalable.

Our channel partners, they know how to pitch our story, how to sell to our enterprise customers. Also look at our top 10 deals. In eight out of 10 deals, we are replacing some other CCaaS vendors. Look at the entire CCaaS market is pretty big, and we're replacing almost every one of them.

Because of our product, rich feature and innovation, and also the AI, plus our UC and CC combined in a story. That's the reason why we're winning. You look at the top 10

In terms of organic growth, to build an AI or the acquisition, first of all, we look at everything from customer perspective. What kind of services or features they want us to innovate together with them? Like a search, like a generative workflow, right? We want to build up ourself. If there are any other innovative startup companies, we are willing to.

We're also very disciplined, and make sure either the technology or the customer and some of the services we cannot build, we are going to leverage the acquisition. Again, look at our R&D, 26%, right, in terms of revenue, the percentage. This is pretty large spending, right? We have so many great top talents. We have a high confidence we can build a lot of innovations. At the same time, see, Michael, if you know of any great startup companies with great technology, we are very open-minded.

Of course. Very nice quarter, guys.

Thank you. Appreciate it.

Up next, we have a question from Jackson Ader with KeyBanc.

Great. Hey, guys. Good to see you. The question I had was on the online segment, Michelle. With churn just kind of ticking up a little bit, but also revenue accelerating, that kind of suggests to me that maybe net new customers or either customer additions or ARPU for the net new customers is healthier than maybe you'd expect. Can you just talk about maybe the dynamics of the online net new customer adds you're seeing?

Yeah. Let me kind of attack it from a revenue perspective, because I think it may be a little easier to digest. Our Q1 revenue went up 2.8% in Q1. Really important to bring in my comments earlier on FX, which lifted the total number, will have a sort of disproportionate impact to online, as well as we lapped a quarter prior where we didn't have sort of the impact of a price increase.

Let me pivot and kind of talk about what I think we're seeing more broadly in online revenue, and kind of how to think about it going forward. Look, we saw some continued progress with low churn. It's a very different base than sort of what we had in the pandemic. You can see that, I think, in so many ways. Then I think we're getting more of a frame of sort of how to land and expand within that, bringing down customer or products, excuse me, the hunt and enterprise, where they make sense for our online customers, bringing new paths to AI monetization, My Notes being a great example of that.

Certainly, new products and acquisitions, since Eric just mentioned them. We did welcome Bonsai. I think it's the dynamic sort of popping up Q1. Look, there is durable and strength in our online business, and that's why we continue to think that it will grow slightly in FY 2027.

Great. Then a real quick follow-up. If we continue to kind of see this non-current RPO-

Yeah

outgrow current RPO.

Yeah.

Is it customer led? Are customers looking for longer term deals? Is

The dynamic. Yeah. What we're seeing there is just a reflection of what we've been talking about. If you think about our levers for growth and kind of growth inflection are changing more into phone, more into contact center, more into AI. contact center in particular comes with longer term deals than maybe a traditional

Look, we're pleased that it went up even versus Q4, which tends to be our biggest selling quarter. Look too, I might throw in deals over $1 million was one of the strongest that we've seen, even in a Q1. I think it's something that really just reflects more where our business is going.

Got it. Thanks, guys.

Thank you.

Up next, we have a question from William Power with Baird.

Great, thanks. Yanni Samoilis on for Will Power tonight. Good to see the enterprise NRR tick higher. I was hoping you could just talk a bit about that inflection, and then more broadly, maybe a bit about how conversations are going with your enterprise customers, their renewal. I know there's some headlines out there about seat counts, but wondering if there's anything you'd call out there, if that's still maybe status quo. You already talked a little bit about discounting. Just how you're thinking about discipline there, given the value of the platform, and the AI products that you're offering. Thanks.

I'll try and take those in order. Net dollar expansion, look, we've been saying to investors that the intent would be to inflect on, we were pleased to see in this quarter a modest improvement. Most of that, just to avoid repeating myself, is the same durable thing that we've been talking about, AI monetization, product diversification.

The intent in the fullness of time is that that thing would continue to grow off those dynamics. We will have a little bit of the white label churn that we mentioned going forward. To your second question, which I took to be kind of the macro nature, look, we continue to see strong and durable enterprise conditions.

More importantly, sometimes we don't always get to control the conditions that we're given, but I think

Yeah, just philosophy around discounting, discipline around that.

