Zoom Communications, Inc. (ZM) Earnings Call Transcript & Summary

Good afternoon, everybody. Good morning. My name is Tyler Radke. I co-head our U.S. software coverage here at Citi. Welcome to Day 3 of the Virtual Tech Conference powered by Zoom. We are happy to have Kelly Steckelberg, the CFO of Zoom. Kelly, I know it's been a busy week with Zoomtopia and the Analyst Day. So I really appreciate you making the time for our conference.

Of course, thank you so much for having us, Tyler.

And just for investors on the line, feel free to submit your questions through the chat. But we just asked no questions related to Five9 because we're not allowed to answer that. So Kelly, maybe just we could start off, recap us what you're seeing out there. You recently reported Q2 results. What are you seeing from a demand perspective as we're kind of in the state of the world kind of between reopening and kind of hybrid work?

Yes. So we had very strong Q2 results. We were excited that we crossed over the $1 billion revenue threshold for Q2 and over 50% year-over-year growth. We saw strong momentum in Zoom Phone as we also announced, we achieved 2 million Zoom Phone seats actually at the day of our earnings announcement. So that was really, really exciting. And also we announced in the quarter that we had set twice 2 new records in terms of Zoom Phone seat size deals. And so that was really exciting. And in fact, the largest Zoom Phone deal that we had in the quarter pushed a customer now into being our largest customer, new customer, moved into that peak. So that was all really exciting momentum we see. And then the other interesting thing to note about Q2 was, as organizations kind of -- last year, what we saw was the extreme momentum in meeting because everybody was thinking about how do we keep our employees safe and how do we keep them productive during this period of time. And then as we got sort of to the back half of the year, we started to see this momentum growing with Zoom Phone as everybody is now thinking more strategically about the work-from-anywhere strategy, how do they -- thinking about these desk phones that are sitting in offices with the one using them, how do we get the phone into the hands of our employees. And then what we started to see now in Q2 is as organizations have started to welcome their employees back into the office, thinking about how do we recreate the experience that we've all become used to, where we can clearly and easily see everybody's smiling faces on these Zoom Meetings, right, you have the ability to see who's talking. And as they move back into one of these hybrid approach, wanting to make sure that they're operating the same level of inclusivity to everyone, whether they're in the office or outside. And that's where Zoom Rooms come in. And we started to see the momentum in Zoom Rooms growing. We saw the attach rates actually double from Q1 to Q2 as companies are ensuring that their conference room -- the technology in the conference room is really equipped to support this experience for everyone. And that's a combination of both software and hardware that we're seeing companies invest in. And so we're really excited about that momentum as well.

Awesome. Awesome. So maybe help us understand, we got a lot of questions post the quarter on the guidance for the rest of the year. Just if you were to kind of compare your expectations for the second half now versus 6 months ago, what's changed? Like what -- how are you kind of changing your assumptions around the broader macro environment?

Yes. So when we came into this year, this is all the way back, like in November, December, where we're setting our annual plan as well as thinking about guidance. We really were thinking about our customer base in these 2 segments of customers with greater than 10 employees and customers with fewer than 10 employees. And as a reminder, the customers of greater than 10, the seasonality of that customer base has really -- the renewals has really shifted to be very front-end loaded in terms of an annual basis. We shared a visual of the seasonality on our earnings call, which I highlighted, for example, that 28% of our renewals now are staying in Q1. And then that declines by increments as you continue through the year. So as we thought about that segment of our business, we came into the year, we were cautious and thoughtful about what those renewal rates would be as we weren't sure how we were going to react as we came through this first cycle of pandemic -- post pandemic renewal. And what we saw was we saw really strong retention rates in Q1. And we saw that behavior continue in Q2. And the behavior in Q1 is what led to a majority of the increase that you saw in our guidance after we completed our Q1 earnings call and then that was persistent in Q2. Now when you look at the customer base with fewer than 10, we -- this is the segment of the basis, the most volatile. There's a high correlation reminder about 40% of our customers buy on a monthly basis. And there's a strong correlation between billings and customers in fewer than 10 -- monthly going to customer fewer than 10. And we -- when we set our plan, we expected there to be a lot of volatility in that customer segment, but we really expected it to come later in the year. We thought that a vaccine hold out around the globe that we would see a lot volatility there. And what happened was we started to see that earlier than we had anticipated. And that coming in kind of at the end of the summer, July, early into August. And that's what you saw reflected in our guidance for Q3 and Q4. Was this elevated churn rate in that segment of our customer basis. As a reminder, that segment of our customer base has grown significantly free. In FY '20, they were about 20% of our revenue. And then in Q2, they had grown to 36% of our revenue. And so that's why that elevated churn is having a relatively significant impact on our guidance for the rest of year.

