Good evening. And welcome to the 8x8's Third Quarter Fiscal 2021 Earnings Conference Call. Speaking on our call today is Dave Sipes, Chief Executive Officer, and Sam Wilson, Chief Financial Officer. Before we get started, just a reminder, our discussion today includes forward-looking statements about 8x8's future financial performance as well as its business, products and growth strategies, including the impact of COVID-19 pandemic. We caution you not to put undue reliance on these forward-looking statements as they involve risks and uncertainties that may cause actual results to vary materially from the forward-looking statements as described in our risk factors and our reports filed with the SEC. Any forward-looking statements made on this call reflect our analysis as of today, and we have no plans or obligation to update them. In addition, some financial measures that will be discussed on this call, together with year-over-year comparisons, in some cases, were not prepared in accordance with US Generally Accepted Accounting Principles or GAAP. A reconciliation of these non-GAAP measures to the closest comparable GAAP measures is provided in our earnings press release and PowerPoint presentation deck, which are available on our Investor Relations website.

Thank you, Victoria. Good afternoon, everyone. I hope you and your families are healthy and safe. I'm pleased to speak with you today on my first earnings call with 8x8. I will cover business highlights from our third quarter results and Sam will walk us through financial results and guidance for the fourth quarter and full year. I will then share my observations from my first 50 days and initial thoughts on the company's next level of growth. Now let me start with Q3. Q3 was a good quarter; total revenue grew to $137 million, a 15% increase year-over-year and above the high end of our guidance range. Key drivers of the growth were strong demand for bundled CCaaS and UCaaS offering continued up market focus, new logo acquisition, channel contribution and improving operational execution. Our fully integrated CCaaS and UCaaS solution is a clear differentiator for us. As a mid market enterprise organizations replace legacy on premise systems and shift employee and customer engagement to the cloud. The industry continues to recognize the value of 8x8's fully integrated platform. For the ninth consecutive year Gartner named 8x8 as a leader in the Magic Quadrant for unified communications as a service worldwide. Also in the quarter for the sixth year in a row, Gartner named 8x8 as a challenger in the Magic Quadrant for contact center as a service. Of note 8x8 is the only UCaaS Magic Quadrant leader that is also in the contact center as a service Magic Quadrant. Furthermore, we achieved our fourth sequential quarter of improved profitability. We exceeded top and bottom line guidance improved operating efficiency and strengthen our cash position. With a clear line of sight to improving revenue growth and profitability in the fourth quarter, we were raising full year guidance and cash balance outlook for the fiscal year. Sam will speak to this in a moment. Now let me turn to highlights from the quarter. We are pleased with the success we are seeing from our channel for strategy and up market focus with mid market and enterprise customers. We had a record quarter of market with over 730 customers with greater than $100,000 in ARR, a 24% increase year-over-year. This was a result of strong execution across sales, marketing and channel and a combined product solution that is fit for purpose for enterprise customers. Channel execution was strong again, driving 64% of bookings in the quarter. Eight of the top 10 deals and enterprise ARR growth of 46%. The channel team across all regions delivered their highest bookings quarter on record. Channel partners are turning to 8x8 because of our integrated contact center and communication solutions deliver exceptional value for our mutual customers.

