Vocera Communications, Inc. (NYSE:VCRA) Q2 2020 Earnings Conference Call - Final Transcript

Jul 27, 2020 • 05:00 pm ET

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Vocera Communications, Inc. (NYSE:VCRA) Q2 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you. [Operator instructions] And our first question will come from the line of Sean Dodge of RBC Capital Markets. Please go ahead. Your line is open.

Analyst
Sean Dodge

Great. Thanks. Good afternoon, and congratulations on a great quarter. Maybe, Brent, starting with your comments around the strong bookings performance and outlook. I know you've retooled your direct sales force, not all that long ago and as part of it, had hired some more experienced individuals to help shorten the productivity ramps there. Where do you think that group -- your quota-carrying reps are overall in terms of productivity? Are they still ramping? Are they running full speed now or is it just tough to tell with the pandemic right now?

Executive
Brent D. Lang

Yeah, Sean. Good question. I think that most of those new hires occurred in Q2 and Q3 of last year. Some running into Q4, but the bulk of it was sort of in the middle of last year. And as a result, they've had a good period of time to learn the products and ramp up. And so I feel like most of them are at full productivity at this point. Obviously, it varies a little bit from region to region and person to person, but I've been really pleased with the level of expertise and capability that they've brought to the sales organization. And the results are sort of speaking for themselves.

Many of the top performers at the end of the quarter were some of the newer reps. And every quarter, I place calls out to all the quota achievers who make quota. And I was really struck as I was doing that how many of the names were, some of the newer names on the list. So I think the strategy of moving toward more of an enterprise oriented sales force was the right one, and it's definitely paying off in the results that we're seeing. And I think there's still room for overall productivity as the sales organization continues to focus more on these enterprise deals, but I'm really happy with the performance of the newer folks.

Analyst
Sean Dodge

Okay. And then on the gross margins in the services business, Justin, you mentioned some of that improvement being driven by lower costs associated with more remote implementation. I guess, how much better are the margins on a virtual implementation? And to what extent you think that's sustainable, over the medium term or the longer term, do you expect that to reprice those professional services to share some of that efficiency gain back with clients?

Executive
Justin Spencer

Yeah, Sean. The services margin is made up of margin from essentially two revenue streams. The first is the software maintenance and support revenue stream. And there, it's really a function of leverage. So as the revenue has continued to climb we're able to leverage the fixed cost infrastructure that we have and are primarily our technical support team, and they've done a great job just continuing to be as efficient as possible.

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