Welcome to the Five9, Inc., First Quarter 2017 Earnings Conference Call. Today's call is being recorded. And at this time, I would like to turn the conference over to Tony Righetti with Blueshirt. Please go ahead.

Thank you, operator. Good afternoon, everyone and thank you for joining us on today's conference call to discuss Five9's First Quarter 2017 Results. Today's call is being hosted by Mike Burkland, CEO; and Barry Zwarenstein, CFO. During the course of this conference call, Five9's management team will make projections and other forward-looking statements regarding the future financial performance of the company, industry trends, company initiatives and other future events. You are cautioned that such statements are simply predictions, should not unduly relied upon by investors and actual events or results may differ materially and the company undertakes no obligation to update the information in such statements. These statements are subject to substantial risks and uncertainties that could adversely affect Five9's future results and cause these forward-looking statements to be inaccurate. A more-detailed discussion of certain of the risk factors that could cause these forward-looking statements to be inaccurate and that you should consider in evaluating Five9 and its prospects is included under the caption Risk Factors and elsewhere in Five9's filings with the Securities and Exchange Commission. In addition, management will make reference to non-GAAP financial measures during this call. Management believes that this non-GAAP information is useful because it can enhance an understanding of the company's ongoing performance. And Five9, therefore, uses non-GAAP financial information internally to evaluate and manage the company's operations. This non-GAAP financial information should be considered along with and not as a replacement for financial information reported under GAAP and could be different than the non-GAAP financial information provided by other companies in our industry. A full reconciliation of the GAAP to non-GAAP financial data can be found in the company's press release issued earlier this afternoon and is also available on the Investor Relations section of Five9's website. Now I'd like to turn the call over to Five9 CEO Mike Burkland.

Thank you, Tony. Welcome, everyone, to our first quarter 2017 earnings call. I'm very pleased to report that our first quarter revenue exceeded our expectations, growing 24% to a record $47 million. This revenue growth continues to be driven by our enterprise business which delivered 40% growth in LTM enterprise subscription revenue. This is a key metric that reflects the growth of our enterprise business which is the majority of our overall revenue mix. Furthermore, we continue to deliver leverage in our business model with adjusted EBITDA of $2.6 million in Q1. The improvements in adjusted EBITDA continue to be driven by our enterprise business which is consistently increasing as a proportion of our total revenue and delivering high marginal profitability. We've continued to make these improvements in profitability even as we accelerated hiring in a number of areas, most notably our professional services capacity in response to ongoing momentum in our enterprise booking. Speaking of bookings, I'm extremely pleased that we had our second-best quarter ever for enterprise bookings in Q1 and our pipeline reached another all-time high. Our exceptional bookings were again, driven by growth in our direct sales force, coupled with increasing leverage from our expanding ecosystem of partners. This ecosystem of partners influenced more than 50% of our enterprise deal flow in the first quarter. As a reminder, Five9 has deep partnerships with industry leaders in areas such as CRM with the likes of Salesforce oracle, Zendesk and Microsoft and WFO with partners like Calabrio, Verint, CallMiner and, in unified communications with Microsoft Skype for Business and Cisco. Our channel program continues to grow nicely and is yielding results beyond our expectations. For example, bookings from master agents and resellers represented nearly 25% of our enterprise bookings in the first quarter of 2017. The following metrics…