Discounting and pricing. Yes. Look, generally, we do price raises in the enterprise, and you've seen us do that on phone and contact center. Generally, we try, and we'll do those when sort of market conditions or competitive dynamics make sense. More and large, we work discounting, we work deal terms and conditions as you would expect us to do. We feel good about where we are with deal health as well as opportunities going forward.

Awesome. Super helpful. Thank you.

Our next question comes from Allan Verkhovski with BTIG.

Awesome. Hey, guys. Thanks for taking the question here. Eric, I have a question on the AI momentum you're seeing. You've been rolling out a lot of new functionality, and based on the conversations you're having, can you talk through how the average customer's perception of

Just as a follow-up, another question on Custom AI Companion. Can you share what kind of trends you're seeing in terms of adoption today? Are there specific industries or size of customers where you're maybe seeing more success with? Any other color would be helpful.

Yeah, Allan, such a great question. Interestingly enough, this morning, I had a call with one of our big customers in the financial sector. Exactly same as you said, right? What's the customer perception about

Everybody else, I'm not sure, because from a cost perspective, they think any other software company, they AI company. I think that's naturally, I think that's right, because whenever the new technology, you look at the stack, right? From infrastructure layer, right? The cloud infrastructure, the chip layer, and also large language model are more like a AI company.

More to more, and application layer, you will see some company will emerge as a AI company. I think we want to be part of that because of our AI innovation. When customer, they tested our My Notes feature, they love that. When I shared our the new innovation we are going to announce next month, we love that. More and more when customer and they deploy all those innovative AI services, give me some time, for sure, wow, this is AI company. For now because as I explained the technology stack, right? That's the perception. I'm sorry, what's your second part of the question?

The second part was just any trends you're seeing in terms of customers that are adopting Custom AI Companion, maybe specific industries or more upmarket, mid-market, just generally any trends would be helpful in terms of what you're seeing there.

Look at not only for a lot enterprise customers, SMB, even including the solopreneurs, I think in terms of conversation-centric AI, like a transcription summary, all is there, the CX Insights, the

More like, hey, how to leverage

Got it. Perfect. Thank you, guys. Congrats.

Thank you, Allan. Appreciate it.

Good question. You mentioned our AI Services that we offer the speech and the API Service, because when customer tests that, the quality much better than any other competitors, right? This is kind of a speak of our product, they also have a great AI talents. That's one. Two, when we build all those AI Services, we also co-innovative with customer. Even before build, we already shared why want to build those services, customer resonate very well.

That's the reason why next month we'll have quite a few announcement, some customer in the pilot, they really like that, right? Because the co-innovation. Also, especially for a lot of enterprise customers, even AI is such a great technology, the adoption speed is not as fast as we want. That's why we also have some FDE, full-time deployment engineer working together.

Take a

First, I know there's a lot out there that like to put out the AI revenue stat. Let me just use this opportunity to throw in, to me, the most important thing is to ensure that AI monetization impacts your total revenue growth. Look, that's already happening from a

I won't add to all the metrics, as I think Eric covered a couple and I've covered a couple. That's clearly the most important. Then look, within new revenue streams of AI, look at how much just even quarter-over-quarter we're just bringing new to the market. Look, we get excited. There's progress in things like

Workvivo came out with new stuff relative to AI monetization. Clearly Custom AI Companion and look, services is one. I wouldn't put it at the top of the list, maybe just answer the question explicitly. Then look, I'd be remiss if I didn't say also that AI usage and threading that in is also a very important indirect measure, in terms of how to think about monetization.

Meaning putting it in our paid SKUs at no additional cost is intended to reduce churn and bring in new interest in customers. We get excited and look every single quarter, there's just a lot more momentum coming at us. We look forward to talking about it with investors going forward.

Appreciate it.

Yeah.

Our next question comes from Andrew King with Rosenblatt Securities.

Hey there. Thanks for taking my question and congrats on the really strong quarter. Just wanted to double-click on that Resona win in Japan. It was really notable because it's the first time I can remember hearing of

Those are two different use cases. It's hard to say which one is bigger because you are so right, and naturally, you think probably we focus on inbound. That's not the case because you look at the technology, outbound, right? I think it might be even larger, right? Because more and more, the companies, they want to leverage AI technology to reach as many customers as possible, right? That's why outbound, I feel like even more opportunity.