Thanks, Dave, and good afternoon. We appreciate you joining us as we report the third quarter financial results. I want to echo Dave's comments that I hope you and your families are staying safe. We are pleased to have delivered results that exceeded guidance, improved operating leverage and reflect increased confidence in achieving profitability. Key drivers were better than expected performance from product categories, UCaaS and CCaaS in bundled offerings. Total revenue for the quarter was $136.7 million, an increase of 15% year-over-year, and above our $132 million to $133 million guidance. We had good sales linearity in the quarter unexpectedly, hardware grew sequentially as enterprise customers accelerated deployment and professional services were strong. Looking at service revenue, we generated $127.1 million, an increase of 15% year-over-year and above our $124 million to $125 million guidance. Total ARR was $494 million at quarter end, up 20% year-over-year. Our strategic investments in the channel and product innovation over the last few years are delivering strong results. Third quarter non-GAAP gross margin was 59.6%. As expected, lower sequentially and driven mainly by product mix. Non-GAAP service revenue margin declined 80 basis points over last quarter to 66%. As we have previously mentioned, CPaaS margins are significantly lower than UCaaS and CCaaS margins. CPaaS usage increased during the quarter from holiday activities. Non-GAAP other revenue margin came in at minus 25.6% for the quarter a large improvement from the minus 73.5% a year ago and sequentially improved from the minus 27.7. Key drivers were continued growth in our professional services and the flex hardware rental program. Looking ahead to the fourth quarter, we currently expected overall gross margins to improve mainly due to better product mix and from CPaaS usage returning to pre holiday levels. Turning to the third quarter operating expenses; we continue to align global business to drive both improved execution and efficiency. Non-GAAP sales and marketing expenses improved to 39.1% of revenue in Q3, 2.2% lower than last quarter. The combination of leverage from our digital marketing programs, optimization of media spend, and moving from physical to virtual events has driven spending efficiencies. We've also added domestic and international sales capacity and have improved sales productivity.

Thank you, Sam. In closing, I'd like to share some of my initial observations and thoughts. This is nowadays 50 for me, and I've been spending time with our employees, customers and partners to better understand our strengths, and where we can focus to make meaningful improvements. I have a deep appreciation and respect for the strong technology our team has built. I joined 8x8 because I believe we have an incredible market opportunity in front of us. Additionally, I'm very encouraged by the talent and dedication I'm seeing amongst the 8x8 team. Looking forward, I see the opportunity to leverage my 20 years of experience to drive improved operational execution and transformation to help the company reach its full potential. First, as has been demonstrated, for years now, the resiliency of the business model really is special. And the market opportunity is massive. Not many SaaS companies have reached the $0.5 billion revenue size that 8x8 is today. Yet, we're just scratching the surface. Moving business communications to the cloud is one of the largest SaaS market opportunities there is. That transformation is still in the early innings. Yet recently, we have seen it become a top business priority. The urgent adoption of work from anywhere has accelerated the timeframe in which companies are making and planning to make the move to the cloud. Enterprises now see cloud communications as a critical component of employee enablement, customer connection, and business continuity. Having been a pioneer in cloud business communications from the beginning, 8x8 is well suited from a product and experience base to capitalize on the accelerated nature of this transformation. Second, API has a unique technology to capitalize on this opportunity. I have spent a considerable amount of time with our engineering and product teams, and strategic business…

Your first question comes from the line of Matt VanVliet from BTIG.

Hi, good afternoon. Thanks for taking my question. And welcome to the team, Dave. It's great to have you aboard. And I guess my first question kind of goes on the press release from this morning, and you touched on it quite a bit, but the Microsoft Teams acquisition or integration, and all the capabilities you've built out there, in our work, we continue to hear and it's no surprise to anyone that teams is very well proliferated across the enterprise. But can you just help us understand sort of what the opportunity is for 8x8 from total addressable market, and how maybe the margin structure or the contract structure is a little bit different than going in with more of a direct sale on the X series?

Sure, I'll talk to the market opportunity; I'll let Sam talks about last part. This is David, so on what we're providing with the Microsoft Teams, Direct Connect is an ability for our and our customers to utilize the Microsoft Teams endpoints with our market capable of UCaaS and CCaaS offering and it brings an ability for customers like that fast growing retailer we talked about to utilize their current team's environment. Additionally, because we have our unique and providing that direct routing capability of being able to bring on also contact center agents and other employees like frontline workers that might not be in the team's environment who can create a mixed environment for those customers. And that's we're having quite a tremendous amount of pickup in that product capability. We also launched some capabilities there, the ability to set settings from within teams, and in and out of call queues. So there's continued innovation that we're putting into that product to create differentiation. And the market Tam is large as there's a large ecosystem around teams chat, that as adopted today and through the pandemic, and probably about 115 million daily users is the size of that and growing. And we commissioned that research with Hanover, and institute that says about three quarters of those companies are going to institute third party integrations for the UCaaS telephonic capability. So the market opportunity is large. We're leading in the some of the capabilities there and are having success both in the channel and directly with customers.