Thank you, Mike. Revenue for the first quarter of 2017 was $47 million, up 24% year-over-year. This revenue growth is all organic and effects the continued strong growth in our enterprise business that now makes up 70% of our LTM revenue. Our commercial business which represents the other 30% of LTM revenue, continued to deliver steady and consistent growth of around 10%. Recurring revenue accounted for 94% of our revenue in the first quarter. Recurring revenue is made up of monthly software subscriptions which are based upon the number of agent seats plus usage which is based upon minutes. We enjoy a high retention rate on these recurring revenues. Our annual dollar-based retention rate for the first quarter was 99%, up from 98% in the first quarter of 2016. The other 6% of our revenue in the first quarter was comprised of professional services fees, generated from system clients in implementing and optimizing the Five9 solutions. I will now discuss gross margin and expenses. A reconciliation from GAAP to non-GAAP results is included in the appendix of our investor presentation in the Investor Relations section of our website. Adjusted gross margins were 61.8%, an increase of 40 basis points from the first quarter of 2016. Adjusted gross margins have now increased year-over-year for 17 consecutive quarters. I remind you that we have made and are making significant front-loaded investments to expand our professional services teams to implement our software for enterprise customers. These investments have been conservatively accelerated given the higher-than-expected enterprise bookings growth. To illustrate, our U.S. professional services team has grown by 51% year-over-year with the majority of the increase coming in the last 6 months. We expect adjusted gross margins to decline modestly in the second quarter due to seasonally cloud revenue set against continued strong hiring…

And we will now take our first question. This will be from David Hynes with Canaccord.

Mike, wanted to ask you first just about Amazon Connect since this is the first time I guess we'll hear you on a public conference call. You can take that any direction you'd like, but specifically, I guess, I'm curious, these guys introduced an elastic pricing model, so curious, do you see that as a viable enterprise pricing model? And if so, how does that impact your business model?

DJ, good question. So let me just tell you about our perspective on Amazon Connect. First off, their interest in Cloud Contact Center is a significant validation, quite frankly, of the large and attractive market we've been going after for quite some time. I think the attention that the market's getting from their announcement could actually accelerate the shift to the cloud for the market. And I'll remind everybody, this is a massively large market. We're going to continue to win our fair share regardless of who comes in from a competitive standpoint. I would say, secondly, that it's very clear that this entry by Amazon is a version 1.0 with very basic capabilities, for example, no -- sorry, no omnichannel. It's voice only. It's inbound only, so it doesn't have outbound or blended capabilities, limited connectivity options and some very basic routing. So again, it's a toe in the water from their perspective. And the way they're going to market in terms of swiping a credit card and self-provisioning, again, it's great for SMB accounts, but for large enterprises, that's not the way they purchase mission-critical enterprise software solutions in the cloud. So I do think it's a leap -- a far leap to consider them a competitor today in -- a viable competitor in the enterprise market. And again, that elastic pricing model which is on a per-minute basis, if you add up their pricing on a permanent basis with -- that average agent in our population or any one's, in any contact center, they're averaging about 4,000, 5,000 minutes a month. You do the math on that, it's very similar to where our pricing comes out today. So I don't think that in and of itself is anything differentiating.

Okay, got it. Makes sense. Second question. Really positive results, faster than I was expecting in terms of the progress with master agents and resellers. I think you said they were 25% of enterprise bookings. If the traction there keeps up and I presume it's outperforming kind of expectations, does that have any implications on how you think about hiring on the direct side? Would you slow hiring there? Do you think 30% to 40% is the right pace for the next few years? Or how are you thinking about kind of modulating the 2 go-to-market models?

Yes, so here's my perspective on that, DJ. First of all, we're very, very pleased with the growth that we've had in our master agent and reseller channel. And if you think about we’re hiring. Our direct sales capacity growth is in that 30% to 40% range. We do anticipate that to continue. And I would also offer up that master agent deals are referrals. Our direct sales force still closes those transactions. So our folks are involved in those deals. And to a large extent, at this stage in the game, even with a reseller channel, we're investing in headcount to support that reseller channel, so again, it's early days. We're really excited about the growth that we're seeing in that channel, but at the same time, I would set your expectations that we will continue to grow our direct sales capacity at 30% to 40% year-over-year.

This time, move to Scott Berg with Needham.

It's Peter Levine in for Scott. My first question is if you could talk about the strategic hires you've made in the quarter or any updates on the talent pool coming from your 2 closest competitors, I guess I'm just trying to gauge the level of inbound requests you've seen today versus 6 to 12 months ago.

