All right, I think we are live. Good afternoon, everyone. Welcome to our fourth quarter 2020 earnings call. We're pleased to report our results. Joining me on the call today are Mikkel Svane, our Founder, CEO, and Chairman of the Board, as well as Elena Gomez, our Chief Financial Officer. During the course of today's call, we may make forward-looking statements such as statements regarding our future financial performance, product development, growth prospects, ability to attract and retain customers, and an ability to compete effectively. The assumptions, risks, and factors that could affect our actual results are contained in our earnings press release and in the risk factors section of our prior and subsequent filings with the Securities & Exchange Commission, including our quarterly report on Form 10-Q for the quarter ended September 30, 2020, and our upcoming annual report on Form 10-K for the year ended December 31, 2020. We undertake no obligation to update these statements after today's presentation or to conform these statements to actual results or to changes in our expectations, except as required by law. Please refer to today's earnings release for more information regarding forward-looking statements. During this call, we will present both GAAP and non-GAAP financial measures. The non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from our GAAP financial information. You can find additional disclosures regarding these non-GAAP financial measures, including reconciliations with the comparable GAAP financial measures in today's earnings press release and shareholder letter, and for certain non-GAAP financial measures for prior periods in the earnings press releases for those such prior periods. All of those are available on our investor relations website. Now, with that behind us, I would like to introduce Mikkel and have him come on. Thank you. Thanks so much, Mark. I hope everybody can see me and hear me. Good afternoon, everyone. I'm, of course, proud to announce that in 2020, we surpassed our billion-dollar annual revenue target, which was originally a target we shared back in February of 2016. Very proud about that. We achieved this milestone during a year of unprecedented turbulence that has caused so much pain for so many people around the world. Over and over again, our customers have inspired us with their solidarity, with the grit, and with the perseverance they have shown throughout the year. Of course, big thank you to all our customers for trusting us as their partner. Thank you to that truck passing by. We will, of course, do anything we can to continue to be your trusted partners and be your champions of great customer service. In the fourth quarter, we observed really robust demand for our solutions from both new and existing customers. We are entering 2021 with strong momentum and believe that many of the changes brought to us by this pandemic are durable and will accelerate the shift to online first business models, also, of course, in your customer relationship. You have already seen and will continue to see that shift reflected in our products, in our packaging, in our pricing, and in all our offerings. We are very proud of our achievement here in 2020, and we believe it lays a strong foundation for us as we seek to more than triple our revenues over the next five years. Today, we also announced that Elena is leaving Zendesk over the next several months. I want to take this opportunity to express my gratitude and appreciation to Elena. Elena has been with Zendesk for almost five years, kind of same anniversary as our billion-dollar revenue target. You did it, Elena. Thank God. I know that many here on the call have gotten to know Elena really well over those five years. Elena is, of course, an incredibly generous, genuine human being, and we appreciate especially how gracefully she has decided to transition from Zendesk, staying at least through our next earnings cycle. There will be plenty of time for a proper send-off for Elena. This is not the time today to say goodbye. I will, at an upcoming occasion, make you cry, Elena, for everything, and thank you for everything that you've done for this company. For now, I'm going to ask you to take us through the financial results. Awesome. Thanks for not making me cry. Appreciate the kind words. I'd like to start off by thanking all of our 4,000 employees all around the world for their resilience and execution through an unprecedented year. We close out the year with momentum, and I'm proud of achieving our billion-dollar annual revenue milestone in the fourth quarter. For the full year 2020, we delivered $1.03 billion of revenue. Which reflects 26% year-over-year growth. We also delivered full-year non-GAAP operating margin improvement of 3.7 percentage points year-over-year. Fourth quarter revenue increased 23% year-over-year, exceeding our expectations entering the quarter and certainly our expectations at the onset of COVID. Revenue outperformance was driven by strong demand for our solutions from both new and existing customers. We are particularly pleased with the strength in our new business bookings, the strongest growth in three years. GAAP gross margin for the fourth quarter was 76.3%, up 3.2 percentage points year-over-year. Non-GAAP gross margin was 79.4%, up 2.7 points year-over-year. Gross margin improvement was driven largely by revenue scale and increased optimization of our personnel costs in our product support organization, and efficiency from our hosting infrastructure. GAAP operating margin declined by 5.2 percentage points year-over-year, primarily due to a $15 million impairment related to office space consolidation. Non-GAAP operating margin expanded by 1.4 percentage points, driven largely by revenue outperformance, gross margin expansion, and prudent expense management. Margin also benefited from lower travel and events costs due to the pandemic. Free cash flow was $38 million in the fourth quarter. Now, moving on to guidance. As Mikkel indicated earlier, every business needs to be an online business first. Simplicity and agility are more important than ever and will become even more and more important. We believe Zendesk is well-positioned for this new reality. In 2021, we are investing to re-accelerate our