I see. Okay. So I guess on to that segment, the less than 10 cohort. How are you thinking about that revenue mix longer term, right? I mean I think everyone recognizes that there were some huge upticks during the pandemic. But, yes, how are you thinking about that like normalizing?

Yes. So for those of you that had the opportunity to join at an Analyst Day or if you haven't, go back and take a look at the materials because we shared some graphs and we really wanted to help everybody have some insight, a little more insight into behavior of this segment of our customer base. And what we highlighted was one graph that shows the way that the segment of our customers and cohorts typically behave is you have a peak in churn typically on a cohort sort of in the 3- to 6- to 9-month period and then it starts to decline and then you end up with a very, very long, long tail of retended customers where the renewal rate stabilizes. And we saw -- when you look at the segments and cohorts, you see this sort of elevated level in Q2, which is exactly what we just talked about. However, what's interesting about that is in Q2, we didn't see an elevation of churn in those older 10-year cohort. So this supports our belief -- and also, I should highlight that when you look at the segment of our customer base that's in those sort of more recent cohort, it's dropped like 25% in Q2, which is lower than it was in FY '21 or FY '20. So all of that is leading to what we're going to see over time, which is the significant base of customers that just have this long tail of retention. Now it will decrease as a percentage of revenue over time because I don't expect this customer base to grow in the same way that the customers greater than 10 do. So what's important, though, is they will be a significant tribute to revenue as well as profitability. These are some of our most profitable customers as they largely self-serve, and they largely are buying at lesser discounts, I should say, because they're buying online. And so that's what we expect to see over time. And we're just going to get this nice tail of retentive customers to contribute to revenue, but are potentially weighing down the overall company growth rate because the growth is mostly coming from the customer segment with greater than 10.

Right. And I guess related to that, one of the questions that we usually get is just in the near term, like would you -- understanding you expect the percentage of the less than 10 to go down, would you also expect the absolute dollars to go down in the short term just because of that churn or how do you think about the relationship between this?

Yes. Yes, honestly, this -- it's going to be a little bit volatile for the rest of the year, which is what you saw reflected in the guidance, honestly. Because what we saw in Q2 or the combination of seasonality as well as we believe some related to probably churn or COVID reopenings. And it was a little bit hard to tell exactly which was which or how much of that churn was related to which category because our seasonality trends from pre this year don't make any step because the customer base has changed so much. So as we're continuing -- so we will continue to learn over time and have a better idea of which of that is seasonality, and then we'll expect to see coming back in the fall. And we did reiterate on Analyst Day, just 2 days ago, that the behavior we've seen in the last 2 weeks since earnings is consistent with the assumptions that we made in our guidance. So nothing dramatic has changed in that segment, but we'll continue to learn over time.

Yes. And sticking on the Analyst Day, there was a lot of interesting new metrics there that I thought were -- made you frame the opportunity a little bit differently. And the one that really stood out to me was that across the Global 2000, just the relatively low penetration of customers either spending $100,000 and certainly $1 million. I guess -- what -- if you think about what's happened over the last year, right, the pandemic. I mean I look at what we're doing at [indiscernible] like a lot of people have Zoom licenses where it was blocked in our firewalls just months before the pandemic. Like why is that penetration still so low? And how are you thinking about the pace of really starting to take those numbers higher?

