Parker Lane: Understood. Thanks again.
Eric Yuan: Thank you.
Operator: We will now hear from Shebly Seyrafi with FBN Securites.
Shebly Seyrafi: Yes. Thank you very much. So I’d like to hear from you what you think your current visibility is compared to, say, three months ago. I noticed that your RPO grew by 32% year-to-year, which is impressive. But you also had a decline in your CRPO percentage over the past several quarters, your expansion rate has been declining and with your guidance for deferred revenue to grow 2% to 3% with my model and getting billings down 10% year-to-year in Q4 and you have never really had a billings decline in my model. So just talk about the visibility you have right now versus three months ago and when you think you might see this stabilize? Is it a few quarters or is it a few years? Thanks.
Kelly Steckelberg: Yeah. So the current RPO pressure is largely related to the Online customers and the decline that you are seeing in Online as the long-term RPO really benefits from the direct and — or the Enterprise side of our business, which are managed by the direct business and have more annual and multiyear contracts. That’s kind of why you see that shift in terms of the overall percentage. I would say and then the other impact that We are having that we can’t — which is difficult to predict, of course, is FX, right? So you have to consider that, which is more concentrated Online than an Enterprise, but you heard we in our guidance that we have reduced, we said about $14 million of that, we believe to be attributable to FX.
In general, I would say, the economics or the state of our business hasn’t changed. Meaning, our Enterprise business and our Enterprise sales organization is stable. They are continuing to operate in the same way. The Online business with the improvement in churn, as well as the way that the majority of it now has shifted out along beyond the 15 months is really helpful in terms of our ability to forecast that business. And so I think the visibility is the same, there’s just some different reasons for all those different components that you are talking about. The deferred is — again, the decline you are seeing in Q4 is really due to the front-end loaded nature of our business. And then remember, so the front-end billing, sorry, the renewals happen at the front-end of the year, that’s where you are going to see the upswing in billings, the upswing in deferred and then that gets amortized over the years, so deferred’s coming down and then we have much lower renewals in Q4 as well.
So the renewals that are filling up the bucket are much, much smaller. So it’s — you mentioned many factors and there’s different reasons for all of those.
Shebly Seyrafi: Yeah. Thank you.
Kelly Steckelberg: Yeah.
Operator: Our next question will come from Peter Levine with Evercore.
Peter Levine: Great. Thank you for taking my question. I think given some of your customers are pushing back on launch of decisions, are you able to kind of toggle your sales force being focused more on those back-to-base opportunities. And then, Kelly, just a follow-up, can you share how many of those 9 — I think you said 9,000, 10,000 phone customers or net new to Zoom and then maybe just share were these legacy PBX replacements or are you going in and replacing another cloud provider? Thank you.