Yes, so Peter, as I've commented on in the past, we've been the beneficiaries of a couple of our competitors getting acquired in the form of a couple things, new partnerships, new hires, great talent as well as some customer wins that are a direct result of some of the dislocation we're seeing. But we're being very, very selective still and it's great to be able to pick off the cream of the crop at some of these companies that have been acquired and I'll kind of leave it at that. We commented on the last call regarding this and we continue to see a nice flow of resumes and some opportunistic hiring that's occurring. So it's great.

And that makes -- so at 30%, 40%, you're looking to grow your rev base. What's the mix going to look like between experienced reps and junior...?

Well, we actually have an enterprise field-facing sales organization that we're talking about. When we talk about the 30% to 40% growth, that is on our enterprise team. We also have an inside sales organization that handles our commercial or SMB accounts and those are kind of separate and distinct teams even though they all roll up to one sales leader. That 30% to 40% growth in sales capacity will be in the enterprise portion, not in the commercial portion of that sales organization. And most of them -- I would say, actually virtually all of them are very seasoned, very experienced, contact center domain salespeople. And that's, again, the beauty of being in a market like ours that has been around for a long, long time with these legacy providers that have been around for decades. There's a lot of great sales talent in this industry. We've been actually leveraging our network, so to speak, so we really try not to hire resumes but rather known quantities that someone on our sales organization or sales leadership has directly worked with in the past. And it's been, I think, a huge differentiator for us in terms of being able to hire successfully in the enterprise sales organization.

And a final one here from me is are we still on track to exit '18 with that 20% EBITDA margin?

Yes. Peter, we're very organized around getting to our intermediate-term model. In approximately 2 years from now, we'll be at 20%-plus. And those levers that we have there to pull are the continued improvement in gross margin driven by the unit economics on the enterprise business which is growing very nicely as you heard and the leverage in G&A and, to lesser extent, in R&D.

And we'll move to Sterling Auty, JPMorgan.

This is Jackson Ader on for Sterling. So a follow-up on one of the questions from earlier about the channel. If you guys are adding some Avaya resellers, what kind of attributes make for a good reseller partnership from one of your competitors. If you've added a dozen over the last few quarters, what specifically do you look for?

Yes, Jackson. For us, it's been mostly inbound interest, to be quite honest with you, from some of these Tier 1 Avaya resellers reacting to the Chapter 11 filing that Avaya made months ago. And again, they are faced with the challenge that many, many enterprise customers are not likely to re-up and make major investments in their Avaya. And these resellers, these VARs need a cloud alternative to Avaya. So we've been pulled into this market more than -- pushed ourselves into it, quite frankly. They've seed us out. We've signed, as I mentioned, over a dozen in the last 2 quarters. And these are not just kind of small Avaya resellers. We've got, I believe, the 2 largest Avaya VARs signed up already as part of that 12.

Great. And then a follow-up. The Avaya replacement that you mentioned where you met the client at Dreamforce in the fall and then signed them up recently. So what was it specifically about the integration that they were struggling with. Was it just the amount of time it was taking? Was it painful? Any details you have there would be great.

Yes, absolutely. Really when you think about integrating Avaya with cloud solutions like Salesforce, right, most contact centers, a minimum requirement from an integration standpoint is contact center infrastructure and CRM being tightly integrated. And they were really struggling with the integration between Avaya and Salesforce and that's not something that's new to us. We see that a lot. It's a great reason why Salesforce brings us into opportunities, quite frankly, because they're looking out for their customers. It's a very difficult thing to integrate those solutions. So that's the net-net of what we saw there.

We'll now move to Jeff Van Rhee with Craig-Hallum.

With respect to the partners, any partners in particular that stood out this quarter maybe compared to the past few. I'm thinking particularly on the CRM side, maybe the WFO but mostly the CRM side. It sounds like what we've heard some of those partnerships have really tightened up, but anybody in particular stand out there for you?

It's interesting, Jeff. We've been partnering very, very effectively and are investing in joint development with Salesforce and Oracle. We've been partnering with them for quite some time. The Zendesk partnership is a little newer, but at the same time, we have really gone deep with Zendesk as well and they're bringing us into larger opportunities. And I would say we've had some wonderful traction lately with both Salesforce and Oracle. We're just down at Modern CX in Las Vegas. That's Oracle's customer experience conference, their user group for that part of their group, their Service Cloud offering and as well as sales cloud, actually. But it's great to be going really deep with these partnerships, developing the next-generation solutions of our integration and quite frankly, it's a huge differentiator for us, something that our competitors have just not kept pace with and it's extending our lead.

And on the channel side, it's mostly referrals with you closing the business. Do you see that changing over time and letting some of those businesses, some of those partners do more of this on their paper and do the implementations? Just how do you think about that trending over the next year or so?

Yes, absolutely. Over time, we expect them to do more. Now the master agents are unique in that those that those guys really are referral partners and that's their business, right. But the resellers, the VARs that I mentioned -- the Avaya VARs I mentioned, those folks are writing the deals on their paper. They're getting some assistance from our sales organization, but over time, we expect them to actually be doing some of the implementation work and support work as well. But we're going to phase that in. We're going to do it very, very stepwise and very carefully. We've seen some of our competitors in the past tried to go third party too quickly in terms of implementations and it can really hurt the customer experience if they don't know what they're doing. So again, our VAR is very high in terms of who we're going to let implement and support our enterprise customers.

Got it. And then, I guess, last from me. I'm thinking back maybe 2, 3 quarters I think you had given some color about moving more of your infrastructure over to ADBS. I think you were evaluating it and sort of working on the math in going to make some decisions going forward. So I guess 2 questions there. Just any update in terms of that series of evaluations of decisions? And then also with respect to CapEx dollars, any difference in how the CapEx dollars are being spent now than maybe 6, 12 months ago?

Yes, let me comment on the AWS public cloud stuff and then I'll ask Barry to talk about the CapEx. So we did comment and we’re on track to deliver regionalized or Global Voice within public cloud. And I want to be clear to you, that word public cloud, it's not just AWS, but it's any public cloud infrastructure that our customers and we agree, we should deploy that voice pop for them, if you will. And again, that a Global Voice solution to keep calls in region and we're very much on track to deliver that. We've already got some beta sites, some beta customers I should say, overseas and they're enjoying the experience so far. And Barry, talk about CapEx.

Yes, the composition, Jeff, of the CapEx has not materially changed at all over the last several quarters. It's still focused around the growth that we're enjoying, particularly domestically -- well, domestically let me put it that way and the necessary equipment that we need for the data center to accommodate that growth. The international applications of AWS will come into play potentially in the future.

We'll now move to Raimo Lenschow with Barclays.

This is Hadley on for Raimo Lenschow. Just kind of was wondering, I know this continuing momentum with enterprise, but do you see there being some sort of maximum mix between enterprise and SMB or maybe nothing, in particular? Yes, let's start with that, if that's okay.

The enterprise market is significantly larger than the commercial market. As you know, our enterprise business is growing significantly faster than our commercial business. So if you just start to run the math, so to speak, enterprise now makes up 70% of our LTM revenue. That's up from I believe 66% a year ago. Correct me if I'm wrong there, Barry, but I'm pretty sure it went from 66% to 70%. There's no real end in sight. We anticipate continued faster growth in enterprise. And for that reason, we expect that mix shift to continue.

Great. And then also you mentioned -- just kind of jump off and back with another question accelerated [indiscernible] enterprise bookings. Do you see this kind of continuing going forward? Or how do you view this?