growth. We expect revenue in the range of $1.28 billion to $1.305 billion, which reflects approximately 26% year-over-year revenue growth at the midpoint. While our 2021 strategy is defined by growth, we will continue to scale this business. We expect non-GAAP operating income in the range of $90 million to $105 million. We expect free cash flow for the full year of 2021 in the range of $85 million to $100 million, which includes expected accelerated rent payments of up to $12 million related to our real estate changes in San Francisco. Longer term, we're looking to more than triple our revenues, as Mikkel said, over the next five years, as we continue to pursue our goal to be the easiest company to do business with. We are fortunate to be in a large and growing market. We believe that we are well-positioned to achieve our five-year revenue goal as we continue to invest in simplifying our product offerings and differentiating our go-to-market motions to serve our customers of all sizes. As Mikkel mentioned, I made a personal difficult decision to leave Zendesk over the next several months. I'm incredibly grateful to have been part of this team over the last five years. The journey to a billion has been hard work, mostly fun though, and I look forward to watching the company accomplish so many more milestones over the next several years. Finally, I'll be here for a little while longer, as Mikkel said. No goodbyes for now. With that, I'll turn it over to Mark. Thanks, Elena. We're going to open it up for Q&A as we've done the last three quarters. We have put all of our analysts through a randomizer, and today we'll open up the call with Phil Winslow with the first question. Great. Thanks for taking my question. I wish I would've won Mega Millions, but I'll take Uh-oh. There we go. Unmuted now. Okay. The question to Mikkel and then a follow-up to Elena. Mikkel, when you think about the tripling target that you talked about over the next five years, how do you think about the growth algorithm there? How much comes from moving upmarket, the new Zendesk Suite, Sunshine, et cetera? Just a follow-up for Elena on that. Yeah. We've of course been analyzing all the different growth dimensions to our business. I'm not going to share details about that model, but we believe that we both have additional geographical expansion, a ton, even a metric ton, of market opportunity that we are getting very strong indicators on already in our current business. Just a lot of potential from additional offerings in the market that we see and where we'll see. We feel confident. We feel good about it. It's a good target. Our confidence, as we approach that target, is going to increase over time. I feel confident, and we will, of course, update you. Got it. Elena, just to follow up on that, obviously the CAGR is about a 25% over five years to hit that tripling. When you think about just the margin versus growth framework there versus maybe what you all have talked about in the past, any changes to that? Obviously 2021 being an investment year. Yeah. No. First of all, yeah, we did have a framework which frankly when you step back and see the world has changed, Phil, over the last year, it was a good opportunity for us to rethink that framework. Make no mistake, we're investing for growth and that's our priority. Of course, it does not mean that over time we will not scale this organization, because that's always on our mind. Right now the opportunity is great, and we've got momentum in the business, so we want to lean into investing. Great. I'll save my goodbyes for next quarter, but it's really been a pleasure working with you. Thanks, Phil. I'm just going to add one other thing. Our language is more than triple our revenues in five years. That's language I'd like to make sure everybody. Sorry. More than. All right. Our next question comes from DJ at Canaccord. Hey, guys. Maybe first, and first Elena, congrats to you on a stellar five years. Maybe first question, I'll point to you just in terms of the 2021 guidance. Can you talk about what's contemplated in there in terms of recapturing some of that partial churn that we saw as an effect of COVID? Yeah, sure. I think the guidance framework we typically follow hasn't changed that much. There is one exception, which is now we are coming out of a pandemic. We have to put that lens on top of everything we do. I would say there's cautious optimism. To answer your question specifically, what we've seen from the customers who have churned or contracted, I should say, in Q2, you guys remember that was a tough quarter. We've seen about a third of them come back. I'm actually optimistic still that we've got some of that to come back into 2021. Yeah. Okay. That's a helpful data point. Mikkel, one for you, maybe more strategic. I guess, does the increase in messaging as a channel in any way change the profile of the data that you have access to? Look, messaging is obviously a far more persistent channel, and I think about all these businesses that are trying to capture experience data, right? I think you guys are right at the heart of that. I'm just wondering if there's any implications in terms of how the platform might evolve over time. There's definitely some dimensions to that because we're going to have a view into a more instantaneous kind of behavior, a more real-time behavior among customers. Top of our priority right now is still to kind of democratize the access to these tools. We've done that before for email, we've done that for chat, making it available for everyone, and thereby just exploding the demand and the usage of these type of application, and that's really our priority for messaging first and foremost. Yeah. Okay. Congrats on the results. Thanks, guys. Thanks, DJ. Next question comes from Brad Sills, BofA. Hey, Brad, you're muted. Oh, great. Sorry about that, guys. Can you hear me? Now we can. We can hear you. All right. Yeah, I tried to enable the video here as well. Congrats on a nice quarter. Thanks, guys, for taking the question. Question on Sunshine. I wanted to ask where the focus is there now. What are you hearing from customers? I think last year, you mentioned during the pandemic, a lot of those projects were kind of tabled, understandably. Are customers coming back to these more