Yes. Yes. Thank you. So within the global case specifically, the percentage of the global to pay that are spending more than $100,000 a year with us today is only 16%. When you drop that down to $10,000 annually of spend, it increased to 36%, which is great because what that tells you is our strategy often that's worked very well for us is land and expand. And so that 36% of those customers of the Global 2K they're spending have a 10,000 [indiscernible] covering much. It still represents a seat in the door, right, or step in the door for us so that we can now have the opportunity to continue to expand there. And the way that we are managing the Global 2K is we've taken all of those 2,000 accounts, and they are mapped to an account executive within Zoom that is now responsible for building those relationships. And you saw Ryan alluded to a little bit that these are customers that take their time, right? They are the largest organizations in the globe, their decision-making process [indiscernible] a lot of governance around it. Their change in management process takes time. And so what's really important is that we establish relationships there. And we are there and have a seat at the table when those windows present themselves. So it might be a renewal period. It might be something happens with the product they are using, it's just scaling to meet their needs or they have some of their sense of dissatisfaction or they just want to take the opportunity to consolidate vendors. And so having that relationship and being there when they're ready to discuss it, is what's really the most important. These are multiyear relationships that we're building with them. And it can be multiyear even when we become the vendor of choice, multiyear expansion opportunities as we also illustrated at Analyst Day, it's kind of have a [ land to expand ] plays out over time. So it's just important that we're there. We're building those relationships, and we have the opportunity as they present themselves.

Right, right. I guess maybe another way to ask that, I guess, what are the 95% that aren't spending $1 million, what are they using? Are they using WebEx? Are they just all free licenses and so the meetings...

Yes. Again, remember, so it's the Global 2K, so there's a couple of things I would say about that. Many of them are using legacy providers like Cisco and WebEx, that's opportunity. Some of them aren't even yet, which sounds even really are to believe probably standardized yet on a meetings platform. As if you think about what's happened over the last 18 months, the adoption of video communications has really accelerated, but it's not at the same rate everywhere in the globe. Like I think we take it for granted here in the U.S., but it's not the case everywhere in the world. And then when you look at -- if you shift over to talk about the upcoming versions of phone, many of those Global 2K, I'm sure, are still using on-prem legacy phone solutions. And there hasn't been a compelling reason yet for them to really consider upgrading and moving that into the cloud. But the remote work is becoming that catalyst. And that's what we see as presenting the opportunity to Zoom Phone that partly contributed to its rapid momentum over the last couple of quarters.

Okay. Got you. So on the go-to-market side, one of the things we heard at the Analyst Day was the channel contribution. I thought it was pretty noteworthy of 20% of all business, I think 30% for the Phone. How do you see that mix evolving over time? And I guess where does it channel? I mean Zoom, to me, seems like a very self-service user-friendly function like why do you need the channel for Zoom Meetings?

Yes. It's a really good question. So when we were really primarily a meeting company, we were absolutely a direct-led organization, less than 10% of our deals were retouched by the channel. As we have now evolved into the platform, especially when it comes to Zoom Phone, what we've learned, and Ryan Azus, our CRO, has been really a big advocate and help -- and educating all the trends as you said that the [indiscernible] buyer is typically a different buyer than the mean buyer and they are -- have historically been used to working with partners that they know and trust for making the significant decision. And so it is very important that we have those relationships. Back to the earlier discussion, it's really important we have this relation so that we are given an opportunity and have it because it's stable. If we don't have those partner relationships and one of the Global 2K, for example, decides it's time to look at telephony options and they go to their partner. And we don't have a relationship with that partner, we may not even get the opportunity to sell, even have the opportunity to demo. And so we do have a partner program that we've established over the last 18 months. As you said, about 27% of the Q2 do phone deals were touched by a partner, which is really amazing, considering that 18 months ago, we didn't really have a program to speak of. And that is largely still U.S.-based. Most of these partners, the way that it works is their regional base. There isn't like one huge partner that has a global presence. So our next strategic initiative here is expanding our channel program internationally, which we are really working on. And over time, we think that at least 50% of our Zoom Phone deals should be coming down the channel. And while, yes, there absolutely is the prices you pay here. The benefit of that, first of all, is acceleration, right? You can go more quickly when you have an extension of your sales force through the channel as well as ensuring, again, that the channel partners are selling Zoom. They are compelled and [ intended ] to sell Zoom and not to sell a competitive platform. We want to make sure that we're in there and have the opportunity to have those add back.