Again, the same technology stack. We just focus on all those different use cases, right? That's kind of the platform approach. Yeah, when we started a few years ago, we also just focused on inbound, and now I feel like outbound, inbound, sometimes hybrid, I think will bring us a lot of new, exciting opportunities.

Just any comments on if there's any needed pricing structure changes between outbound versus inbound?

It's a great question. I think inbound might more like use it outcome-based. Outbound, we also want to focus on the outcome-based, right? Asking that model, customer resonate very well, right? If I reach 1,000 prospect to leverage our technology, right? If only five out of 1,000 reply back, you get the least, I think that don't make any sense, right? That's why outcome-based model, I think is more for outbound.

Got it. Thank you.

Yeah. Thank you.

Our next question comes from Peter Weed with Bernstein.

There we go.

Sorry, I'm out here. Harder to get unmuted. I think you've talked about this in the past, but maybe remind us, is obviously doing really well for you guys. If we look forward, one of the areas where there seems to be a lot of pressure from AI is perhaps the scale of people employed in contact centers. How do you see that impacting your revenue opportunity and kind of when you look at how you can price and maybe get value, how you kind of stay away from fee-based potential challenges there?

Michelle, you want to address that?

You cut out a little bit, Peter, there, but I think your question was sort of how do we find the right balance between sort of consumptive and per user business models. Did I get it right?

Well, I think very specifically in contact center itself.

Perfect

where I think there's some pressure maybe.

Yeah. This is a good one because it's actually, I think, a little bit different for

We come at contact center with a very fresh and modern approach, an AI-first approach. To your question maybe more specifically, we also don't have the business model pressure. Look, our agent-assisted product, we have a per user, three-tiered structure, kind of good, better, best. Best being the Elite, where we kind of get to the AI value.

Increasingly we're introducing where I think the market is going, Eric touched on this a little bit earlier, a more consumptive-based business model, potentially outcomes-based, and that is the pricing structure for

Yeah, Peter, from a high level, let's say any customer, if they are going to hire more and more human agent, it's great. They can deploy more

I appreciate it. Thank you.

Thank you, Peter.

Yeah, I don't see it as different. I think this is an area where investors have given

Look, we have $1.6 billion remaining, we're going to leverage that. We think that's a great sign, this latest tranche of confidence that Eric, myself, and the board have in where

Yeah.

Our last question today comes from Thomas Blakey with Cantor Fitzgerald.

Oh, I think I'm on there. Thank you, Eric and Michelle, for taking the question. Maybe as a final question, it's a good wrap-up here. I think with the big AI disruption that you were hinting at, Eric, could you just maybe talk about the durability of the communications app, if you will, the communications layer when you talk with customers? Maybe as a secondary to that, just what is the strategic value of the data, the real-time data that you can bring to AI applications when you talk to your customers to kind of illuminate the value proposition of what

Tom, thank you. I wish you are the first one to ask me this question because those two are the most important questions in my view. I think first of all, you look at the prior to AI era, for any of us to complete a task, normally it will need two-step, right? Step one, you and I have a

Let's say I'm a sales rep. I talk with you. You are a potential customer. After the

That's why

After this

Yeah. Can't be displaced, so that's great.

Absolutely. Otherwise, what do we do? If you're sending your agent and my agent to work together, it's never worked, in my view.

Yeah. Thank you, Eric. Thank you, Michelle.

Thank you.

We have one more question today from Arjun Bhatia from William Blair.

Oh, perfect. Thank you. Let me see. I got to change my camera. Wow. There we go. Thanks for taking the question. Congrats on the strong quarter. Eric, actually, I'll follow up on that last question because I think one of the important or interesting rather use cases or customer examples you pointed out in the prepared remarks was the MongoDB example, where they were basically taking actions in CRM ticketing from a

How aware are customers that

Yeah, it's a great question. First of all, we have a new release next month, and based on all the customer feedback, for sure that from a quality, from a feature perspective, much better. Afterwards, you're also right. We just need to double down on go-to-market side and make sure everyone are aware of that. For sure, we have a little bit of awareness problem.

Customer do not know that, but at the same time, the huge opportunity, and I think internally, based on our

Great.

If you have any good idea, please let us know. I really appreciate.

Yes. I will keep you posted. Thank you so much. Appreciate it.

Thank you.

Yeah. This concludes the Q&A portion of today's call. I'll now turn it back over to Eric for closing remarks.

Yes, thank you to every great customers, partners,