strategic kind of projects where they're thinking about Sunshine to embed service into the digital fabric of applications? What are you hearing from customers on Sunshine, and where's the focus? Well, our focus this year is going to be to make it a lot easier for the majority of our customers to use these tools. We still have a big vision. We're seeing some really interesting things. Short term for this year, our really focus is to make all of these components, all of these tools, incredibly easy to use in no-code, low-code environments, and that's our priority for this year. Great. Thanks, Mikkel. One more, if I may, just on the global SI channel and the move-up market, how critical is that channel, and where are you in terms of development of that channel and where's the focus there as well, please? Thank you so much. I think as we think about the partner channel, it is an evolution. We've done some really good things with regional and mid-tier partners that help us quite a bit with both our existing customers as well as bringing in new customers, but there's a lot more to do there over time. There are trade-offs, obviously, doing business with Zendesk. We're easy to implement, but then there's an opportunity to expand your use cases over time where partners can become very helpful. We think about it as a journey rather than a one-year kind of investment return as we think about how we're going to work with partners. We do have very well-established partner teams now in each of the regions, including the U.S., which was kind of our latest market to kind of begin using partners more directly. You'll hear more about it over the next year or two. Okay, great. Thanks so much, Mark. Thanks, Brad. All right. Next question comes from Brent over at Piper. Hi, all. This is Hannah on for Brent today. Hey, Hannah. Thanks for taking my questions. First, short-term RPO rose by $67 million sequentially to $627 million. Could you provide some additional color on what drove the strength in the new contract signings this quarter, and if it was specific to geography or a vertical that stood out? I'll take that. I would say we saw strength in all of our segments and regions for the quarter, which we're really encouraged by. As I mentioned on the script, we definitely saw some new business, and we've been pretty intentional about focusing on making sure we are taking the friction out of doing business with Zendesk. We are trying to make it super simple, and we've seen some payoff in that, both in our existing customers, making it easier for them to add agents and to add product, but also as we're acquiring new customers, making it easy. That's one reason. In terms of RPO broadly, the sales team, kudos to them for really thinking about engaging with customers longer term. It's encouraging for us to see. We're pretty proud about that. Great. That's helpful. Then could you compare and contrast the interest in Sunshine Conversations you've seen pre- and post-COVID? We're noticing more and more customer service engagements are being fielded through social channels and messaging channels. Any color on how channels to provide the best customer support have changed and how you're capitalizing on that would be helpful. Yeah, we're definitely seeing a big surge in demand and a big surge in these synchronous and halfway asynchronous messaging channels. We just released a report on the state of kind of CX during the COVID year here. There's no doubt that the messaging channels took the brunt of the surge in channels. What we have done with the recent Suite release is that we have tried to take the best of the Sunshine Conversations platform, and really made it available for everybody. Everybody can use these channels without any development. We expect that to be very popular in the market so that everybody can engage with their customers in a really scalable way, in a really efficient way, and really getting a lot of business insights over WhatsApp, Facebook Messenger, over LINE in Japan and all these other channels around the world that are so important for how we engage with each other. More and more, especially now with businesses that are helping us run our lives and run our businesses. Okay. Our next question, Stan from Morgan Stanley. All right. Perfect. Good evening, well, afternoon, everybody. Mikkel, Mark, Elena. We'll miss you, Elena. Thank you guys for reporting. Very nice results. A couple of questions from my end. Just maybe on Sunshine CRM, what are you guys seeing as far as adoption and momentum, as far as monetization of Sunshine CRM as we head into 2021? Just to repeat what I also told right before, our focus for 2021 is really to make the Sunshine capabilities available for all of our customers in a low-code, no-code way. Just that democratization capabilities that we are normally so good at in the company. We still see a lot of opportunities in a lot of the more advanced use cases, but making a lot of these capabilities more easily available for a larger group of our customers is really on our priority for this year. I think the monetization of the Sunshine platform per se is of a lower priority than getting more usage on the platform, if you will, relatively speaking. Got it. Then just on the pricing packaging, you guys noted in your shareholder letter and also, I think it came out a few days ago, you kind of tweaked around a little bit of packaging and pricing. Maybe just walk us through how you thought about that, and what prompted the changes? A lot of it is driven by the behavior we saw in the market last year. Customers, they want to be able to hit the ground running. They want some of these things that have always been very important to Zendesk, like the ease of use, the instantaneous results, the time to kind of get up and running, all these things. The agility of how you can quickly change your setup, how you don't need a horde of developers to adapt through changing conditions. I think it's one of these things that had really been true for business this year is change has been the only constant. Right. We are trying to make all of these things much easier, trying to make all the decisions around what you need and what you don't need, trying to take all of that off the table, make pricing and packaging much more transparent