Right. Right. So sticking on Zoom Phone for a moment. I think earlier, you mentioned kind of an interesting stat around the increased attach rates of Zoom Rooms, and maybe part of that's driven by people getting back to the office. And hey, we've got to actually have this in our conference rooms. Have you seen a similar dynamic for Zoom Phones? Maybe people are seeing their desk phone for the first time in over a year. Is that -- how much of that is the catalyst for Zoom Phone?

Yes. I think that it's -- absolutely, a lot of it is being driven by just general momentum in the marketplace as employers are embracing this work-from-anywhere strategy or hybrid or whatever you want to call it, most employers are recognizing it's unlikely their employees are coming back to the office 5 days a week in the [indiscernible]. And so enabling them to be as productive as possible and to take their phone with them wherever they go, is absolutely a momentum that is happening in the marketplace. Now the other part of it is just our own maturation. The fact that Zoom Phone is now available in 47 markets around the globe on a native basis, which really enables the largest multinational customers to have a native implementation of Zoom Phone and really be able to have the advantage of having all their employees on it as well as the continued growth of our own sales organization. We have an overlay team, which are really Zoom Phone ninjas, and they're doing great. So all of that is really leading -- the combination of that is excluding the momentum that we're seeing in the same time.

I see. Okay. So I think you shared a milestone that Zoom Phone is around 2 million seats, which is a huge, huge accomplishment. How should we think about your long-term ambitions for where that number could be? And where do you think Zoom can ultimately be in terms of the share of the business from [ sea ] market?

Yes. So as a reminder, we talked about it at Analyst Day, the opportunity out there is over 416 million desk phones that are sitting out there. So the opportunity is huge. And even if you look internally at Zoom, the -- on a deal basis, the penetration rate of Zoom Phone internally is under 5%. So the opportunity is really, really significant. The way that we've been thinking about it and talk about it is the overall contribution to percentage of revenue. Now number meetings has a huge head start. But in the future, I think about it, that Zoom Meetings should be approximately 50% of our revenue and Zoom Phones should then be contributing somewhere in the range of 25% to 35%. And then that leaves 15% to 25% of revenue to be coming from Zoom Rooms, Zoom Events, Contact Center, Zoom Apps, all the other exciting products that are still rounding out the platform. So that's how we think about the future contribution.

I see. Okay. And one of the other things that you mentioned on the last call, I believe, was a large financial services customer. I think 60,000 seat plus phone deployment, really one of the largest ones I can recall. Maybe help us frame that opportunity in particular. What did they have in place? What was kind of the catalyst for switching? And how fast are you able to do that deal?

Yes. So that, in total, that deal was a few years in the making, meaning from the time that they started their first -- with their first new meetings until getting to this stage. They had expanded with Zoom Meetings. They then added Zoom Rooms and then ultimately, added Zooms Phones. And that was -- we replaced one of the well-known large legacy on-prem phone providers. And for them, it was really around continuing to expand their platform for their customers while they were working remotely and to have the combined benefits. When you think about the power that you get when you have this platform of meetings, combined with phone, combined with rooms, especially for such a large organization, the efficiency and the effectiveness you get within the organization was really what they saw in Zoom and why they decided to upgrade. And as a reminder, they actually, with that purchase, became our largest customer. So they knocked out the previous company in that position that we're very excited to have them as our largest customer now.

Right. Right. And I imagine there was kind of a really strong ROI value proposition for replacing. Anything that you could share in terms of how they look at that internally?

Well, what I can say is when you look at our list prices for meetings and phone, wherever -- and whoever you want to compare us to, we are very competitively priced. And then when you get into a large customer like this, of course, there are opportunities for them to have discounts for volume, for willingness to mid- to multiyear agreements and to pay upfront. And this is often the reason -- the biggest reason that we win, especially around Zoom Phone is reliability, usability and total cost of ownership. Those are all very compelling points of why we can win against the competitors.

