Eamon Coughlin: Hi, Kevin and Sam, this is Eamon Coughlin on for Ryan McWilliams. Thanks for taking my question. How did contact center agent hiring and call volumes in fiscal 3Q, compare to last year’s fiscal 3Q? Were there any differences, particularly for any verticals, any particular strength or weaknesses?
Samuel Wilson: Can I ask you a small question, because you’re asking me literally how many phone calls were received by contact centers in the third quarter?
Eamon Coughlin: Yes, I’d say usage or – and then in general, like seasonal hiring that typically would come up for say, open enrollment or holiday centers [ph]?
Samuel Wilson: Yes. Okay. So as you know, we offer our customers in the contact center – the ability to search seats for kind of holidays, or Easter, or whatever – whatever campaigns they’re running, political campaigns, those kinds of things. I would say we saw a little less than usual. I mean, in these contracted business models, you see a little bit of this lag, right? And so contracts come up and they may have done a layoff previously, et cetera. It’s also hard for us because we are seeing increased sales of larger contact centers. As I mentioned in my script, we’ve seen a 50% increase in the contact centers over 250 seats. So, it’s a bit of a moving thing, because we are selling more new customers contact center, we are selling more seats in contact center, we’re selling more stuff in contact center, and at the same time, we do see some, and Kevin mentioned this.
Some of the economic pressures around, we probably saw a little less surge seats that, I would have expected. Maybe I was a little overly optimistic, those kinds of things. And I think it’s been mentioned earlier, but I think out of every segment, I mean, the retail vertical, probably the – maybe the squishiest, maybe that, some travel leisure type stuff, it’s hard. I mean, we basically have no customer growth at 0.5%. So, we have a lot of different verticals represented. And so it’s, I don’t know, it’s kind of my sense.
Eamon Coughlin: Perfect, thank you. And then did the CPaaS business in Southeast Asia continue to show stability like it did in 2Q? And then maybe like what assumptions are factoring to the guide for 4Q for this business?
Kevin Kraus: So the CPaaS business performed as we expected it. And yes, it showed stability for the quarter. So that’s good news. I want to point out though that seasonally, we have seasonal variability in that business as certain promotions get done, over the holiday period and so forth. In the Q4 guide, there’s some downward trend as normal, as we enter like the Lunar New Year period and other.
Samuel Wilson: Ramadan.
Kevin Kraus: Ramadan yes, and other periods. So that’s factored into our guide.
Samuel Wilson: All right, now, you mentioned the CPaaS business, so I’m going to consider this a layup to sort of do that CEO thing and deviate a little bit. But we’ve got some great new products coming out on the CPaaS side. There’s some pre-configured bundles for specific use cases that you’ll see us start pushing into our install base, and our contact center customers. Stay tuned before the end of the quarter. So the reason I brought this up is, I’m sort of warning the audience that in the future, it’s going to get a little messier, because we’re starting to view our CPaaS business not as a separate entity inside of 8×8, but it’s all starting to become blurred, right? You’ve got UC, CC, and CPaaS is how we traditionally think about it, but now we have low-end UC, we have cross-organizational customer engagement, we have UC.
And then we have CPaaS riding on top of all of it. So it’s becoming a bit of a mix, and it’s really all being driven on effectively one platform as we bring it altogether. So, you get economies of scale and engineering capacity and CI/CD, Continuous Innovation, Can-Use Deployment, and all those things are starting to spin in the right direction.
Eamon Coughlin: Got it. Perfect. Thanks, guys.
Samuel Wilson: Thank you.
Kevin Kraus: Thank you.
Operator: Please stand by for our next question. Our next question comes from the line of Michael Funk with Bank of America. Your line is open.
Michael Funk: Yes, so thank you for the question. And thank you for the color on the call and the focus on profitability. I wanted to dig in, though, some more into the revenue. You lowered the guide for the year. Trying to dissect the piece part here rather than just reading the tea leaves, right? So, I’m sure you have an internal forecast for net new, for NRR, and then for Fuze customer contraction. So maybe help us with more precision with our own modeling by pointing out, which piece of that fell short or is falling short relative to the prior expectation. And then final piece related, I think Fuze was about $130 million in revenue. You said that’s been trading off, but should stabilize in a quarter or two. Can you provide us the current revenue number for the Fuze customers, so we can figure out that attrition rate and the potential stabilization point?
Kevin Kraus: Okay, thanks, Michael. So on the revenue, you’re asking about Q4, right? So I talked about headwind in CPaaS, due to the holidays coming up. In terms of Fuze, we do see, what we’re doing internally as a company, which is a great thing, is actually we’re migrating them.
Samuel Wilson: Upgrading.
Kevin Kraus: Yes, we’re upgrading over to the 8×8 platform. As we do that, we are seeing some down sell, you would call it, as those customers right-size their needs for us. So there is a bit of erosion there and that’s what I was referring to as headwind in the prepared remarks. But doing that and doing that early and proactively helps us retain those customers and that’s what we believe. So that’s a good thing for us, because they’ll stick with us.
Samuel Wilson: Okay. And I want to address the second part of your question. Look, I can’t give you a number on exact Fuze anymore, because we’ve upgraded, see now you made me do it. We’ve upgraded hundreds of customers between the platform. We’ve cross-sold. We’ve done a lot of things. And we don’t really break them out separately internally anymore. We view all of our metrics internal, or a combined company. And it’s just sort of hard to do it that – just it’s easier for us when we manage everything to do it that way and that’s the way we do. And I just don’t have the number, to really give you effectively in front of me. I will tell you though, what we do see is the core business is vibrant. We do expect in the next couple quarters we should start to see improving growth trends and a resumption of growth in fiscal ’25.
It’s one of those quarters – I think we’ll see a resumption of growth. And you’re going to ask me, like why do I have confidence in that? And it’s going to come back to new products, right? If we can get that 60% number that’s accelerating to keep kind of bumping along and keep going as we add more new products and as we retool the go-to-market force around that product portfolio. I really do think the math will work itself out, to show that resumption of growth. And in the meantime, we paid off $63 million in debt out of cash flow yesterday. Well, we wired the money yesterday. I think we’re paying it off officially tomorrow.
Michael Funk: Yes, love the delevering. Just make sure I understand. You came in in line with the revenue forecast for this quarter and then lowered the full year. So it’s supposed to be lowered 4Q. Are you saying that that reduction is entirely due to CPaaS and there – wasn’t an undershooting on net new NRR…?
