Zoom - Q2 2024
August 21, 2023
Transcript
Operator (participant)
Okay. Hello, everyone, and welcome to Zoom's Q2 FY24 earnings release webinar. As a reminder, today's webinar is being recorded. Now I would like to hand things over to Tom McCallum, Head of Investor Relations. Tom?
Tom McCallum (Head of Investor Relations)
Thank you, David. Hello, everyone, and welcome to Zoom's earnings video webinar for the 2nd quarter of fiscal 2024. I'm joined today by Zoom's founder and CEO, Eric Yuan, and Zoom CFO, Kelly Steckelberg. Our earnings press release was issued today after the market closed, and may be downloaded from the investor relations page at investors.zoom.us. 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.
During this call, we will make forward-looking statements, including statements regarding our financial outlook for the third quarter and full fiscal year 2024, our expectations regarding financial and business trends, impacts from the macroeconomic environment, our market position, opportunities, go-to-market initiatives, growth strategy, and business aspirations, and product initiatives, 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 the risks and other factors that could affect our performance and financial results that we discuss in detail in our filings with the SEC, including the annual report on Form 10-K and quarterly reports on Form 10-Q. Zoom assumes no obligation to update any forward-looking statements that we may make on today's webinar. With that, let me turn the discussion over to Eric.
Eric Yuan (CEO)
Hey. Thank you, Tom. Hi, thank you everyone for joining us today. Before starting, I'd like to welcome Dr. XD Huang as our CTO, who joins us after a successful career at Microsoft, where he most recently served as AI Field CTO and Technology Evangelist. Dr. XD joins us at an optimal moment in our AI journey. In the past few months, we've brought several new AI innovations to the market and announced an aggressive roadmap aimed at empowering our customers to work smarter and serve their customers better. As we develop and deploy AI solutions, we strongly believe that technology should advance trust. We are privileged to have countless customers rely on us for their communications needs. We don't take that for granted.
Earlier this month, we took the additional step in stating that Zoom does not use customer content to train our AI models or third-party AI models. I'm proud of the approach we are taking. By putting customers' privacy needs first, Zoom is taking a leadership position in ensuring customers can use our AI features with confidence that their content is protected. Now, let me share how we have advanced in our mission of one platform delivering limitless human connection. We launched Zoom Scheduler, which serves to reduce the hassle of scheduling with people outside your organization, and Intelligent Director, which uses AI and multiple cameras to provide the best image and angle of a participant joining from a conference room. We also launched many new offerings, like Zoom Clips, which enables asynchronous video conversations.
More and more customers are getting on Zoom Team Chat, driven by increased adoption of Zoom One and new features like Continuous Meeting Chat, which connects the transient in Meeting Chat feature to the persistent Zoom Team Chat product. Currently, we have 2 Fortune 50 companies, one major consulting firm, a global F&B brand, and a leading law firm using Zoom Team Chat as a core means of text-based communications. Our contact center product has surpassed 500 customers, and we are rolling out about 90 new features and enhancements per quarter. We launched Workforce Management in early July to help customers streamline customer communications, manage agent needs, and transform their customer experience, all from a single unified platform. WFM is already off a to a great start, and we look forward to adding additional products to this suite to expand our native customer experience capabilities and revenue streams.
We have progressed rapidly in our integration of Workvivo. After rolling it out internally, I could not be more impressed with the product and confident in the value it will bring to our customers in terms of building culture across a distributed workforce, ultimately delivering upon our strategic pillar of enabling hybrid work. Speaking of this, a few weeks ago, we announced internally a structured hybrid approach, asking our Zoomies that live within commuting distance to come into their local office twice a week. Zoom is purpose-built for hybrid work, and it's on us to understand what our customers are experiencing in their hybrid journeys, and what works and does not work for them. We believe that this approach will enable us to continue to innovate for our customers and deliver what they need to be to succeed. Now, moving on to some of our customer wins.
First, we are very excited to expand with the United States Postal Service. In Q2, the Postal Service added a Zoom Team Chat, or 21,500 users to their existing Zoom for Government deployment. Let me also thank Brookdale Senior Living, the largest operator of senior housing in the United States. Brookdale started as a Zoom Meetings customer in fiscal 2020. A year later, they began evaluating Zoom Phone, and in Q2, they went all in on the cloud and upgraded to Zoom One in order to unify their communication needs in one integrated product. Let me also thank Perdue Farms. Like many of our customers' journeys, Perdue started years ago with an initial Zoom Meetings deployment. Last fall, they went all in with the Zoom Enterprise Plus. However, the story does not end there.
In Q2, Perdue added a Zoom Contact Center due to its native integration with their existing Zoom Phone deployment and our ambitious innovation roadmap. Let me also thank Valmont Industries. Valmont came on board as a Zoom customer a little over one year ago with Meetings and Phone, and it quickly became a major platform adopter, including Zoom One and Zoom Contact Center. In Q2, with the goal of utilizing AI to better service their customer and also their employees, they added a Zoom Virtual Agent due to its accuracy of intent understanding, ability to route issues to the correct agent, ease of use, and quality of analytics. We are so delighted to see our partnership with Valmont grow so quickly, and we are committed to innovating further to support their operations.
Finally, let me thank Dollar General, America's general store, for choosing Zoom's Workvivo platform to connect employees at the digital heartbeat of the company. Dollar General will roll out Workvivo's employee engagement platform for its roughly 190,000 employees to enhance the employee experience at the individual, group, and district levels, drive employee dialogue, and reinforce its strong culture. Again, we are very excited to welcome and expand with USPS, Brookdale, Perdue Farms, Valmont, Dollar General, and all of our customers worldwide. With that, I'll pass it over to Kelly. Thank you.
Kelly Steckelberg (CFO)
Thank you, Eric, and hello, everyone. We are pleased that we beat our top line and profitability guidance in Q2. Here are a few milestones. First, operating cash flow grew 31% year-over-year to $336 million. Second, Zoom Phone reached roughly $500 million in annualized run rate revenue. Finally, we are excited that Zoom Contact Center has surpassed 500 customers in only six quarters. In Q2, total revenue grew 4% year-over-year to $1.139 billion, which includes $10 million of pressure from foreign exchange. This result was approximately $24 million above the high end of our guidance. Our enterprise business grew 10% year-over-year and represented 58% of total revenue, up from 54% a year ago.