I see. Okay. Makes sense. So I think one of the interesting things that we saw last quarter was, as it relates to Zoom Room, you talked about the 2x attach rate versus Q1. I mean how are you thinking about the potential for that attach rate to further accelerate? Do you feel like we're kind of hitting an inflection point? Or was that kind of more of an anomaly that you saw in the quarter?

Yes. I think it's absolutely -- the time, if you will, for Zoom Rooms as organizations are thinking about how are they going to welcome their employees back in the office. And we've actually heard from several customers where they open their offices, people started coming back. And then they realized that the conference room situation was not optimized or a hybrid work team. And so they sent everybody at home and redid their conference room. And that's a combination of both software and hardware. We have some amazing hardware partnerships with me, with Poly that are doing really incredible innovations with things like smart gallery, which, again, is a combination of all hardware and software, which helps to recreate this experience so that even when you have some people in a conference room and some people working with different locations, you get the opportunity to see everybody's face, to see who's speaking and that's really wanting to recreate this inclusive experience that we've all had over the last 18 months as well as most of us have been working remotely and organizations realizing how important that is, of the benefit that has come from that. And so I mean it's a long way of saying, I think, I joked about it at Analyst Day like conference rooms in the future that are not being enabled, are going to become storage rooms, like there's no reason for our company not to have video and technology in it because the days that everyone sitting around the table together are long. Like it's just not going to be like that in the future. And that's where Zoom Room is really an important part of that strategy.

Yes. Yes. And I guess on Zoom Rooms, sometimes we get asked the question, like how much of that is white space opportunity where, yes, it's not video enabled versus replacing a very kind of expensive system you had in there, maybe a telepresence or some other form factor?

Yes. So one of the stats we gave at Analyst Day was there's over 90 million conference rooms. And I'd have to go back and look, I can't remember, but it's like a low double-digit percentage of those that are video enabled today. So I'll say it this way, it's less than the majority that are video enabled today. So there's both opportunities, right? There's opportunities in terms of rooms that just have no technology in them today, and will need to in the future as well as outdated technology, which certainly doesn't have the ability to adapt to the needs that have been created over the last 18 months to support a hybrid work [ seen ].

Yes. Got you. And we actually had a follow-up question come in back to the Zoom Phone for a moment. So as you think about the -- I think, you said 460 million desk phones globally. How much of that today is addressable? I know you're still kind of in the progress of expanding some of your master agent programs and just geographically, obviously, it's a different set of regulations everywhere. So like how do you think about the pace of...

Yes. It's a really good question. I don't have the breakout of that $460 million exactly on geography basis. What I will say is, I think the most important thing in terms of being able to dress that is international availability of native Zoom Phone features. And we are natively available in 47 markets around the globe. There are still 2 big markets that we are very actively working on in terms of -- as you said, the regulatory environment varies greatly around the globe. And the 2 countries we're still working on, [indiscernible] we're working on are India and China. And that will really sort of be the completion. I think once we have those, and I would say probably 98%, 99% of those seats would be addressable. When you look across the reservoir unless you can imagine that we have like all of Western Europe in there. I don't remember exactly where they are, but the majority of users will be achieved today, except for those 2 markets that I mentioned.

I see. Okay. And I wanted to go back to one interesting -- there's a lot of interesting slides from the Analyst Day, but one other one that I thought was pretty interesting was, I think, you showed kind of another way of looking at the -- your customer base in terms of number of employees. And I think 38% of your revenue came from companies with over 250 employees. And I'm curious, like as you contrast kind of the different segments of customers, like how has those buying behaviors changed? Like -- and particularly at the high end of the market, like I imagine for the low end, you probably saw this kind of frenetic pace of purchasing last year, but I'm curious if that it's been more stable kind of at the high end. And if you haven't really seen much of a fall-off in growth.

So we actually saw elevated buying across all segments of the business in Q1 and Q2. And that's where -- that's visible in the seasonality slide that we shared, for example, on the earnings call, where we showed the seasonality of renewals and 28% of them being concentrated in Q1 and then I think maybe 25 in Q2 and then it keeps accelerating from there. But what I would say is the ongoing opportunity and the momentum in things like Zoom Phones and Zoom Rooms is really certainly greater and consistent more in that greater than 10 than in that few words greater than 10. And the renewals also are much more consistent in that greater than 10. We see the most in and out sort of be -- maybe in that fewer of them.

I see. Okay. Maybe going back to Zoom Tokyo this week, which I like your background. [indiscernible] I guess what were some of the announcements that you were most excited about?

Yes. So I was really excited about all of the additional features in shaft. So we use chat really, really extensively internally here at Zoom. And it is an amazing product. I've had a few employees joined recently. Our team that they were Zoom Meetings customers at their previous employer, but they weren't using chat, they were like, "Wow, I -- we wish -- I wish I had this tool in my last company, I would have been so much more productive." So we continue an enhancement of Zoom Chat. I think is really exciting and really important for the long-term strategy as that product becomes more and more a significant player in our platform strategy. I think the announcements around whiteboard and the ability to collaborate in a session like this, like Tyler, say, you and I were working on something together, but then save that and have that persist so that we can come back to it. It's like, remember, when we, obviously, were in the office, you write things on the whiteboard, then you write a big save on top of it, so it doesn't get a raise. Like it's that -- the ability to recreate that. But in a Zoom Meetings environment, I think that's really, really exciting. And then also the announcement of the video engagement center, which is an extension in terms of how you can -- how organizations, especially service organizations are going to be able to engage with their customers. If you think about the ability, whether it's a doctor or a designer or maybe a stylist to have that video component come into your home or your office in a way that you haven't done before and the convenience and the extension of those services that it creates, I think, is really compelling and really exciting about the future of how services and the provision of those types of services is going to continue to evolve.

I see. Okay. So on chat, unfortunately, we don't use it at Citi, but it sounds like a good opportunity. Maybe just help us frame how you're thinking about that longer term, right? I mean I think a lot of these collaboration technologies, whether you look at Microsoft Teams or Slack, right? I mean chat is a critical part of that. How does Zoom kind of fit into that lay of the land? What are kind of the use cases for chat? And how do you plan to monetize it?

Yes. So chat is -- actually, to [indiscernible], is included for free with our meetings platform, and it has become even more significantly important, especially for users of Zoom Phone. So it's really nice to have that integration. As often, I'm sure many of you do this, right, rather than just pick up the phone and call someone or bring somebody into a Zoom Meeting, you often chat them first, "Are you available?" And what's really amazing is when you have that full integration of meetings, chat and phone, it just makes that all seamless. So I could chat you, Tyler, like, "Hey, do you have a second?" And then if you're available, it's a literally like one click at the top of the profile, either I bring you into a meeting or I call you on Zoom Phone. And it just makes all of that so easily and so efficient. And I think that asynchronous communication is really important, especially as we're all working in different locations. But getting it out of e-mail sometimes into chat, just makes it so much easier, like I will tell you, 90 -- probably 95% of our communication at Zoom internally happens within chat. It's so -- like my e-mail is really reserved for external communications, external parties, and all my internal communication happens in the chat. And it's so great because it's so easy to bring other people in quickly. If you have a quick question or bringing together a chat group and then have that -- be able to have that discussion in real time, it's so much lighter, if you will, than e-mail, but it's really important. Now with that said, we certainly work with our customers and watch it deliver happiness to them. And so we do have the ability to integrate with, say, for example, if they're using -- but we hear from our customers, sometimes they want to use Microsoft Teams for the chat functionality. That's what's been implemented in their organization, but they want to use Zoom Meetings or Zoom Phone. And so we do have a very strong partnership with Microsoft around this, and there's a one-click launch from their user interface so that you can launch a new meeting and then launch a Zoom Phone. And you can also start a Zoom Meeting from within a Microsoft-enabled conference room. So that's how you can start to see kind of these 2 platforms come together and customers can leverage what looks best in their organization.