and easy. We believe very much, also based on the initial reactions, that this is what businesses want today. Got it. Just one very last one for Elena. We'll rope you in before you skedaddle. When we look at billings, so it looks like billings grew about 30%, and if we look at kind of the change in current RPO plus revenue, that growth was a little bit closer to 23%. Was there anything to highlight on the billing side? Maybe was there any duration extension or maybe the invoicing change wasn't as big as what you initially expected? Just kind of help us close that gap a little bit. Yeah. No, I think effectively, as we're signing more and more longer term contracts, Stan, as you know, that revenue is going to layer in over time. It's going to show up in our RPO, won't show up in the current billings necessarily. I think that's the primary difference there. Okay. All right. Okay. We'll follow up on a call then. Great. Thank you, guys. Happy to follow up, too. Thanks. Okay, awesome. All right. Thank you. Thanks, Stan. Next up is Jonathan Kees from Summit. Can you guys hear me? Yep. Okay, let me try to start my video. There we go. Okay. Hope you guys can see me. I'll add my kudos to the results, and the guidance, and also, yeah, the sentiment for you, Elena. It's been a pleasure working with you, and yeah, best regards. We will miss you. My questions are, I guess, for the international revenues. It looks like that's about a two and a half year high in terms of the percentage of revenues from outside the U.S. Just curious, I'm assuming that's a direct result of all the senior management that you've backfilled, that you've installed, like the Mia and stuff like that. Are you done in terms of the senior management filling, and are you just now growing the sales force for EMEA and those other regions? I have one other question after that. Well, I want to say that since 2019, we've gone down a path of wanting to be more prescriptive about being a global company. That also means that we want to be more prescriptive about having leadership just outside of our San Francisco office. I'm getting a little echo here, sorry. That also means we want to have more leadership on the ground in the regions outside of the U.S., and so far, we've been very successful with that. That also means this is just the beginning of a journey of truly becoming a more global company with more leadership and more executive presence around the world. We are a global company. We have half of revenue outside of the U.S. We're working with some really interesting companies, both in all of APAC, which is a massive region that we always feel we're just beginning with in Europe and in all of LATAM. We believe that there's room for a much more global presence also through more leadership in the regions. Oh, sorry, you're muted. Sorry. Okay. I had one other question, if I may here. I know you're not an ad-driven model, your seats, and in new products, in terms of monetization. I guess especially with Sunshine, where you can host customers' other apps, and you build user profile, as a B2C, you collect a lot of data on the consumers. Does iOS 14 have any impact on you guys, or is it more the apps that your customers will be loading on Sunshine? No, we don't foresee that have any impact for us directly. There is, of course, customers that have to think about how that affect their ad-based business model, but not for us. Okay. Just making sure. Thank you. Thanks, Jonathan. All right, next up is Drew Foster from Citi. Hey, guys, can you hear me? We can hear you. Can hear you. Great. Thanks for taking the questions. Congrats on the billion-dollar mark, and to Elena on your new endeavors. I also had a follow-up on the CRPO metric. Elena or Mark. Just kind of triangulate the top-line indicators here between billings and CRPO growth and so forth. As it relates to the CRPO metric specifically, I mean, that metric sort of continues to outpace the overall business, and I think I understand sort of the pertinent caveats on that metric in that it doesn't include contracts less than a year and so forth. Given the pace, I'm wondering if there's anything driving that growth rate higher than your actual sort of bookings growth, specifically as it relates to seeing maybe potential benefits from smaller customers just signing on for longer contracts with you, but maybe not larger ACV. I just want to make sure I'm aware of all the pieces as it pertains to using that metric as a leading indicator of revenue growth. Any color would be helpful. Thanks. Yeah, I mean, at the highest level, Drew, it's really timing. We have been focused on signing multi-year deals, and so you're not going to see that in the current billings and revenue unless they do annual billing, which we're definitely moving more and more as we can to annual billing. More importantly, we're getting longer-term commitments, which will show up in RPO, but may not show up in the current billing cycle or revenue. Okay. One follow-up on the guide for next year, Elena, as it relates to the margin guide and just your spend profile. I'm wondering if you could put some color around your assumptions that you made for continued T&E savings next year, how much of a benefit maybe that was in that line item and maybe how much you're reinvesting that back in the business. Just help us sort of parse that, please. I think a lot of my employees would love to travel. The world has changed. We're being, I would say, conservative with that because we are going to do business in a different way, and we're going to have a more virtual-first tone to how we operate. That said, we did have roughly, I think, $15 million of T&E savings in 2020. Not all of that will come back. I just don't see us doing the same level of travel as we have in the past. Frankly, the way we approach our field events, our customer events, over time, that'll change, too. We've had success doing those virtually. We're going to continue some level of that. Of course, there will be some in-person events at the right time. I know our marketing team is working through the new strategy there, but at the highest level, I don't see travel coming back the way it was last year. Okay, thanks. Thank you. Thanks, Drew. Next up is Jeff Van Rhee from Craig-Hallum. Hey, guys. Can you