Yes. What we're commenting on mostly was the professional services hiring. And I commented on that on the prepared remarks. And again, we're very, very careful around balancing that top line and bottom line performance for the company. And that's really what we're trying to do is give you guys insight into that balancing act. As we book a lot of business, as we have great momentum in terms of bookings, the professional services organization is responsible for implementing those new accounts. And it's a good problem to have in terms of having to hire a little faster than we anticipated in professional services.

We'll now move to Meta Marshall with Morgan Stanley.

A couple of quick questions. The first one was just around whether there needs to be any kind of digestion period around adding channel partners or resellers, wanting to make the most effective -- or get their utilization high before kind of adding additional resellers? Or do you feel like you can kind of add as many as you want at any pace? And then the second, at enterprise connect, we had heard some of the more recently acquired cloud players were kind of deemphasizing their cloud businesses and offering up the premise solutions more often and just wondering if you had observed that in bids of the -- kind of the legacy cloud guys being less active in deals of the last quarter?

Yes, Meta, good questions. The first one, in terms of digesting resellers and partners, yes, we do really try and strike a balance between signing up a lot of partners and then -- versus going deep with a few partners. And I think we've been in the mode of kind of a little bit of being reactive to a lot of inbound interest, quite frankly, of these -- especially the Avaya VARs that want to sign up with us. And then our approach here is that water seeks its own level. We're going to have certain partners that absolutely perform better than others and we're going to go deeper with those that prove that they can be effective in the market with us. So I think what you'll see is kind of initial go broad and then kind of selectively go deeper with some of those relationships. And I think we're right in that mode where we're-- we've gone broad real quickly in the last couple quarters. Now we'll start to go deep with a few of these partners and we'll see who the real superstars are. In terms of the acquired competitors, we have definitely seen, definitely seen in the case of one of our competitors who got acquired by one of the legacy competitors in the contact center space that was an on-premise player only -- well, I shouldn't say that. They had acquired other cloud properties before that, but they are conflicted and it's definitely being seen by our salespeople in the field on a regular basis. They're having a tough time embracing the cloud solution from the acquired company. And it's exactly the dislocation that we were anticipating and quite frankly, it's providing tailwind for us. Our win rates against that competitor, in particular, have gone up very nicely.

We'll now move to Mike Latimore with Northland Capital Markets.

In terms of the -- you mentioned replacing hosted Genesys. I assume that was the legacy Genesys as opposed to the acquired interactive CAS business?

Yes, that's correct. It was -- well, it was legacy Genesys. It was not the most recent acquisition, but it was a prior acquisition and I'll kind of leave it at that.

Yes. Yes. [Indiscernible] And then in terms of the quota for salespeople, did you increase the quota at all this year?

We have increased quotas over time. We have not given kind of specifics in terms of what those quotas are, Mike or exact time frame so when we increase them or increased them. But we -- again, we continue to kind of, over time, expect those numbers to go up on a per-rep basis but not dramatically. We're not talking about very large increases. It's just as we see performance improvements from a productivity perspective, we'll inch those numbers up a little bit.

And then in terms of just like the pipeline build in the channel, do you see sort of a faster or more pronounced build on the master agent side of things versus say the VAR reseller group?

Yes. I kind of look at those in one category and some of dashboards that I'm familiar with, Mike, off the top of my head, so -- but I think they're both -- the -- I'll be honest, the master agents have been with us here for close to 18 months, many of them. So there is a little bit less of the law of small numbers like there is in the VAR side, right, so if just look at kind of percentage changes on the VAR channel, those are going to be ridiculously high, but in terms of pipeline growth, because it's virtually growing off of 0. But I do expect this VAR channel opportunity to be significantly large for us over time, but we're just at the beginning of that ramp.

And then just lastly, the gross margin on usage, should we think of that as roughly stable at this point?