We continue to see improvement in online average monthly churn, which decreased to 3.2% from 3.6% in Q2 of FY23. The number of enterprise customers grew 7% year-over-year to approximately 218,100. Our trailing twelve-month Net Dollar Expansion Rate for enterprise customers came in Q2 at 109%. We saw 18% year-over-year growth in the upmarket as we ended the quarter with 3,672 customers, contributing more than $100,000 in trailing twelve months revenue. These customers represent 29% of revenue, up from 26% in Q2 of FY23, and include some of the amazing names that Eric highlighted earlier. Our Americas revenue grew 6% year-over-year, while EMEA and APAC declined by 1% and 3%, respectively.
Absent currency impact, both EMEA and APAC would have been approximately flat year-over-year. On a quarter-over-quarter basis, all regions grew 3%. Moving to our non-GAAP results, which exclude stock-based compensation expense and associated payroll taxes, acquisition-related expenses, net gains or losses on strategic investments, restructuring expenses, and all associated tax effects. Non-GAAP gross margin in Q2 was 80.3%, an improvement from 78.9% in Q2 of last year. We are pleased with the strength of our gross margins as we continue to optimize usage across the public cloud and our co-located data centers for both existing and emerging technologies. For the full year, we expect non-GAAP gross margin to be approximately 79.7% as we make additional investments in new AI technologies.
R&D expense grew by 6% year-over-year to approximately $104 million. As a percentage of total revenue, R&D expense increased to 9.1% from 8.9% in Q2 of last year, reflecting our investments in expanding our product portfolio, including Zoom Contact Center, AI, and more. Looking ahead, investing in innovation will remain a top priority for Zoom. Sales and marketing expense decreased by 3% year-over-year to $276 million. This represented approximately 24.2% of total revenue, down from 26% in Q2 of last year. As a reminder, Zoomtopia will be held in Q3 of this year and will drive incremental marketing investment in the quarter.
G&A expense declined by 19% to $73 million, or approximately 6.4% of total revenue, down from 8.2% in Q2 of last year, as we continue to achieve greater efficiencies and experience one-time savings in the quarter. Non-GAAP operating income grew by 17% to $462 million, exceeding the high end of our guidance of $410 million. This translates to a 40.5% non-GAAP operating margin, a meaningful improvement from 35.8% in Q2 of last year. Our effective tax rate in Q2 was 18.5%. For the remainder of the year, our tax rate is expected to approximate the blended U.S. and federal state rate.
Non-GAAP diluted earnings per share in Q2 was $1.34 on approximately 306 million non-GAAP diluted weighted average shares outstanding. This result was $0.28 above the high end of our guidance and $0.29 higher than Q2 of last year. Turning to the balance sheet, deferred revenue at the end of the period was $1.37 billion, down approximately 2% from Q2 of last year. This was in line with the high end of the expectations that we shared last quarter. For Q3, we expect deferred revenue to be down 4%-5% year-over-year, partially driven by shorter billing frequencies on enterprise deals arising from the high interest rate environment. Looking at both our billed and unbilled contracts, our RPO increased 9% year-over-year to approximately $3.5 billion.
We expect to recognize approximately 59% of the total RPO as revenue over the next 12 months, as compared to 61% in Q2 of FY23, indicating lengthening contract durations on a year-over-year basis. As a reminder, our renewal seasonality peaks in Q1 and declines throughout the rest of the year. Operating cash flow in the quarter grew 31% year-over-year to $336 million. Free cash flow grew 26% year-over-year to $289 million. Both results include the approximately $60 million cash payment related to the legal settlement that we discussed last quarter. Our operating cash flow and free cash flow margins were 29.5% and 25.4%, respectively. We ended the quarter with approximately $6 billion in cash, cash equivalents, and marketable securities, excluding restricted cash.
Given the strength in profitability and collections, we are increasing our cash flow outlook for FY24. We now expect free cash flow to be in the range of $1.2 billion-$1.23 billion. Turning to guidance. For Q3, we expect revenue to be in the range of $1.115 billion-$1.12 billion, which at the midpoint would represent approximately 1% year-over-year growth or 2% in constant currency. We expect non-GAAP operating income to be in the range of $400 million-$405 million. Our outlook for non-GAAP earnings per share is $1.07-$1.09, based on approximately 309 million shares outstanding.
We are also pleased to raise our top line and profitability outlook for the full year of FY24. We now expect revenue to be in the range of $4.485 billion-$4.495 billion. At the midpoint, this represents approximately 2% year-over-year growth or 3% in constant currency, which we expect to be neutral in the back half of the year. Our increased total revenue guidance reflects a consistent view on enterprise, with tempered expectations for online for the remainder of the year. We expect our non-GAAP operating income to be in the range of $1.685 billion-$1.695 billion, representing an operating margin of approximately 38%.
Our outlook for non-GAAP earnings per share for FY24 is $4.63-$4.67, based on approximately 308 million shares outstanding. Thank you to the entire Zoom team, our customers, our community, and our investors for your trust and support. Before opening up for Q&A, we are excited about our premier user conference, Zoomtopia. It will be in person in San Jose, as well as on Zoom Events. We look forward to sharing more about our expanding platform, new innovations, and customer testimonials. Please join us at Zoomtopia on October 3rd and 4th. David, please queue up our first question.
Operator (participant)
Thank you, Kelly. As Kelly mentioned, we will now move into the Q&A session. When I call 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 Mark Murphy with JPMorgan.
Mark Murphy (Managing Director)
Oh, thank you so much, and congrats on solid execution in the quarter. Curious if you can comment on the Zoom Scheduler product. It, it looks like a very attractive add-on option, and a clear efficiency gain. I, I understand that that's going to be free for some period of time, and then, looks like $6 per month for, for certain users. I understand it's gonna be included in some of the other bundles, but can, can you just comment on how that's going to work? Maybe Eric, you can, you can touch on the efficiency gains from that product. Kelly, any type of a framework for the revenue potential out of that particular product?
Eric Yuan (CEO)
I can talk on the product side. Kelly, feel free to chime in on the revenue potential. I think, Mark, you are so right on. I guess probably you already tried it out. It's indeed very attractive. You know, the reason why you look at the, the how customers or even, including Zoomies, right, how we schedule a meeting. Let's say, Mark, I want to schedule a meeting with you next week. It's so complicated, right? I need to reach out to your EA, you reach out to my EA, or maybe we need to think about a calendar schedule. It's so hard. You know, meaning across the company, you know, scheduling is so complicated, like, how do I help customers and simplify that experience? That's why I decided to introduce Zoom Scheduler, right? Also there are some other startup solutions out there.