Okay, now on the topic of Microsoft Teams margins, we don't see a materially different margin between a team's seat and a non team seat. Particularly when we look at the bottom line on the top line, there might be a slight decrease in margin, but that's usually more of an effect that we're selling to a larger company, and they're buying in large volume. But when compared to the bottom line with reduced support costs and those kinds of things, it's effectively the same. We're agnostic to either one. And I think that's one of our great benefits is we want to do what's right by the customer, not necessarily push them one way or another.

Great, and then on the contact center side, obviously a ton of traction here and we continue to come across more and more usage more and more focus on how you're going to meet your customer in the digital world, as everything shifts to ecommerce, given the pandemic. What are you seeing, is this mostly still rip and replace of some or, consolidation of multiple vendors that are in a customer? Or are you really starting to see kind of net new use cases? I know you highlighted maybe NHS in Scotland as one that are helping roll out the vaccine, but are you seeing enterprises look to stand up maybe small contact centers, where historically they've not had anything.

Probably the mass majority of market is still on legacy solutions. And so bringing that to the cloud with a modern solution that combines both contact center and unified communications is a massive opportunity, and is where the bulk of the new logo acquisition comes from ultimately and like we're in the early innings of this market transformation. And the change of work from anywhere that's occurred has created increased urgency in that transformation. But we're still in that early phase of early customer adoption, and then people planning the adoption of replacement of the older systems.

Your next question comes from the line of Brian Williams from Stevens.

Congrats on the results. Dave I appreciated the color about what attracted you to 8x8. I love to hear how you think your experience and skill set can help the next leg of growth accompany Thanks.

Sure, and I found it invigorating so far, there's been a very warm reception from employees and partners and customers, even investors as an analyst. And part of that is there, there was felt there was a good fit, right, between myself and the organization, with my knowledge of the customer, and my operational bent as well as good market expertise. And I feel that is largely playing out. So feels like the right opportunity at the right time. Additionally, with the increased elevation of moving organizations, from legacy to cloud, as the profile of the whole category is increased, and that is creating even tremendous opportunity. So, overall, it feels like a strong, combination at this point.

Excellent. Yes. And the travel hospitality and retail wins, you mentioned, certainly, one of the, some of the first win back come to mind this macro environment, but what the channel bookings in the quarter be encouraging the celebration of growth you saw there. Can you just talk about the composition of what your pipeline looks like, heading into 2021. And are there larger deal sizes in their? Thanks.

Channels, obviously, an area with momentum, and I think it's attributable to consistent execution and great leadership that we have at 8x8 that's building strong relationships with the channel, we are seeing strong congruence between mid-market and enterprise customers. And I would say pipeline wise is healthy. And our goal is to continue that momentum and growth of our channel capabilities and marrying that with our ability to help the channel close those deals and accelerate the penetration into that category for combined UCaaS and CCaaS offerings.

Your next question comes from the line of Rich Valera from Needham.

Thank you. And let me add my welcome, Dave. Glad to glad to see aboard. So, Dave wanted to ask you about the channel, since that's something that sort of you've clearly been involved with a lot in your career. And just to give your assessment of where 8x8 is in terms of presence in mind share on both the bar and master agent side of the channel. And if you see an opportunity for them to increase their mind share while also improving unit economics. Obviously, there have been some issues in the industry historically, with folks sort of buying channel presence that maybe wasn't that economically wise. But in any case, just your thoughts on where you guys stand on the two parts of the channel?

Yes. So like I said, channel momentum has been good. And there's been an element of catch up to some degree. But I think there's also a preference that's being created at this point. And through consistent execution, the economics, we like the economics, we think there's a good mix between challenges we are at today. And we're encouraged by that, where we see additional success. And we saw, obviously, overall momentum, but bar and UK continues to be a shiner with generating 40% of the channel pipeline. And that's a differentiated model. That is an opportunity to continue growing that in that market, as well as probably an opportunity to move into additional countries beyond the UK for that.