Yes. So on the usage margin, the short answer is yes. And we've enjoyed very strong increases in the past, but we're not at a level where it's -- pretty much gone to plateau. We still remember, though Mike, we'll have the other 2 drivers -- the other 3 drivers, really, just the scaling on the subscription side against the fixed and semi-fixed costs. Our professional services margins have done very well. They've come up meaningfully. They're still negative and will remain negative for many, many quarters to come as we invest there, but it's very much on the card that, 1 year or 2 down the road, they're going to be at breakeven and remove the 1 to 2 percentage point drag that we have over there. And then as I was to talk to you in the prepared remarks, the shift each year of 2 to 3 percentage points away from usage toward subscription.

And then just lastly, the WFO partners. Have they been helpful in terms of bringing you into deals at this point? Or how's that playing out?

Yes. Our prior WFO partner was much more of a one-way partnership where we just OEM-ed their solution. We didn't get a lot of pull in the market from them, if any. But the new partnerships we've establish over the last few quarters with the likes of Calabrio and Verint and CallMiner, those are actually 2-way deals, where they're bringing us into opportunities and we're bringing them into opportunities, so very much a win-win situation for us and we're thrilled with the progress so far.

We'll now move to Brent Bracelin with Pacific Crest Securities.

This is Trevor Upton on for Brent. Mike, just a quick one on the Avaya partners again. Maybe just hoping to drill into that opportunity. You added a dozen VARs and resellers over the past 2 quarters. How big is that remaining opportunity? And how should we think about it impacting the model?

Yes, Trevor, as I said earlier, it's very early days. We've signed again, over a dozen and in a very short period of time, as I said, we're going to go and broaden, then we're going to figure out who the superstars are. We've got some of their largest -- beyond the 2 I mentioned. So we do expect it to be significant over time. But again, it's really hard to quantify and I would say, it's too early to quantify how to model that. But again, we will see and we'll keep you posted on how the progress goes.

Are there large, meaningful VARs and resellers left? Or do -- have you already signed the largest, obviously, beyond the 2 largest?

Yes, it's interesting. It's like anybody's channel, right. There's a few superstar channel partners that do a lot of their business. I think we have -- I'd say, most of the partners that produce 50%-plus of the Avaya business in the past, but I think we still got more to add. But again, we're going to strike that balance as we talked about earlier with Meta's question which is make sure -- we got to make sure we're going deep with the partnerships we're signing as opposed to just trying to sign more.

[Operator Instructions].We'll now move to Nikolay Beliov with Bank of America.

Barry, I got a couple for you. The first one is the dollar-based retention rate came down by a point versus 100% in Q4. What are the puts and takes here?

Yes. So Nikolay, even on an LTM basis, you're going to have fluctuations. This particular quarter, we had a traveling headwind in terms of 2 of our companies being acquired. And also, we had a difference in the timing of the upfront billing. Without these 3 things, it would have been 100%. And we're extremely happy with a 99% or 100%, whatever the quarter is, dollar-based retention rate. It shows the mission-criticality of our solution. This is serious stuff. And the partners don't move -- our clients don't move that easily.

Got it. And when they look at the recurring revenue trajectory, excluding Proserv, you guys grew 24% to 27% 1Q, 3Q '16. There was an acceleration there that was a powerful part of the Five9 story. And then in Q4, that came down to 21% and now in Q1, it's in the low 20s, 22%. Just try to understand why does the strong pipeline enterprise bookings, why kind of like the slowdown in the growth rate here?

Yes, so Nikolay, I'm going to answer that in probably some different figures. I'm going to talk about enterprise subscription revenue growth. And if you look at that on a sequential basis, it did decline from 43% to 40%. And I can just tell you a couple things. Enterprise subscription revenue is lumpy when it comes to big customers ramping in and I'll give you an example. Q3 '16, the quarter you cited, was exactly when we had this outsized year-over-year growth from 3 very large-enterprise customers ramping in that quarter or the quarter before to show revenue in that quarter. So again, it's going to get a little lumpy because of that. For example, if you excluded those 3 very large ramping customers and one unexpected bankruptcy of a sizable customer that we just had in Q1 in '17, a solar company, our growth in enterprise subscription revenue -- enterprise subscription revenue would have been accelerating each quarter in the 30s, peaking in Q4 of '16 in the high 30s and staying there through Q1 '17. So just gives you a sense for kind of the lumpiness of this based on ramping very large customers and I guess, I'll leave it at that. I will add one more thing. 30% to 40% growth in enterprise sales capacity. That is the best forward-looking proxy for enterprise subscription revenue growth. We've been punching above our weight for some time relative to that capacity growth, but if you look long term, that enterprise subscription revenue growth should be in that 30% to 40% range and we're at 40% right now.

And Barry, the last question from me is around unit economics. How has it changed over time both on the enterprise and commercial side? I would assume your matching decrease in sales cycle in the enterprise as the market is opening up and everyone is aware about the cloud and just want to make how both CAC and retention and revenues now with the omnichannel offering, you driving more dollars per customer, how the LTV per customer has changed over time.

Yes. So there's been very little change. In terms of the enterprise where we focus, despite the lengthening of the cycles, the implementation cycles and so on, we still in and around 6x. For the commercial business, it is somewhat less for maybe a little bit south of 4 and that's just the nature of the business, given it's still very important software for this SMB -- the commercial clients, but there is much higher share there.

We'll now move to Rich Baldry with Roth Capital.

I'm sort of curious whether Amazon's Connect announcement has sparked any higher interest in the space from other cloud infrastructure providers or maybe altered your thoughts about working with non-Amazon players, whether that's preferential now or whether that would change at all?

Yes, sure. We definitely see Amazon's competitors on the infrastructure side, probably leaning in a little bit more in terms of their interest in the contact center space. And I guess, as I've said in my remarks, I think it's very, very good validation of the contact center -- the Cloud Contact Center space. And I think we'll have to see how this movie plays out, but if you look at Amazon's competitive set, many of those are -- some of those are our existing partners these days and they're looking to us as the solution that they want to -- they want to partner with and they want to be bringing to market. So we feel very good about the position that we're in relative to that.

And on the financial modeling said, the guide for 2Q would have revenues moderately down sequentially. Really haven't seen that in the past. Is there anything sort of outside strength on the usage aside or something in Q1 given its strong sequential growth that maybe isn't sustainable? Or do we just write that off to your consistent pattern of conservative guidance?

Well, let me start and I'll have Barry fill in the blanks, Richard. You will notice and thank you for asking this because I think it's important for investors that haven't been familiar with our story over the years, if you look at our quarterly revenue patterns, there is definitely some seasonality to the curve, if you will. The sequential revenue growth that we have seen for the past several years from Q1 to Q2, there is a seasonal flat spot as Barry mentioned in his remarks. That is very much a seasonal pattern to our customer's business and, therefore, their use of our software and the cloud. And if you look at certain industries like retail and health care and education, they typically have Q4 and Q1 high season and then they tend to come off of that in Q2. It's driven a bit of a flat spot historically for us as opposed to a decline. If we add kind of that flat spot plus our conservative guidance, lay it on top of it, that's where you end up. And we did the same thing last year.

And the year before. And so the only thing I would add to that is that -- to stress the seasonality aspect of it in addition to the conservatism which is also not -- well, then we saw that again. It's also when you look at our full year guidance, we're raising it. So Q2 is purely a seasonal matter.

That will conclude the Q&A session. At this time, we'll turn things back over to Mike Burkland for additional or closing remarks.

Great. Well, thank you, everyone, for joining the call today. We continue to strengthen our leadership position and our ongoing momentum in the enterprise market just gives us a lot of confidence that we're poised to gain further share in this massive market opportunity in front of us. So enthusiastic about the future, really appreciate you guys get joining us and have a great week.

Again, that does conclude today's conference call. Thank you all for your participation.