I see. Okay. And maybe moving to whiteboarding. I think that was another key highlight. How are you monetizing that at all? Maybe help us. I mean it's just...

Yes. Yes. So the way that whiteboards are going to work in general is, there will be some component of it available for everyone, including our free users, like meetings, it will be limited in capacity. So think about the number of boards that you can save at a certain period of time. And then as you move into having paid customers, it will be included and also a certain number of boards that will be included. And then when you get beyond that, there would be the opportunity to expand the number that you want to have save for an additional charge. So that's how you should think about it that it will -- a certain component or quantity of it will come with your media subscription. And then beyond that, it will be an incremental price.

I see. Okay. And I guess, finally, on the Video Engagement Center. Maybe just help us understand how this fits into the broader platform vision. I know in terms of what you can say about Five9 is limited but without mentioning that specifically, just give us a...

Yes. Yes. Thank you. I think what the differentiation and the way you should think about this is that video is really at the core. And it's -- it's in it's name, Video Engagement Center. And that's how I think that you should think about there are 2 different things in terms of this is a differentiated experience that service providers will be able to have with our customers because it could be longer in nature, very high touch. It's very differentiated from a typical thing about a typical call center environment where they're optimized for rapid resolution. And how do you solve that customer's problem maybe on the first call and as quickly as possible. Whereas Video Engagement Center is more about that high touch seeing the environment of where that customer is potentially, helping them make decisions about -- think about -- maybe you have an appointment, I had an appointment recently like with someone from restoration hardware. Like now imagine if they have been able to see the environment I was in rather than I'm just trying to explain to them what I'm trying to accomplish, like it movably changes that dynamic. And that's how you should think about the differentiation in those 2 products.

Yes, yes. Or if you're trying to repair something of the washer brakes or something.

Exactly. Exactly. How do you show them, what it is you're looking at rather than trying to talk it through, especially as the end-user customer is not the expert in whatever it is they're trying to show typically.

Yes. Yes. And I've been asked this question a lot, too, and I don't have a great answer, maybe you have a better one. But in terms of those use cases, right, like how much of the call center or contact center requires that, right? Because it's certainly for something physical, it's one thing. But if I'm calling up to change my flight, I don't necessarily need to.

Yes. No, no, I think, it's fair. And I think that it's a combination of -- it's not just what's available today. It's about changing the dynamic in terms of rather than going into whatever, to see a doctor, to see a designer, to have a technician come to your house. It's this changing of things that we do in person today to having them done via video. And so it's not only taking what's existing today being done without video, but also transitioning from what's being done in person to video. So I think that's how you should think about it, it's coming from 2 different aspects.

I see. Okay. I know we have a couple of minutes left, but I did want to ask you about hiring. We haven't had a chance to talk about that.

Sure. Yes.

We've heard from a number of companies at our conference this week. Number one, just how difficult the hiring environment is -- that great resignation? We've also heard from some companies that have had to kind of put in some onetime raises just across the board, given cost of living going up. I guess what are you seeing on the hiring front? How is hiring? If you had to do anything from a cost of living adjustment that you'd call out.

Yes. So I certainly acknowledge, it's a very competitive environment. I think that we have absolutely benefited over the last 18 months by the increase in our brand awareness has increased the visibility in terms of our ability to attract talent. We also have -- as we're all working remotely, offer a lot of flexibility to our existing employees, but also prospective candidates in terms of the ability to work remotely. And I think that's very attractive. We did add approximately 1,700 employees in the first half of the year. So have continued hiring at an accelerated rate for sure. So we have not -- I mean, let me say this thing. We constantly look at our compensation in terms of market and are being thoughtful and want to ensure that we remain competitive in that. We haven't done any kind of onetime bonuses across the board, but we are continuously watching our packages to make sure that they're competitive and responding to that appropriately.

I see. I see. Great. Well, Kelly, thanks so much. I think we're right at time. This was a great discussion. Really appreciate you joining us on a busy week for you with Zoomtopia.

Of course.

Hope you use them rest this weekend. But thanks so much.

Thank you, Tyler. It was great to be here.

And thanks, everyone, for joining in.