Great. That makes sense. And then question on the API business. When that was, when that acquisition was done, one of the thoughts was that you'd ultimately be rolling that out in some higher margin geos that would help the margin profile. I am just wondering we have any update on sort of where you stand in terms of rolling that out beyond some of the initial geos when you bought that property?

Yes, and I think we mentioned in our last quarters call that we did roll some, limited availability of the API business into the US, UK, we have close customers, existing customers on to that. I mean still the vast majority of the business in is in Asia, we expect it to stay in Asia, because it continues to be robust growth there. So I think stay tuned. It's definitely a source of differentiation, particularly when we mix it with our contact center product.

Your next question is coming from the line of Tim Horan.

Thank you and welcome, Dave. Can we dive into teams, please? It's been really an incredible 18 month growth for Microsoft really unprecedented. And almost I think, very few of these customers are in UCaaS at this point. Can you talk about the benefit of customers using with teams? What's your go-to- market strategy there? And why would these customers use you over? The many other options that they have and I guess how unique are you? And then lastly, like, can you give us a sense of how important this is to your growth or, percentage of growth of incremental customers you expect in a year or two? Thank you.

Yes, I'll answer the first part of that. So being able to light up the team's chat application with a full blown UCaaS and telephony capabilities is really kind of like at the broadest stroke of what the opportunity is doing that in the approach, we've done it with direct routing, creates a high quality interface. And doing that with a reliable, high quality, dependable vendor is really what the customers looking for in that case. Additionally, we provide the ability to bring in things like contact center agents, that is differentiated and unique. In addition to other types of workers that might not be on the team's environment, even in a large organization. As you can imagine, there's different types of deployments within those organizations. So this allows you to mix and match a customer to enable their entire organization with real time communications with that a symmetric communication platform that teams is providing.

I think I just add one small tidbit to what Dave was saying, as look, teams is generally purchased by the IT department, we generally sell to the IT department, we offer a global solution. It's a one stop shop with the direct routing, we don't bog down the end users in the areas where they're on teams. And so it's a very clean solution for the IT department, the IT department doesn't have to have as much of telecom expertise, again it's a bunch of local carrier partners in regions in the world. And so the net to the IT department is it's one stop, it's a great TCO, and it's low on, low manageable, ongoing operating costs. It's just kind of a win-win. And I think the Hanover research, which suggests that 75% of all teams, customers will be using a direct routing solution, supports that also. So I think it's just -- it's one of those rare instances. Yes, I mean, I think you're spot on Microsoft's got a winning product on their hands, but the IT department still needs to deploy it globally, and make it work well. And we're just a nice hand in glove solution to that.

And so what's your go-to- market strategy there? And how important will it be to growth a year or two from now?

I mean I think the easy answer to that is I don't want to say something sophisticated, right? We hit the digital channels, the regular sub agent master channels. We've also targeted a bit the Microsoft channels because they are super interested. Remember, last quarter we signed up Pax8, which is a traditional Microsoft partner. We have some of the largest Microsoft partners in the UK, who are selling our products. So I mean it's to the mid market enterprise customers are a little bit more channel focused. So we hit them through the channel through the smaller customers, we hit them through the traditional digital route.

Your next question comes from the line of Jonathan Kees from Summit Insights Group.

Great. Thanks for taking my questions. And I'll add my congrats to the quarter and the welcome for Dave and I wanted ask about I guess two product lines here. Obviously, your UCaaS and CCaaS are doing well, wanted to double click first on your CPaaS. You talked about the holiday usage that came back from previous quarter came back. It sounds like it rebounded enough so that it brought down the margins, I guess, with that particular product line, can you talk about what your expectations in terms of the growth could be for that product. I know you're trying to integrate it with your other products offering portfolio, but it's still being sold separately, it's still not completely bundled with the other products. So if we can just talk about release, what you think the market rates would be for the growth for that product would be in terms of where you're trying to deploy it. And the second thing I wanted to double click on the product wise would be your video. Video is obviously pretty hot, during the pandemic, during a lockdown. Can you talk about maybe this is more for Dave here, what your vision is for the video, and the development for that, and where you see that going? Thanks.