hear me? Yep. Hey, Jeff. All right, good. Hey, congrats. Much here to be proud of, guys. Really congrats on everything you're accomplishing. This is a heck of a feat. I have two questions for you. One, Mikkel, on messaging, it sounds like messaging is exploding, and I'm wondering what the appetite is in your base for automated messaging and bots. Are you still using your own AI to power those responses? Maybe if I could, I'll just sneak my second in right up front. The second part on Parler, I know in early January you shut down service, and I was wondering if you're setting yourself up for a blowback. The reason I think that, the Zen policy, if you're going to cancel all platforms. That service people who rioted and destroyed property and attacked police. I mean, that list has gotten very long in this last year, and it seems like a very long road for you. I think, and now, I guess if you don't shut these others down, you risk appearing political or agenda-driven. I guess the question is, you don't want to obviously alienate half your customers and prospects who see things differently. At the end of the day, I wonder if it's worth the risk and if it's consistent with the goal of maximizing shareholder value. Thoughts on those two would be great. Yeah. Starting with the latter here, we have a pretty intense process for evaluating when we get complaints about customers using our service. I can't share all the details, but we have customers, and the customer you're talking about here, we've had them in review over several iterations based on very specific complaints about what they were doing with their platform. We really try to ensure that nobody uses our product for anything that hurts anyone. Once we get served with specific evidence for that, we have to have a process that deals with that and figure out what is the right thing to do. That's how I want to position how we do that. Is this simple and easy? No, it's not. It's simply not. It's very complicated. That's also why we have a very well-documented process for how we deal with these things. As for the first question, with our new messaging capabilities in the product, we have a new tool for the automation of the basic kind of conversation called Flow Builder, which is a little bit like an advanced IVR system, if you will. That can solve a lot of the basic needs for a lot of our customers. Beyond that, you can today plug any of the bot providers, and we have a whole bot marketplace, and work with these bot providers to put the kind of the bot set up that works best for you into the stream. We feel very good about our strategy today, both for solving the no automations use cases, the little automation use cases, and the very automated use cases. Very helpful. Thanks so much. Appreciate it. Yeah, thanks, Jeff. Next up, we have Samad from Jefferies. Hi, good evening. I'll echo everybody else's sentiments as well, especially Elena, congrats on the next step, and we'll miss working with you over here. maybe since I said the nice part, I'm going to give an annoying question just to stick with the spirit of everybody else, one last tough question on the way out. When I think about the bookings growth, I like the additional disclosure that we saw in the shareholder letter, and it's been quite nice from the end of one Q to four Q, about a 60% increase. I just want to maybe triangulate how that compares to the prior year, and the reason why I ask that is because whether we use billings or CRPO, that typically goes up by 40%- 45% from one Q to four Q, just back testing those numbers the last couple of years. How should we contextualize that 60% increase from one Q to four Q of new bookings? I think the easiest way is to just how should we think about new bookings growth year over year in the fourth quarter? I'll agree with you. That's, would you say, an annoying question? It's okay. I think the key is new bookings, if you're talking about Q4 of 2020, we're really proud of the bookings growth we had. The one thing you have to remember is as we give the guide for the year, we have to still remember, we are in a pandemic. We don't have all the visibility, but we are confident in our ability to navigate. If you're trying to compare billings to RPO, again, it's just timing. It really boils down to that. We've been doing a great job of, and I commend the sales team of getting longer term contracts, especially up in the enterprise. I guess I kind of wasn't trying to do either. What I was trying to understand is that bookings chart that was in the shareholder letter, it shows a 60% increase from one Q to four Q. I guess what I'm trying to understand is what would the year-over-year increase in the fourth quarter look like for those bookings, both new and expansion? Yeah, that was not the intention of. Yeah, we don't want to comment on. That was not the intention of this chart. Yeah. It's not to show that. What it is to show is that after we saw almost a halt in the beginning of the year, radical slowdown as the pandemic just hit us in the head and everybody stood still for a while, things have accelerated noticeably through the year. That is the intention of that chart, and you shouldn't try to pull other data out of it. Does that make sense? Yeah. Great. I totally get it. We have to ask sometimes. Maybe if I step back and ask a more strategic question for you, Mikkel. As we think about the slew of new products that came out early last year, obviously COVID changed some priorities for your customers, and you guys executed well through that. How should we think about maybe refocusing on Sell, and how should we think about maybe expansion of this suite as we think about outside of maybe just core service, as we get back into 2021 and through to next year? Later this year, sorry. We've done a lot of work around our sales product last year, especially about the ease of adoption and the ease of the purchase and the ease of using it with other systems from Zendesk, and that has worked really, really well. We are very excited about that. That's going to continue to be part of our focus for 2021 as we are working on a roadmap to really get some synergies out of the sales and customer service process. We are very confident both about our short and long-term opportunity with the sales product. Great. Thanks for taking my questions, guys. Appreciate it. Thanks, Samad. Next up, Kirk from Evercore. Hi. Hi, everybody. Thanks for taking the questions. I guess I'd just like to start maybe on the quarter. Have you guys seen some of the impacted industries come back over the last couple of quarters? I'm just kind of curious. You obviously have some great customers in places like airlines. Are they still on sort of the mend and they're sort of a rebound in 2021? Or have you started to see them, you have to look a little bit past the near term and start making some plans for the next, say, 12 months or so? If you look at the cohort of customers that contracted in Q2, and there was a large amount of contraction in Q2, if you recall, just about 1/3 of that business has returned. There's still 2/3 that has potential for us to regain as these customers come back. If you look at airline stats today, they're operating somewhere around 40% on average of capacity of last year. Same thing for rideshare companies, for other companies in the hospitality industry. Those guys are slowly recovering, but we have a lot of opportunity as they recover fully post-pandemic. Vaccines are here now, so maybe things will change by the summer. What's interesting is despite that, we've been able to grow. We've seen new customer activity at a very healthy rate, actually one of the best rates we've ever seen, as well as the fact that some of these more traditional companies have been looking for ways to get better at being online first. We're really encouraged that we were growing at the rates we were in the second half of the year, despite kind of that lag. That also plays into kind of the current RPO and all those other things. As those companies and the value of their future revenue are at lower rates, that does have a slight drag on current RPO until some of those contracts return at the bigger size. Okay. Mikkel, just I want to ask a question about sort of your longer term more than tripling of revenue over the next five years. What does that incorporate in terms of your thinking about Zendesk's place within the higher end of the market? Meaning, there's no doubt that customer service has expanded across every tier of the enterprise. I guess, how much do you need to also be successful, maybe more upmarket than you have been historically, to get to those goals, and how do you feel about your positioning around that? Yeah. This is, of course, something that is a question that we've heard for many years, and that, of course, we're constantly addressing in the business. How can we continue to become more and more relevant for our larger enterprise customers? That's definitely a journey we started in five, six years ago with building out the teams, making sure that we had kind of the coverage, making sure that we had a pricing, a legal model, and security model, and all these things that works for large enterprises. We have, of course, succeeded with. Our enterprise proxy has gone up every single year since we started that journey, and we feel confident in our journey towards the largest enterprises. We also know that there's a lot of things that once we get out into various industries, that they would like us to work on, capabilities and so on. We have all of those things in our roadmap. We feel confident about we will get there. As many wise people have advised me, it's a journey. If we just keep getting at it, the compounded return of our investment in building the teams, investing in the capabilities, and building the foundation, it will all come, and we feel very confident about that. It's been a good journey setting thus far, so congrats It has. On the quarter. Thank you, Kirk. Thanks, Kirk. Next up is Koji from Oppenheimer. Hi, guys. Thanks for taking my questions. Congrats on a great quarter. Sorry to ask another bookings question here, but I did kind of want to talk about or ask about where the strength in the bookings was coming from. What I mean by that is, was that strong bookings performance in the fourth quarter really driven by catch-up from earlier in this year? Are you really beginning to see or maybe have more strategic conversations with your customers where you're beginning to see some pull forward of future spend coming through in the bookings today? I have just one follow-up for you. Yeah. I can start and then Mikkel or Mark chime in. Clearly there has been an increase in demand that we're seeing through, and we're seeing it everywhere in our business. You can't really point to one segment, which is for us a good sign, right? That tells me it's a broad-based demand for our product as opposed to execution in any one part of our business. It's really coming from both new customers, from our existing customers expanding, from all of our segments and frankly all of our regions. Mikkel, if you want to pick up on that. No, we alluded to it in our shareholder letter, too, that we are seeing a lot of customers really Pivoting for this new economy, for this new reality, for this online first model that we're living in right now. We're definitely seeing growth from that segment. We definitely still have segment of customers that are suffering. Then we have a lot of new businesses and a lot of new activity, and a lot of also customers that are just killing it in this economy. It's a combination of all of those things. Thank you. For my follow-up, I wanted to ask you a question on the Unity partnership. I saw it come through on the press release, I think it was in December. Yeah. Had to ask the question, being a pretty avid gamer in the past, reading that I got excited. I'm like, "Wow, in-game support. I wish I had that back in the days." My question is really trying to size up the opportunity, maybe from a TAM perspective. What could this mean for maybe new customers that you maybe wouldn't have been able to talk to in the past? Messaging transactions or that potential over the next several years? Maybe you could talk a little bit about how that partnership conversation started with Unity. Thank you for taking my question. Yeah. No, but I really enjoy that question. Gaming is such an interesting industry, and I think we are all incredibly inspired what you're seeing in the gaming industry, in the community, in their way of engaging