The customer, they would like to, you know, leverage Zoom platform because, you know, they already use Meeting and Phone, Team Chat, in one more click, they can schedule a meeting with, you know, someone from an outside organization. Really like that experience. That's why we decided to build that. You know, we already have a, you know, free trial, and also customer world, how to pay the customers already, and also be part of Zoom One as well down the road. Actually, it's doing very well, and it really simplify the way for you to schedule meetings with anyone outside your organization. We're pretty excited about that opportunity.
Kelly Steckelberg (CFO)
Yeah, I think in terms of its overall contribution, Mark, it's at a very attractive price point and will grow over time, certainly. Also, we think that what it does is make the product continue to be where you live, and it makes, especially our larger enterprise customers, that much more retentive as it continues to, you know, spread the platform and how you spend your day.
Mark Murphy (Managing Director)
Thank you so much.
Eric Yuan (CEO)
Thank you, Mark. Hopefully, you try that. Thank you. Appreciate it.
Operator (participant)
Our next question comes from Meta Marshall with Morgan Stanley.
Kelly Steckelberg (CFO)
Meta? Oops, Meta, we can't hear you.
Meta Marshall (Managing Director)
'Cause I'm on mute. One of the questions that I had was just what you were seeing in terms of the environment. You know, I know that your upside kind of came from the enterprise. Just wanted to get a sense of, you know, how the environment changed during the quarter, if there were any changes during the quarter, and just whether kind of that upside came as a result of kind of better upsells or just more, you know, deals kind of getting closing in, in shorter order? Thanks.
Kelly Steckelberg (CFO)
Yeah. Thank you, Meta. I would say in terms of Q2 versus Q1, the environment has been pretty consistent. We continue to see momentum in Zoom One, in Zoom Phone. You know, there are still, I would say, lengthened sales cycles out there, and customers really making sure that they take advantage of doing their full due diligence. You know, we're really excited about the vision that we can paint for them, not only around obviously the existing platform, but what's also coming from an AI perspective, and I think our customers are finding that very attractive. As you heard from the customers that Eric talked about, seeing a lot of momentum of customers that were originally meetings customers really moving either into Zoom One or adding on Zoom Phone and considering Contact Center as well.
Meta Marshall (Managing Director)
Great. Thanks.
Eric Yuan (CEO)
Meta next?
Kelly Steckelberg (CFO)
David, who's next?
Operator (participant)
Apologies. Our next question comes from Kasthuri Rangan from Goldman Sachs.
Kelly Steckelberg (CFO)
Hi, Kash. Oops. Sorry, Kash.
Kasthuri Rangan (Managing Director)
Okay, got it. Thank you. It looks like the enterprise business is seeing stability with respect to attrition, et cetera. I'm curious to get your thoughts on the online business. That it's still a substantial portion of the revenue and anything that you have identified, that could help stabilize the attrition levels. Also, just while we're at it, what is the pricing power of Zoom? Like, when you talked about customers worried about inflation and doing shorter-term contracts, that I guess on the flip side means that you could raise prices. I'm wondering how much leverage you have with that as well. Thank you so much.
Kelly Steckelberg (CFO)
Yeah. In terms of the online segment, we were really pleased with the continued improvement that we're seeing in the retention rates or the churn rates. You know, they are really at historic lows, and so that's really great to see. Wendy and her team continue to innovate. a little, a little more volatility, and that's what we indicated in sort of tempered expectations for the rest of the year. really pleased with the ongoing progress that we're seeing in that segment of the business.
Then, you know, in, in terms of the pricing power, I mean, Eric, feel free to chime in, but certainly we continue to have these discussions with our customers when it comes up for renewals, looking for opportunities to potentially expand their usage of the portfolio, moving them from Zoom Meetings to Zoom One is a very common upsell, you know, mechanism, or, I should say, movement that we're seeing with our customers today. Considering, is there an opportunity potentially, given the value that they're seeing in the platform, potentially for a price increase at renewal as well?
Operator (participant)
Thank you.
Eric Yuan (CEO)
Yeah, just quickly, in terms of pricing power, and most of businesses, they still view employee experience as the number one part, right? That's why they really want to, you know, kind of give a customer the best greater service, you know, like a Zoom platform. You know, otherwise, you know, probably they do not have a right employee experience and when it comes down to price, that's not the case, right? Most of the customer we're talking with, they really appreciated the value and ease of use, the quality of Zoom service.
Kasthuri Rangan (Managing Director)
Thanks so much.
Eric Yuan (CEO)
Thank you, guys. Appreciate that.
Operator (participant)
Our next question comes from Michael Funk with Bank of America.
Michael Funk (SVP)
Yeah, hi, thank you for taking the question today. You know, so, you know, congratulations on the new logo additions, you know, good, good momentum there, and the phone adds as well. Just was wondering, Kelly, I mean, what has to happen with some of the other metrics that did decelerate during the quarter? NDR decelerated sequentially, you know, online churn up sequentially, enterprise customer additions also slowed sequentially. You know, thinking about the acceleration in revenue growth we've been expecting or hoping for, which of those metrics is gonna turn first, and how much visibility do you have into that turn?
Kelly Steckelberg (CFO)
Yeah, couple of things. Let me just comment on a couple of the metrics that you called out specifically. First of all, for the online churn metric, as a reminder, we expect Q2 and Q4 to be seasonally higher than Q1 and Q3. While it was up over Q1, it was down over Q4, and that's because of summer and, you know, winter holidays. I think that 3.2 number is, is a really great number. And, you know, we are gonna continue, and Wendy and her team are continuing to focus on opportunities to improve that. You know, in terms of the enterprise, we're really focusing on some of the, you know, approaches we've talked about earlier. Certainly, Zoom Phone is one of the, the key drivers in terms of expanding our customers' usage of the platform.
That doesn't necessarily result in new customers, but you could see that in the enterprise customer metric as that starts to expand. The success of Zoom One is going to drive that expansion of more customers in the $100,000. I think those are the metrics that you should watch as great indicators as our enterprise team continues to sell Zoom Phone, sell Zoom One, sell Zoom Contact Center, and then, of course, as AI becomes more front and center, you'll get to see that as well.
Michael Funk (SVP)
Just quickly then, so the NDR for enterprise, that should improve as we exit the year? Is that an expectation, so 109, that should, that should improve off that number?
Kelly Steckelberg (CFO)
Remember, it's a 12-month number.
Michael Funk (SVP)
Yep.
Kelly Steckelberg (CFO)
It may come down a little bit more yet, but then start to inflect potentially at the back half of the year, but it might be into early of FY25.
Michael Funk (SVP)
Okay. Thank you, Kelly. Thank you, Eric.
Eric Yuan (CEO)
Thank you.
Operator (participant)
Our next question comes from James Fish, from Piper Sandler.
James Fish (Managing Director and Senior Research Analyst)
Hey, guys, thanks for the questions. you know, Kelly, for you or Eric, are you seeing optimizations on your seats showing a slowdown or a similar pace to what you've seen more recently? Is there any way to talk about the linearity in general? Eric, you know, we get the investment behind AI, and it seems like it's causing gross margins to drop a couple points and guide sequentially. I guess, what can you say that gives confidence that this isn't just further price degradation or just a higher level of conservatism on the other side of the coin?
Eric Yuan (CEO)
Kelly, you want to address the first one?
Kelly Steckelberg (CFO)
In terms of the optimization of seats, what we've seen is, I think we've talked about this sales motion before, that our reps have the opportunity to really get in there and talk to our customers, and they've done a great job about logo retention. Even if they are customers, you know, because they've had a dislocation in their employee base, taking that opportunity then to replace that revenue with an upsell of another product, like Zoom Phone, and showing them how overall we can drive such a great ROI for them and save them. Our sales team has been incredibly successful at that, and that's what we're seeing, even though there's still a little bit of sifting, I would say, of seats in there. We're seeing lots of momentum on those upsells at that renewal period.
I just wanted to highlight.
James Fish (Managing Director and Senior Research Analyst)
Yeah.
Kelly Steckelberg (CFO)
In terms of gross margin, we had 80.3% this quarter, and we only guided to 79.7%, so it's not even 100 basis points of degradation.
James Fish (Managing Director and Senior Research Analyst)
Fair enough.
Kelly Steckelberg (CFO)
Eric can talk about the, the reasons and why that is and what we're investing in.
Eric Yuan (CEO)
Yeah, yeah, gross margin is very, very strong. Again, you know, in terms of impact, it's just short term, not long term. The reason why, you know, when it comes to AI, it's becoming more and more important. Many of our customer told us, you rely on Zoom platform, you know, like all the features today, you know, like a meeting summary. You know, someone can, you know, take a meeting notes manually, right? How to leverage AI, improve the productivity and efficiency, right? For sure. You know, we needed to invest more. The good news, we already invested, you know, two to three years ago, right? That's why some of the features are already ready. How do we further double down on that investment, right?
You know, we hired a Dr. XD, also invested a lot of, you know, the GPUs as well, have a team, we have a high confidence, those AI features will have a customer value, right? Also, our strategy is very differentiated, right? You know, first of all, I have a Federated AI, a Federated AI approach, also the way we look at those AI features, how to help a customer improve productivity. That's very important, right? Of course, the customer already like us, not like some, you know, others, right? Who, you know, give you a so-called a free service, then charge you AI features, you know, a crazy price. That's not our case, right? We really care about the customer value, also add more and more innovations.
At the same time, you know, the way for us to look at innovations, not only for incremental innovation, incremental delivering AI, but also how to leverage AI to build some brand new services, to innovate, to deliver even more value than customer expected. That's where we can, you know, monetize to leverage AI technology. That's why we keep investing more. Again, the goal is about some brand new AI services, like a Zoom IQ for Sales, just one. A lot of other services we're going to build down the road. Stay tuned, you know, for the Zoomtopia.
James Fish (Managing Director and Senior Research Analyst)
Thanks, Eric. Thanks, Kelly.
Eric Yuan (CEO)
Thank you.
Operator (participant)
Our next question comes from Matthew VanVliet, BTIG.
Kelly Steckelberg (CFO)
Hi, Matt.
Matthew VanVliet (VP)
Good afternoon, thanks for taking the question. I wanted to dig in a little bit more on the trends you're seeing in the contact center. Can you help us with, you know, what situations you're seeing the most success in? Are these mostly customers have sort of meetings and phone, and then sort of within that, you know, are, are you seeing more sort of internal helpdesk-type situations, or, are you seeing kind of higher volume, customer-facing, deployments as well?
Eric Yuan (CEO)
Yeah, yeah, Matt, it's a great question. You know, first of all, I can tell you, you know, take a Zoom for example. You know, we already, you know, and deployed the contact center within the Zoom since a year ago, right? You know, our support team are very happy about our own deployment. It works extremely well, right? Because of all those innovation and integrations. Speaking among customers, right, you know, for sure, even if we're at a loss of innovations every quarter, but in a brand recognition, right, it still, you know, will take some time. That's why, you know, quite often, you know, all the existing customer, they would like to deploy Zoom Contact Center integration very well with the Zoom Phone, and also they found a new use case, like internal helpdesk, IT helpdesk, as you said.
At the same time, we also have some contact center customers who do not have a Zoom Phone, who even do not have a Zoom meeting. You know, they like a contact center. I think given our, the, the speed of innovation, I think, you know, we have a high confidence, you know, not only SMB, but also more and more, you know, mid-size enterprise customer, will realize the value of the Zoom and the Zoom Contact Center, I think something similar to what we did for Zoom Phone as well, right? When we started, when the SMB customer, existing customer, very soon realized, "Wow, that's huge value, and why not try or test it out a Zoom, you know, Contact Center as well," right? That's the, the, the path, you know, for our, to further grow our contact center business.
Matthew VanVliet (VP)
Great. Thank you.
Eric Yuan (CEO)
Thank you.
Operator (participant)
Our next question comes from Ryan Koontz with Needham.
Ryan Koontz (Managing Director and Senior Analyst)
Hi, thanks for the question. I wanted to ask about the healthy growth we're seeing here in the $100,000 accounts. Is that primarily displacements of legacy vendors that we're still seeing, or are these other kind of competitive wins, greenfield-type wins? You know, can you share anything about kind of the effective playbook you're using up market there to expand these big logo wins? Thanks.
Kelly Steckelberg (CFO)
Yeah, I think some of that, Ryan, points to the ongoing success we're seeing with Zoom One. Customers really like the ability to buy the bundle, which meets all of their needs, and it's a great opportunity to see the value, especially your previously existing meetings, customers seeing that opportunity. We do continue to see greenfield, especially, you know, Eric just highlighted contact center sometimes is a way that they're coming in the door now, which is amazing. Then also, we still have a lot of customers, their meetings customers that are upgrading to phone as well. It's a combination of both new customers that come in at that level, as well as customers that grow up to that level over time.
Ryan Koontz (Managing Director and Senior Analyst)
Got it. Any, any general changes in the pricing environment up market?
Kelly Steckelberg (CFO)
No, especially from Q1 to Q2, there weren't really significant changes. As I mentioned, there's still, I think, lots of scrutiny around deals, but no other real changes in the environment.
Ryan Koontz (Managing Director and Senior Analyst)
Got it. Real helpful. Thank you.
Kelly Steckelberg (CFO)
Mm-hmm. Ryan.
Operator (participant)
Our next question comes from Sitikantha Panigrahi with Mizuho.
Sitikantha Panigrahi (Managing Director and Senior Equity Research Analyst)
All right, thanks for taking my question. My question on contact center again, you know, that is, that's a huge opportunity, considering like 80% legacy is still yet to move to cloud, and you're starting from a clean slate, you know, just building yourself in-house. Eric, how are you trying to differentiate, I mean, among other cloud vendors right now in the contact center space? Kelly, should we think about this contact center, you know, next leg of growth, is this, like, adoption should be like phone, what we have seen, you know, last few years?
Eric Yuan (CEO)
Speaking of differentiation, you know, first of all, we built the contact center service from the ground up, right? With absolutely the new modern architecture, also video is part of that as well. AI is heavily, you know, AI components, you know, we're heavily invest in AI. You know, also at the same time, a seamless integration with other product as well. That's why we have a high confidence, right? In order, like some other vendors, you know, already there for a long, long time, right? The architecture may not be modern, and the performance, the quality, and so on, so forth, right? However, you know, how to make sure every enterprise customer, you know, you know, during their RFP process, right, they do look at Zoom.
When they look at Zoom, we have a higher confidence we can compete. Also, we know, we just, you know, had a lot, had a lot of innovations around the Workforce Management platform as well. Essentially, Zoom, you know, Contact Center will become a full, you know, Contact Center suite, not just the one part. Right? This is to target SMB and enterprise, with AI, I just think, you know, we are innovating very fast, right, you know, to compete against any other, you know, cloud-based or on-premise-based and Contact Center vendors, so.
Sitikantha Panigrahi (Managing Director and Senior Equity Research Analyst)
Is that going to be similar to, like, phone kind of adoption?
Kelly Steckelberg (CFO)
Yeah.
Eric Yuan (CEO)
Absolutely. Yeah. Sorry, go ahead. Yeah.
Kelly Steckelberg (CFO)
Only six quarters old today, it's, it's very relative, right, to the existing ARR base. It's, it's small. It's growing very quickly, though, it won't be visible to you probably for at least another four to, I don't know, four to five to six quarters probably, but we're really pleased with the growth. As Eric mentioned, when you start considering Zoom Workforce Management, of course, Zoom Virtual Agent, Zoom Quality Management, which is coming, it starts to be a, a platform unto itself that could really be a significant growth driver over time.
Sitikantha Panigrahi (Managing Director and Senior Equity Research Analyst)
Great. Look forward to seeing you at Zoom, Zoomtopia.
Kelly Steckelberg (CFO)
Thank you.
Eric Yuan (CEO)
Yep, thank you.
Operator (participant)
Our next question comes from Rishi Jaluria with RBC.
Rishi Jaluria (Managing Director and Software Equity Research)
Oh, wonderful. Hey, Eric, hey, Kelly. Thanks so much for taking my question. Two quick ones. First, you know, look, appreciate a lot of the investments you're making around generative AI, and, and I know it's early, but I want to think about, how do you, how do you think longer term about your strategy around monetizing generative AI? Is it around, you know, specific modules and discretely charging for them? Is it about gatekeeping them behind higher tiers and using that to drive upgrades? Maybe alongside that, you know, you're, you're starting to see better adoption, I think, of your non-core products, including, you know, Zoom Phone at $500 million in ARR. Eric, you called out some great customer wins on Zoom Chat.
How do you think about using generative AI as kind of a connective tissue to drive more usage of non-core products and maybe even of the entire Zoom One pricing package? Thank you.
Eric Yuan (CEO)
Yeah, that's a wonderful question. If you look at, you know, the, the, the Zoom, you know, platform, right? Not only do we have meetings, right? Some, you know, people still thought it was just a meeting company. Absolutely, that's another piece, you know, a full platform company, right? You know, for those customers, we deployed, like, a team chat. USPS deployed Zoom Team Chat. A lot of company deployed the Zoom Phone and a whiteboards, you know, Zoom Contact Center as well, you know, Zoom Scheduler, you know, then also the Zoom Clips. As we build more and more services, right, and essentially, when we talk about our platform, how to look at everything from customer perspective, how to add more value. Let's take Zoom Web, for example. Customer said, "I, I really like Zoom.
I already paid and deployed the entire platform." You know, a lot of, you know, features, you know, take this as a GenAI features, you know, like a meeting summary, and to leverage GenAI to write it a, you know, team chat and meeting query. If, let's say you are late to the meeting, how to get a quick, you know, real-time summary about what had been discussed over the past five minutes. All those GenAI features can make the entire platform not only sticky, but also more value, right? You know, quite often, you know, some, you know, customers say, "Yeah, you can charge," and some other competitors do that. We are taking a different approach.
We think if you add more value to customers, and they are doing more, you know, we're likely to move on to our entire platform, right? That not mean we cannot monetize the AI. How to think about AI to build new services, right? You know, give an example. Back in the 1995, 1996, I mean, internet was sort of born, you know, when every, you know, let's say, the, the, the, you know, the, you know, the stores, right, when they embrace internet. You do not want them to increase the price, right? You buy online, why increase price? However, you can leverage internet to build new services, right? New innovations. That's why we're taking a different approach, not like some other competitors. They give you some free service, when it hit GenAI, oh, my God, they charge you a crazy price!
I do not think that's fair to customers, right? We are taking a different approach. Adding more value to leverage GenAI to our existing customers, you know, focus on the feature improvements to leverage GenAI. At the same time, given our speed of innovation, how to leverage GenAI to build some brand-new AI services to monetize, that's our goal, that's our direction. Also, that's our differentiated pricing strategy as well. Hopefully, you know, my answer is clear. Otherwise, let's talk more at Zoomtopia.
Rishi Jaluria (Managing Director and Software Equity Research)
Yeah, very helpful and looking forward to it. Thank you.
Eric Yuan (CEO)
Appreciate it. Thank you.
Operator (participant)
Our next question comes from Alex Zukin with Wolfe Research.
Alex Zukin (Managing Director and Senior Analyst)
Hey, guys. Thanks for taking the question. I guess, When I sit back and look at the quarter, this quarter looks a little bit different than last quarter. You grew sequentially, your revenue base, on enterprise and online for the first time together in some time, where both of those things happened. Your enterprise billings actually grew as well. I look at the guidance, and it looks like we're taking a step back, and I appreciate the conservatism in the macroeconomic environment. I appreciate the fact you've got changes you're still working through in the go-to-market. Help us understand, if we look at the trends as they've, you know, has churn stabilized to a point where we can expect, for instance, on the online business, that this is a new floor we can count on?
Because if I look at the exit rate for enterprise revenue, I don't think it's at the rate that, you know, any, any of us sitting here would, would be jumping up and down about. You mentioned NRR on the enterprise side starting to, I think you said, inflect, but maybe go back up, in, in, in the first half of next year. What's the right way to interpret the enterprise growth exiting this year and into next year? I've got a quick follow-up.
Kelly Steckelberg (CFO)
Yeah. In terms of online, I would say that, you know, we, we are very pleased with the performance that we're seeing in the churn rate itself, and I, I do think we're stabilizing around a, a new level that is back to historic levels, and I think that's a, a reasonable assumption to make going forwards. Then in terms of enterprise, you know, we're, we're obviously not in a place that we're gonna comment on FY25 yet. We're not gonna do that on this call. Enterprise, you know, when you look at it from a, from a ... How do I say this to you? When you look at it in terms of the growth rate that you're expecting, you can, you can back into, right, it, what it is.
We are, as you say, still considering, you know, no improvement from the macro at this point, and as you said, continuing to have the sales force settle into our new structure. You know, we're thrilled to have Graeme leading the organization. You know, some of the transitions took a little bit longer in EMEA and APAC than the rest of the world, as you've heard us talk about. You know, as we're coming into Q3, the, the pipeline is strong. It's stronger than it was as we were coming into Q2. I think those are the factors you can take into consideration as you're looking for the growth rate for the rest of the year.
Alex Zukin (Managing Director and Senior Analyst)
Okay. Then maybe, Eric, for you, obviously, the evolution of Zoom from a, you know, point solution to a platform is, is nice to watch. You, you've talked about Zoom One. You've, you've now given us that $500 million annualized number for Zoom Phone. What's the penetration today for Zoom One within the enterprise base, and what's the penetration for the Phone product in the enterprise base? Where does it go from here in your mind? Like, what does success look like for you?
Eric Yuan (CEO)
Yeah, I think, Zoom Phone penetration is doing relatively well. Zoom One, I think, you know, still has a huge opportunity, right? Zoom One is not only for Zoom Meetings and Zoom Phone, right? Also, Zoom Team Chat, if a customer wanted to deploy our free great Zoom Team Chat solution, and a whiteboard, and a lot of other services, right? I think a huge opportunity, especially for medium and large-sized customers, and we needed to kind of, share the, the value. You know, as I said earlier, about, like, GenAI features, all those kind of things is part of Zoom One, right? Leverage all those, you know, the, the cool features, right, to, to, you know, to penetrate more, you know, and about Zoom One, the, the market share, right?
Zoom Phone in itself are doing rather well, but, you know, huge opportunity ahead of us for Zoom One penetration, and I would say we're just starting. You know, I give one example. Take a USPS, for example. When they realize, "Wow, you have a, a great team chat solution, it's also part of Zoom One, and also it's free. That's amazing. I've already tested it. Why? Why not deploy Zoom One," right? Many more customers, when they realize the, the full potential of a Zoom One platform, I think that's the, the, the value, right, we need to focus on.
Alex Zukin (Managing Director and Senior Analyst)
Perfect. Thank you, guys.
Eric Yuan (CEO)
Thank you, Alex.
Operator (participant)
Our next question comes from Peter Weed with Bernstein.
Peter Weed (Managing Director and Senior Analyst)
Thank you. Maybe this kind of follows up a little bit of what Alex was just getting at. You know, first off, I want to say it's really exciting to see the progress on Zoom Phone and Contact Center. It's been amazing to watch that, and, you know, all the checks I do with folks are very positive on things that are going there. You know, I think, Kelly, you commented a few minutes ago, and we're alluding to it, I think, with Alex here, you know, that NRR may come down a bit, you know, before it starts re-accelerating, maybe by the end of this fiscal year, and maybe the beginning of next year, we start to see some line of sight to some benefit there.
I'd really love to kind of dig into, like, what will drive that improvement. And kind of when I split the, the customer base, you do a really nice job of reporting both on greater than 100K and less than 100K. Like, some quick math suggests where it's been really painful recently is on the greater than 100K customers. And I'm trying to figure out, like, on that re-acceleration, is it about kind of reigniting those greater than 100K? Is the opportunity with the less than 100K, like, growing them up because they're, they're less mature? Like, really, what is it that you are going to be delivering with these customers to reignite that between those customer bases?
Kelly Steckelberg (CFO)
One of the things, you know, I commented on is that we have seen some dislocation in our customers' own employee base, and that our sales reps do a great job when they're talking to those customers about helping them potentially rightsize if they have downsized in their employee base, but upselling and retaining that revenue in other parts of our platform. As is, there's still pressure in the macroeconomic environment. You're, you're gonna see that a little bit, right? Maintaining logos, even maintaining the same amount of revenue, but would've been an upsell if not for a downsell due to seat. Part of it is just an ongoing potential change in the macro, which we have not factored into the guidance that we gave. Then the continued acceleration of all these new products that we keep talking about, right?