All right, I'll take CPaaS and I'll give the give the video to Dave for your suggestion. On the CPaaS, look, as we had said, last quarter, we expected gross margins to be down sequentially. I mean, we do generally see a pickup in the traditional SMS portions of the CPaaS business and some of the lower margin portions of the CPaaS business during the holiday season. And that was reflected in the financial statements. And then correspondingly, post holidays now, we expect that rebounding gross margins. It's a fully integrated segment into our business. So I'm really not going to break out the growth rates separately, for a whole host of reasons. But strangely, it is a faster growing piece of the overall business. I think right now we're very focused on next steps. And I think that's great about having Dave on board, he brings a fresh set of eyes to it, about the next steps that we want to take with that business. And figure out that those next steps, I would say stay tuned a little bit on the last part of your question, we'll get to answering that. And I'll turn it over to a video to Dave.

Yes, on video. With our Gipsy community, we've had a great opportunity and launched a product called Jazz, which is Gipsy as a service. And it creates a differentiated approach to bringing video meetings into other app developers allows organizations to embed a full meeting experience at a high level of API's into different applications or workflows. That's a product that were put into beta we have over 1,000 developers on it. And its unique in its ability to it has a simplified pricing model based upon monthly active users. That allows those organizations to implement it fairly risk free into their products. Additionally, it has portability capabilities across different cloud environments. So a number of differentiations that is an early launch of an interesting product that we will be watching and working and building successful.

Your next question comes from line of William Power from Baird.

Okay, thanks. Yes. Hey, Dave. Yes, congratulations. Great to chat again. Hey, I guess, one of the big questions, for us, I think investors generally is, as you look forward, and you look at, some of the cloud communications, industry leaders in growth rates, I think we're just trying to understand what some of the challenges are you face to kind of close that gap with some of the industry growth leaders versus, some of the advantages, you might, in fact, have over some of the other leaders. I know you spoke to the strength you are seeing in the channel, I think even some of our own survey work, kind of validates that. So how do you think about that? I mean, what are the big challenges, what are the advantages and what helps you to close that gap over the next couple of years?

Yes, well, good talking again, I think about it in a few different ways or different steps and we are, I am going through in-depth, the organization and the capabilities, but always looking for opportunities to reinforce success. And you're seeing a number of those even on the call today with channel with UK with the combination of CC and UC and with Microsoft Teams. So where there is strong muscle continuing to build stronger muscle and effectiveness in those areas. Also creating more operating efficiency in the organization is key. And that's something that there's been great strides in. And Sam is a great CFO to have on that, and as all over that, but there are further opportunities to be world class and how we operate and how we go-to- market and how we serve customers that will help and a smooth out and create opportunities for investments into those areas that are working well. And then obviously improving go-to-market motions and playbooks, everything from how we position and how we message, how we talk to prospects. So all of those will help smooth out and create a strong drive train between, applying force and seeing results in the market. And obviously, these things take some time, and you have sell cycles that are nine months in enterprise, so things won't happen overnight. But working across those key areas, I know will create better capabilities and opportunities to get market leading growth opportunities.

Okay. And just as a quick follow up, just as I noticed a big focus on enterprise and you've seen, generally I think improving trends there. Is there any low hanging fruit to help improve the growth rate of the SMB business? Because I know it's one of the elements from a mix standpoint, that's holding back to the overall growth.

Look, I mean, we have good growth in SMB in UK and obviously roll out the e-commerce initiatives to both increase the number of new logos we're bringing on board and bringing them on more efficiently. If you look at a lot of the third party research, the SP business overall in the US isn't growing that robustly fast. I think we're at or above market growth rate. So I think it's more about growing profitably and smartly than it is about just putting up a raw number.

Your next question comes from the line of Peter Levine from Evercore.

Great, thank you, and great-- congrats on a great quarter and Dave welcome to the company. I think most of us know the success you had in your prior life. And it's looking to duplicate that performance or playbook here. What did you see coming in day one that you knew needed to be addressed? And I guess I kind of played against like by this first 100 days, if you can kind of go into further detail on the opportunities you see whether that be operational products, or the partner front and what's top of mind for you out of the gate.