and communicating and just building very strong communities around these games. We're very excited about this. We've been working, of course, with Unity, and we know these guys, of course, from the good old days in Denmark, et cetera. What we've done now is really, really making it easy for game developers to put these capabilities into their product. We are, of course, working with a long number of game providers around these capabilities and are getting all the feedback to new and cool stuff we can do, and just very excited about that journey. We've always been big with gaming, but we definitely hope to take that to the next level. I just want to thank all the gaming providers out there for helping us through this pandemic year. My kids are so grateful. I also just want to our friends at Roblox, love you guys. This has been on behalf of all my kids, thank you. me. Thanks, guys. Thanks, Koji. Let's see who's Now Tom Roderick up next, Stifel. Hey, it's actually Parker Lane on for Tom. How are you? Yep. Doing well. Hey, thanks. Mikkel, you talked about making Sunshine easier in 2021, and that being one of the big priorities for the company. Can you talk about the role that partners can have in doing that? Is it more about the development of new use cases? Is it configuration work? What exactly are the elements that you need to improve to make that more useful for customers? Well, I think that our force as a company has always been the democratization of those things, that everybody can kind of figure out using it. Even our app framework that you can use today to integrate applications, custom applications, standard applications into your workflows is something where we really made an effort just to make that as easy and painless so that you don't have to be a developer to do these things. That's a little bit the same effort we're doing here. We can see how making these things easier to use. Using no-code and low-code tools just accelerate the adoption. Of course, our partners play a big role in this. They do, especially with the more advanced use cases. just our app framework today have, they're more than 1,000 apps, custom apps that other companies have built to provide the capabilities of various scopes. that is what we're trying to do here to really make it easy for the whole partner ecosystem, the whole partner network, to help customers with these things so they can extend, integrate, and customize, and get further out into all the different places where customers meet businesses today. Got it. Elena, you guys highlighted a lot of the contraction and those sort of elements that were playing into the model throughout 2020. As we think about the cohort of customers that Mikkel just mentioned that are sort of killing it or actually benefiting from the pandemic, what happens to them sort of as we reenter this open world again? Are they going to have a meaningful step down? Are they going to have new use cases emerge that keep their demand levels sort of where they were? Just help me walk through some of the puts and takes with that cohort. Yeah. you can't look at one unique cohort because think of it as a portfolio of customers. Some will continue to have new use cases that evolve because of the pandemic. We're seeing a lot of that. Some will come back to their normal rate, and then some of the ones that contracted, like Mark talked about earlier, we have yet to see them come back. that's part of the reason why when we approach our guidance and everything, we do it cautiously because there's still a lot of unknown. we're optimistic that some of the trends we're seeing are durable trends. These are things that will not change and will not go back to what we saw before. Got it. Thanks again. Thanks, Parker. Next up is Pat Walravens. JMP. All right. There you are. Yeah. Elena, two for you. First up, is there anything you can share with us about your future plans, and why now? Then secondly, this one will be more fun. What are the characteristics that you think Zendesk should look for in your successor? You should ask my boss that. Why now? It's a personal family decision, really, to be honest. I've been here five years, and 2020 gave me the opportunity to sort of reflect on a lot of things, and so just a personal choice. I love Zendesk. I should have a tattoo of Zendesk somewhere, my wrist here. It's a great management team. I couldn't be more proud of where the company is, actually. As far as my successor, I feel I'm leaving the company in great shape for this person. That's what I would say. Yeah. Someone as cool as me, I don't know if Mikkel will find out. We'll see. All right. Mikkel, if I can ask you a follow-up, because I know as an organization, this is something we're having a hard time figuring out. What is your policy going to be for back to work? Because I really don't think virtual for everyone is the right solution, particularly not for your younger people you're trying to develop. Where are you guys on that? Right now, we've told the team that nobody should expect to be back in the offices for real until September of this year. We do have a few offices around the world where we start kind of pilots in getting teams back in with all kinds of restrictions and regulations to kind of minimize any risk we see. We know already that a lot of our employees are really embracing the freedom and the opportunity that comes with not having to commute into the office every day, and we expect up to half of the team is not going to be in-office workers going forward. Of course, we still need to do a lot of things together. We still need to get together and have a cocktail from time to time. Yeah. Like we used to do. We also need to celebrate, and we need to get together sometimes and look each other in the eyes and learn things about each other, and we need to do a lot of whiteboarding and so on, some of these things. we will need to have these facilities for kind of collaborating like that. we also have, of course, situations where working from home may not work always for everybody or may not work in periods for everybody. we definitely also need office space for people that don't have that luxury or can't function in that setup too. it's going to be a combination. I think what really matters here is less about how the actual office space configuration going to be and how many come back. It is that this how we communicate today, and I can't see you, Pat, and I'm pretty sure you're sitting in your underwear, but like as I am. This way of engaging, this way of communicating, and this way of collaborating is going to be the dominant way for regardless of where you sit in that office or elsewhere. I think with this, we can really do some amazing things, and we have to be really, really good at this, and this is what we are telling our employees, that that little square you're sitting in today, dominate that, live that, embrace that, because by being the best at this, we can unlock some future potential. Does that make sense, Pat? Yeah, I think it's tricky. I don't love the idea of the little square going on forever, honestly. Is that why you don't have your camera on? No, I'm trying to turn it on. Your host has stopped it. Uh-oh. All right. There he goes. Yeah. We got four more people. There he is. All right. We have four more people and only eight minutes, so I'm going to ask each to just do one. Sorry, guys. Sorry, we're not managing time as well as usual here. Ken, you're up. Okay, great. I guess I'll steer my question towards Elena then. Billings question. I know you guys don't typically talk about next year, but this year is a bit of a weird year from a billings growth, and next year will be a weird year from a billing comps perspective. How should we think about what that growth rate could look like relative to the revenue growth number you guys put out there of 26%? Is it going to generally track? Then thoughts on seasonality would be great as well. Yeah. Ken, I'm going to step in real quickly. We don't want to guide for billings. Remember that in Q1, we did size the billings impact last year of about just over $25 million from that change in invoice cadence. Think about we missed just over $25 million in billings last year. As we go into 2021, we will invoice for 12 months, whereas last year we only invoiced for 11. I don't really want to ever guide to billings because of the way kind of we have a large number of monthly customers. Sorry to step in for you, Elena, on that one. Thank you. Love it. Next up is Derrick from Cowen. Great. Thanks for taking my question. You guys have a new metric, percentage of ARR generated from 100K contracts. When you show that chart in the shareholder letter, it shows a steeper curve than the old metric in terms of upwards to the right. I think what that tells us is stronger enterprise traction than the old metric. First, can you share anything around large deal wins in Q4 and kind of what sectors maybe you're seeing greater strength in the enterprise? Then help us understand some of the key catalysts that are helping you drive traction up market. I think of just pure sales execution. I think of maybe maturity in Sunshine. I think of acceleration in digital initiatives. How are some of those factors playing into the success you're having up market? Derrick, first and foremost, and allow me to butt in here, Mark. Yes to the last questions, all of the above. These are all vectors that drive our further penetration into the market, alongside the fact that also enterprises are starting to look for much more agility in their business solutions. Nobody can do a nine-month project today. Think about this year. Nobody could do a six-month project. Forget about it. That's not how the world operates anymore. Really speed, agility is a real currency today. With that, the other thing, this is not a new metric. As we say in the letter, this is an illustration of some of the issues we have with our old metric or with our current metric, in that it only measured the percentage of our revenue from the one very specific product and the one very specific seats of that. That is why we want to show that over time, that metric has become less and less precise as a proxy for our enterprise progress. That's why we want to show this other metric for comparison as we figure out what is a proper way of relaying this in the future. Does that make sense? Yeah. Well, it looks good. Yeah. Thanks. Thanks, Derrick. I'll just close, that we are continuously, one of our imperatives are to move up markets. Hopefully that's representative of that. That's kind of why it was placed there. We're going to move on because I have four minutes left here. Chris Merwin, Goldman. Okay. Thank you very much. Congrats to you all on the quarter. Just a quick one from me. I was just wondering if you could help us think through some of the ACV uplifts you're getting from Sunshine. I know, I think in the Analyst Day around a year ago, you sort of gave an illustrative example. Just curious anything you can share with us on benefit to deal size as you're seeing it from that? Thanks. First and foremost, our priority in 2021 is really to make the Sunshine capabilities much more available. That will grow the partner ecosystem, that will grow the adoption and the acceleration of the usage of the product, and that is our key priority over any monetization of the platform. That's how we think about it. That's have always been the Zendesk DNA, and that's how we think about Sunshine. Understood. Thanks very much. Thanks, Chris. We'll close off with Arjun from William Blair. Hey, guys. Thanks for taking the question. Quick one for me on the upmarket traction and large deal flow. It seems like the 2020 conversation was a little bit more focused on quicker time to value deals at the expense of maybe some of these larger transformational projects. Just give us a sense for what you saw in Q4 and what the pipeline for those deals looks like going into 2021. I just want to say that high level, we see speed and agility as an increasingly important factor of the transformational projects too. This year we have seen large projects that we participated in with incredibly quick turnarounds. That's something we hope to speak more about. That's something we hope to help other companies learn from, and it's something we expect to see a lot more from. Okay. Got it. Thank you, and congrats on the quarter. Thank you. Thanks, Arjun. With that, we are out of time. I appreciate everybody's interest in Zendesk, and we will see you again next quarter. Have a great afternoon. Take care.