Phone is obviously doing really well and is, you know, well hit its stride. Remember, that's taken 3 to 4 years to accomplish, contact centers, we expect to follow the same, it just needs a little more time. You heard about all the additions into the contact center platform itself, with ZVA, with workforce management, quality management that's coming, all of those will continue contribute to growth over time. You know, Eric sort of hinted, thinking about the ways that AI, over time, is going to help with both retention as well as potential opportunity to grow revenue. It's just some of these things just have to grow a little bit or, you know, age a little bit and mature into the stage that they're contributing in a way that you can see them.
Peter Weed (Managing Director and Senior Analyst)
Yeah, and, and how high do you anticipate NRR being able to get, you know, once all that stuff works out? I mean, obviously you've seen some of those headwinds, so you kind of know how much you're like, "Darn! Like, I lost this, and it would've been so much better." Like, if, if you're looking forward, like, what should we aspire to be getting NRR back to, and, like, how soon do you think we can get there?
Kelly Steckelberg (CFO)
Yeah, you know, Peter, we'll talk about that more when we're ready to give FY25 guidance, but not, not today.
Eric Yuan (CEO)
Yeah.
Peter Weed (Managing Director and Senior Analyst)
Thank you.
Eric Yuan (CEO)
... you know, start a little bit more, Peter. The question you asked was very similar to what are the articles about Zoom One. Actually, you know, today the problem is, you know, Zoom is a, is a too strong brand on Meeting side, right? Right. Many of our customers, unfortunately, they even do not realize we have a lot of other services, not to mention our Zoom One platform, right? That's the number one challenge we are facing. How to make sure all those even existing customers, they also think, "Oh, Zoom is just a meeting." That's not the case, right? When we, you know, and share our greatest story, make sure most of our customers or probably they realize our Zoom, not only just the meetings, has a full platform.
I think the inflection point will not happen until then.
Peter Weed (Managing Director and Senior Analyst)
Thank you.
Eric Yuan (CEO)
Thank you.
Operator (participant)
Our next question comes from Imtiaz Koujalgi with Wedbush.
Imtiaz Koujalgi (Managing Director and Software Equity Research)
Hey, guys. thanks for taking my question. Two questions. first one for you, Kelly. I think you had a price increase with the online business in Q1. That was being phased out, I think, in different geos at different times. Has that been rolled out across the globe? If you can comment on any tailwind, you saw from that price increase in the Q2 online business.
Kelly Steckelberg (CFO)
Yeah. It has been very effective in general in terms of, you know, maintaining strong retention rates and moving customers from monthly to annual as they continue to see value when we've rolled out this price increase. Given that it's been in effect for the full time now, we're not gonna break out, but, you know, break it out separately, but it certainly is overall having a great impact, and including in the momentum for our online. It is... I believe it's live in every market at this point.
Imtiaz Koujalgi (Managing Director and Software Equity Research)
Got it. One follow-up on, on Contact Center. I know it's, it's pretty early. You've, you've just started, you've just had your first early customers, but any comments on price points you're seeing and attach rate of seats? Let's say a customer has 100 seats of Zoom Meetings, when customers buy Contact Center, what is, what is kind of the attach rate that you're seeing for these early, early customers?
Kelly Steckelberg (CFO)
Yeah, I mean, it's very different, right? In terms of it's not anywhere near. Like, phone typically is near one to one, and sometimes even more one to one.
Imtiaz Koujalgi (Managing Director and Software Equity Research)
Yeah
Kelly Steckelberg (CFO)
... from attach rate. Contact center is very different. It depends on the use case we're seeing of the customers, if it's an internal help desk or if it's like a, you know, we've- one of our largest deals to date was a BPO, where it is their business, right? To, to drive contact center. I don't think there's necessarily a standard ratio that you can look at because it varies so much based on use cases. Then in terms of pricing, as a reminder, our list price for contact center is highly disruptive. It's $70 per seat. Given, you know, comparing that, it's, it's- given comparing it to the other competitors in the market, it's a really, I think brings a lot of value to our customers.
While, you know, enterprise customers and larger customers are gonna get discounts, we've certainly been able to manage to maintain price points, given how disruptive and competitive it is compared to others in the market.
Imtiaz Koujalgi (Managing Director and Software Equity Research)
Can I just sneak in just one more clarification, Kelly? You mentioned that we won't have visibility into contact center revenues for another 4-6 quarters. It's still very early. Were you implying that it'll be close to 10% of revenues in four to six quarters?
Kelly Steckelberg (CFO)
No, no, no. No, no, no. Not, I don't mean to imply that at all. I just mean that, I see Matt laughing. That over time, right, you started to see Zoom Phone, and we talked about, like, more milestone metrics and how it was contributing. That's what I was saying. I mean.
Imtiaz Koujalgi (Managing Director and Software Equity Research)
Yeah
Kelly Steckelberg (CFO)
... that would be a really fast growth rate if that were to occur.
Imtiaz Koujalgi (Managing Director and Software Equity Research)
Got it. Thank you, guys. Thanks a lot.
Eric Yuan (CEO)
Thank you.
Operator (participant)
Our next question comes from Matthew Stotler with William Blair.
Matthew Stotler (Equity Research Analyst)
Yeah. Hey there. Thank you for taking the, the question. Maybe just to follow up on, on Zoom Phone. If I look at the disclosure this quarter, you know, $500 million ARR, and last quarter, Zoom Phone reached 10% of revenue, the implication would be, you know, something in the ballpark of, let's say, 10%, maybe a little more sequentially, in terms of growth for, for Zoom Phone ARR. I want to just dig into, or double-click on, I guess, what's driving that growth, right? Is that indicative of, of the success you're seeing with Zoom One? Is that evidence of go-to-market maturity there? Is it some large customers, like the BPO you just mentioned, just kind of ramping up? Anything you'd like to call out there?
Kelly Steckelberg (CFO)
Yeah. I mean, actually, Matt, it's all of the above, is what I would say. You know, it's as we are talking to our customers about renewals, taking the opportunity to talk to them about the value of Zoom One, or talking about just helping them. I think every CFO and CIO across the world today is trying to think about how do they, you know, drive more efficiency in their organization, and Zoom Phone is a great way to do that when you look at it compared to the ROI, especially of having an on-prem solution. Also, with Contact Center, if Contact Center is a driving force, Zoom Phone is a very natural adjacency to it.
I think it's a combination of all of that, and it's just gonna continue to create more and more synergies as Zoom Contact Center especially continues to mature.
Matthew Stotler (Equity Research Analyst)
Got it. Okay.
Eric Yuan (CEO)
Yeah, just, yeah, just quickly, you know, when we talk with our customers, they really like, you know, have a both, you know, they deploy both Zoom Meeting and Zoom Phone together. The Contact Center, a new opportunity. In particular, for those customers, you know, I think they don't want to deploy a point solution, right? If you just have a phone business, it's really hard to build a sustainable business. Customers see, you know, phone and meetings, you know, sort of, they, you know, very similar integration. I can, you know, have a phone call, one more click and jump on a video meeting, right? That's a, you know, that's that kind of similarity experience, you know, really help us, you know, further accelerate our phone growth, right? If you just offer a point solution, that's really not a scalable, not sustainable.
Down the road, more and more customers, they would like to move on to a platform player like Zoom.
Matthew Stotler (Equity Research Analyst)
Got it. Thank you.
Eric Yuan (CEO)
Thank you.
Operator (participant)
Our next question comes from Sterling Auty with MoffettNathanson.
Kelly Steckelberg (CFO)
Hi, Sterling.
Sterling Auty (Senior Managing Director)
Hey, guys. All right, Kelly, for the online outlook, how much of this is because it seems like the online guidance is a little bit worse than what we had before. How much of this is macro? How much of this is execution? Eric, 1 for you. When we think about AI and all the innovation that you're driving, how much of that AI innovation is just gonna be driving and differentiating the core Zoom products, versus bringing a premium monetization kind of, you know, pricing model, you know, or specific AI SKUs?
Kelly Steckelberg (CFO)
Eric, you wanna go first?
Eric Yuan (CEO)
Sure. Yeah, first of all, in terms of online study, you know, I, I, I know you have a pro account. You know, hopefully you still have a pro account, you know, and you for sure can contribute to our online growth. Speaking about AI, I think, you know, we are taking a different approach, right? As I said earlier, from architectural perspective, it's different, Federated AI. In terms of monetization, right? Again, you know, we look at how to leverage GenAI to improve our core meeting experience and deliver more value, make the service more sticky. You know, customer appreciate Zoom always, you know, offer more and more features, values. At the same time, we do not, you know, kind of, charge them a crazy price, increase the price a lot at all, right?
That's why we build a trust. You know, they wanna go forward Zoom platform. At the same time, GenAI does bring huge opportunity in terms of monetization, in terms of for the new service. How, as I said earlier, how to leverage GenAI to build some brand new service. You cannot only count on low-hanging fruits, right? You already deployed this service. I have a GenAI feature now, you need to pay a crazy price. I do not think that's sustainable. The customer do not like it, right? That's our approach, how to leverage GenAI to make sure existing customer happy, and leverage GenAI to build new services focused on innovation, innovation, and innovation. That's our approach.
Kelly Steckelberg (CFO)
Thank you, Eric. Sterling, in terms of online, you know, I would say we're pleased with the execution. Where you see that is the ongoing stabilization in the churn rate. You know, that I think has been really, really well done and stabilized over the last four quarters now, and I think that's a really great indication of the ongoing improvements in the platform, the buy flow, the, you know, movement of customers from monthly to annual.
Where we do see some ongoing headwinds is in the, the overall macro, which is driving more for the top of the funnel. That's where Wendy and her team continue to focus on, you know, new pricing packages, new payment currencies, things that they can focus on to expand the top of the funnel. That over time, eventually starting to add new products as well that can be sold online. That's what will eventually drive this... You know, ideally, we want it to not only be stable, but to be a growth driver as well.
Sterling Auty (Senior Managing Director)
Makes sense. Thank you.
Kelly Steckelberg (CFO)
Yep.
Eric Yuan (CEO)
Thank you, Sterling.
Sterling Auty (Senior Managing Director)
Thank you.
Operator (participant)
Okay, we have time for one more question. That last question goes to William Power with Baird.
Kelly Steckelberg (CFO)
Hello.
William Power (Senior Research Analyst)
Okay, great. Thanks for sneaking me in. Maybe one more question on contact center. Great to see the, the traction there. I, I wonder, if perhaps, Eric, you can update us on where you are with respect to go-to-market. I know that had been a big focus. You know, how much more room and opportunity is there on that front? Then I guess the second part of that is, it feels like there's a big opportunity with respect to AI and contact center. Being a new entrant, you know, how do you think about the opportunity for whether it's virtual agent or other capabilities to help you be even more disruptive in that market?
Eric Yuan (CEO)
Yeah, great question. Speaking of go-to-market, I think, you know, on product front, we have a high, high confidence, you know, compare to the innovation speed. We added so many features and Zoom Workforce Management, a lot of other features we introduced every quarter. In terms of go-to-market, I think, you know, not like what we did before for Zoom Meetings, right? You know, by and large, more like primarily driven by a direct business. Zoom Contact Center is different. You know, for sure we need to double down, triple down on the indirect channel, right? You know, embrace all of the third-party, you know, partners and master agent and so on and so forth. I think we need to invest more on that front.
You know, essentially, you know, this is one of the things, you know, why, you know, not like a Zoom Phone. You know, quickly we see the, the, the accelerated revenue, but even have a greater contact center product. As long as, you know, you see the progress on go-to-market front, I think, you know, we will see the, the, the greater result. In terms of AI, not like, you know, other vendors, right? They already have a contact center sort of solution for, for a long, long time. When you look at AI, you know, kind of architecture, not flexible, right? How to add AI to that, you know, to all those existing layers. When we build a contact center, contact center, we already realize the importance of AI, right? That's why, you know, we have a very flexible architecture.
Not only do we build organic, you know, AI features, but also, you know, we acquired Solvvy and also the, the Virtual Agent and so on and so forth. You know, organic growth and also the acquisition certainly help us a lot in, in terms of product innovation. AI is going to play a big role, you know, for the, the contact center. We have high confidence, you know, we can, you know, do very well on that front.
William Power (Senior Research Analyst)
Thank you.
Eric Yuan (CEO)
Thank you.
Operator (participant)
This concludes our Q&A. I would now like to pass things back to Eric for closing comments.
Eric Yuan (CEO)
Oh, thank you all, you know, for joining us, you know, for the Q2 earnings call. I really appreciate it for all our greatest support and very, very grateful, and thank you. Appreciate it.
Kelly Steckelberg (CFO)
Bye, everybody.
Operator (participant)
We thank you all for your participation, and we look forward to seeing you again. This concludes today's conference. Enjoy the rest of your day.
Eric Yuan (CEO)
Thank you.