There's always a strong product background, with 8x8 and applying world class go-to-market capabilities always feels like a good fit and opportunity. And those are the areas we're digging into. I'm not going to go into like depth at this point. Those are things we'll come back to you as investors and lay out how we see that playing out. But those that opportunity to create greater capabilities, greater awareness, better deal velocity, those are all general areas where we'll combine the strong product capabilities with a world class go-to-market capability for the organization.

Okay. And maybe for you, Sam, do you see a materially different post-COVID expense profile for 8x8 as it relates to sales, marketing, travel expense, real estate, just curious to know how you're kind of managing the business as we kind of hopefully turn the corner on COVID?

Oh, I would say you're reading the CFO journals. That's what we all talk about in there. Look, I believe in corporate America, there's been a very clear realization that we don't need to travel as much and do as much T&E to generate business like we did in the past. And I think it's on both sides. I think it's both on the seller side and the buyer side. So I think we're open to the idea of more remote workers in lower cost regions, lower T&E expenses, so that we can fund more engineering initiatives and more sales capacity and more marketing capacity. And so I think I'm not unique in saying that is definitely something we are looking at. And it's something that we are looking at institutionalizing coming out of the pandemic.

Your next question comes from the line of Meta Marshall from Morgan Stanley.

Great, thanks. I wanted to dive into kind of some of these new customer deals that were greater than 100k and, you noted that, 53 deals, but only 34 of them were new logos, just getting a sense of clearly the means you're upselling your customers quite a bit is that tacking on more feet, is that selling contact center secondary is that pulling through, you see just a little bit of kind of commentary on some of these new deals that come from existing logos.

So I'll start with some general characteristics, and then I'll let Dave pick up if he wants to add anything. So I hate to be so obvious but it's a little bit of all the above. So definitely, we add on more seats, definitely we cross sell. So if we land a customer with UC, we cross our contact center, every once in a while we'll land a contact center customer and cross sell UC, I think one of the biggest things as we move into mid market and enterprise we do find is we'll frequently land one region one buying center, one division, and they're the first, the first group that moves to the cloud. And then the rest of the organization catches on. And we sort of get an overall corporate buying decision that gets made. Looking through the deals this quarter, and over the last previous quarters, I'm constantly surprised when we land the European division of the US division of a multinational, and then they want to roll it out to Asia, they want to roll it out to the rest of their global operations. And so I do think almost every one of these six figure deals that you'll see is cross boundary, cross geographic cross products, in the end. Dave, anything you want to add?

I think when you see, like Hallford, where we already had 4,000 plus seats in there in UCaaS perspective, and then are able; we have the open discussion with the buyer, and then are able to cross sell a whole product category with contact center. And there we added, 450 seats, that's a great opportunity because we get to tell the story of the integrated product, and with a relationship that is already strong in the customer. So that's an area that is quite fruitful.

Your next question comes from the line of Mike Latimore from Northland Capital Market.

Great, thanks very much. I guess, Dave, on the 8x8 platform, it sounds like you're -- you may be the number one differentiator being the full UCCC stack. Just want to make sure that's right. And then second, can you give, sort of a concrete couple examples of, if the customer uses his full stack, what benefit did they get versus, buying another platform that's sort of an integrated approach let say.

Yes, so like there's it goes back a long time that customers have wanted those products combined and legacy solutions have combined those. There's the ability to have high reliability, high uptime from a single vendor and not create complexity and chance for duplication across multiple vendors, there's opportunities to reduce total cost of ownership. But additionally, things when you're talking about an IT buyer, being able to have integration out of the box and not having to integrate the two products as well as being able to maintain integrations into corporate workflows. Additionally, we see feature capabilities, not only from manageability, from an administrator, but also the ability to share presence or analytics across the product suite for adoption usage. And high, a measurement of high levels of call quality and loss scoring across both products. So I would say bucket sizes into like several areas. And in 8x8 buyer demand that's existed previously, and legacy and they're looking for also in cloud.

Got it. And just quick on the gross margin on the sort of other product line, negative 25%, is there an opportunity to kind of improve on that over time?

Heck, yes. We've improved it pretty radically over the last year, and we will we should, we will continue to improve it, may not be every quarter, it depends on certain things that happen, particularly around sometimes we have new phone sales, and sometimes you get larger enterprise phone sales. But yes, we definitely have room to improve gross margins on the other revenue line.

Your next question comes from the line of Catharine Trebnick from Colliers Securities.

Thank you for taking my question. Congratulations, Dave. Nice to see there and a great quarter might have a channel. And what we're seeing this quarter is some consolidation of master agents and bars and SI firms and I'm wondering what's your take on if that persists? Where do you see your strength at 8x8? And then also, in addition, can you give us an update on Scan Source. And where that partnership is and how it's progressing? Thank you.

Yes, I'll take that first part of, the fact that there's consolidation in the channel, I think that's helpful overall, we like to work with large partners. And we have a reputation in the market for being easy to work with flexible and supportive of the partner community. And that will continue to support us going forward as well as we can't afford getting known for having the differentiated combination of UCaaS and CCaaS continue to leverage that with the channel going forward.

And then specifically on Scan Source, I never talked about a single partner without their permission. So I'd be a little bit inappropriate but on the US bar program in general, it continues to roll out it's something we're reviewing continuously to see what the next steps forward are. But it continues to roll out and not much else to say.

Your next question comes from the line of George Sutton from Craig Hallum.

Thanks. Dave I may be the only one that goes back to your WebEx days as well. So nice to work with you for a third time. So I did want to double click on the UK channel success. Now my question may be inappropriate based on Sam's last answer, but the virgin program along with the cloud fueled program, I'm just wondering if you can give us a little bit better sense of why that has been so successful.

Thanks, George. And I'm going to Sam -- he was running our European operations previously. I'll let him.

Yes, so I wouldn't give you a specific on virgin. But I'll certainly talk about the UK market. Look, the company entered the UK market in 2013. First through an acquisition and double down again, in 2016. We've been there for eight years. We are -- that the team always tells us we're the number one cloud player in the UK market. And it's a lot of what Dave said earlier about our success in the US. We're known, we are reliable, and we are easy to do business with. We figured out how to do the bar wholesale billing in the UK and all those intricacies of the business model there over time. And I think it's a real competitive advantage for us, because we've got years of head start, compared to everyone else there. And so I definitely think that the bar you mentioned in particular saw what our capabilities were in selected us for their next phase of growth there.

Your next question comes from the line of James Breen from William Blair.

Thanks for taking the question. Just one clarification on the cost side, Tim, I think you talked about expenses being up sequentially 1%. I just wanted if you can clarify that. And then more for Dave, just on the competitive side, what are you seeing in the market? Is your success that you're going head to head with similar competitors that you were before getting invited to more deals? And generally, in these deals, especially in the larger ones, how many competitors you're seeing that you have to beat in order to win the deals? Thanks.

All right. I'll take the first one while Dave gets the second part. I think what I said was we would be up single digits year-over-year growth for OpEx in the fourth quarter. So single digit year-over-year growth in the fourth quarter for OpEx.

Competitive landscape largely similar as you might expect the buyers are the same. So it's meeting those needs, there is a little more back to the contact center side on the competitive and buyer side needs. And that's the only difference.

Have you seen in terms of the sales cycle, I think there was a little bit of a disruption when we went to a lot of remote work earlier in the year. I think improved it more if people got more comfortable with buying and installing the product without face to face.

Well, so the last part is absolutely right. So the multiple meeting face to face meetings required, have now turned into remote video conferences using our own product and remote video demos using our own product. So definitely that's the case. Look, I think the biggest thing that's changed in my mind looking through what's happened is the IT departments used to this now, we did have panic buying and I think we talked about that over the last couple of conference calls. Now it's a little bit panic buying. And it's more course of business. They know what they're doing. They know how to remotely deploy; they know how to remotely enable their users. And we're, look, I think it's great. I think it's great because the cloud has really shown through during this pandemic. And, no one's ever going to think about buying an on prem system again, for all the reasons that this pandemic showed.

Speakers, there are no further questions. I would like to turn it back to the management for closing remarks.

Thank you so much. And obviously there's a replay available on our website. And until next time, thank you.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect.