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Q4 2019 Earnings Call
Feb 13, 2020, 5:00 p.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Ladies and gentlemen, thank you for standing by, and welcome to the SurveyMonkey fourth-quarter and fiscal year 2019 earnings call. [Operator instructions] Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero.I would now like to hand the conference over to vice president of investor relations, Gary Fuges.

Gary Fuges -- Vice President of Investor Relations

Thank you. Good afternoon, and welcome to SurveyMonkey's fourth-quarter and fiscal-year 2019 earnings call. Joining me on today's call are Zander Lurie, our CEO; Tom Hale, our president; and Debbie Clifford, our CFO. After our prepared remarks, we'd be happy to take your questions.

Prior to this call, we issued a press release and shareholder letter with our financial results and commentary for our fourth-quarter and fiscal-year 2019. Those items were posted on our investor relations website at investor.surveymonkey.com. During the course of this call, management will make forward-looking statements, which are subject to various risks and uncertainties, including statements relating to our strategy, investments, revenue and cash flow. Actual results may differ materially from the results predicted and reported results should not be considered an indication of future performance.

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A discussion of the risks and uncertainties related to our business is contained in our filings with the Securities and Exchange Commission, in particular, in the section entitled Risk Factors in our quarterly and annual reports and refer you to these filings. Our discussion today will include non-GAAP financial measures unless otherwise stated. These non-GAAP measures should be considered in addition to and not a substitute for or in isolation from our GAAP results. A reconciliation of GAAP to non-GAAP results may be found in our earnings release and shareholder letter, which are furnished with our 8-K filing today with the SEC and may also be found on our IR website.

With that, I'll now turn the call over to Zander. Zander?

Zander Lurie -- Chief Executive Officer

Thanks, Gary. Good afternoon, everyone, and thank you for joining us on the call today. 2019 was an exceptional year for SurveyMonkey, punctuated by a strong fourth quarter. We accelerated total revenue growth to 24% in the quarter and grew enterprise sales revenue 145% over Q4 2018.

Enterprise sales now represents 25% of total revenue. We are a market leader in an increasingly important category. In our full first calendar year as a public company, we grew total revenue 21%, eclipsing the long-term revenue growth target we outlined during our IPO in September 2018. We added over 3,000 enterprise sales customers, ending the year with nearly 6,600 customers.

During the year, we more than doubled our sales team, strengthened our strategic partnerships with industry leaders, such as Salesforce and Microsoft, launched new products and tools, acquired two leading customer experience platforms, Usabilla and GetFeedback, strengthened our management team with impressive leaders and expanded our global sales capabilities across three continents. We accomplished all of this while delivering positive non-GAAP operating margin and generating approximately $54 million in unlevered free cash flow for the year, ahead of our outlook. We are executing more crisply and entering 2020 with ambitious goals to expand our enterprise product suite and further accelerate revenue growth. As outlined in our shareholder letter, our operational priorities center around three pillars: Surveys, customer experience, and market research.

In each of these three markets, we offer strong assets and see significant opportunities for growth. We sell our products through two channels, enterprise sales and over the web, which we call self-serve. For two decades, SurveyMonkey has been a category leader in the self-serve business. As we chart our long-term strategic plan, we'll be investing to expand our business in both go-to-market channels.

And the hyper growth rates in our enterprise channel give us high confidence, a much bigger opportunity lies ahead for this company. Our products are smarter, easier to use and more sophisticated than ever. Enterprises are recognizing the value of SurveyMonkey and deploying our software at greater scale in their organizations. The volume of new customers we're winning and speed in which we are deepening our penetration within our existing customers across enterprise sales is disclosed.

But what you can't see in our enterprise results is the quality of our customers and the size of those contracts. We grew RPO 45% year over year, demonstrating the success that our sales team has had winning high-value enterprise customers and upselling, cross-selling and expanding our penetration within existing customers. Aided by our strong brand recognition, we continue to win enterprise business and are taking share from competitors on the back of competitive pricing, enterprise-grade features and powerful integrations with strategic partners. Most importantly, customers who choose SurveyMonkey are reaping the benefits.

Dreamforce, salesforce's signature event and the largest software conference in the world saw attending survey response rates jumped from 8% to 97% after switching to GetFeedback for personalized surveys and on-the-go capabilities, functions not offered by the previous solution. The response Salesforce collects are used to enhance the attendee experience, including critical decisions such as informing speaker preferences and session themes. An example of a leading organization that is upgraded to SurveyMonkey enterprise is the Golden State Warriors. The business strategy team at the Warriors has been using SurveyMonkey for almost five years.

When the NBA team moved their home arena in 2019 from Oakland to Chase Center in San Francisco, upgrading the SurveyMonkey enterprise and Usabilla was the clear choice to capture customer feedback. With multiple use cases, including season ticket holder engagement, gathering fan input for their esports rebranding and adding the Usabilla feedback button on their website, the basketball franchise is leaning into fan feedback to ensure they continue to deliver an amazing experience. World class companies understand they need larger, more strategic deployments of our software to stay competitive and deliver the best customer experiences. We believe the scale of our market-leading web business will continue to fuel enterprise sales leads.

We started 2019 with approximately 100 customer-facing sales reps and delivered impressive growth in enterprise sales revenue during the year. We entered 2020 with a materially larger, well-trained force of seasoned sales reps who hit the ground running. There is a massive opportunity in front of us, and we look forward to demonstrating productivity gains from this talented group throughout the year. We are also deepening integrations with our strategic partners.

Our open platform approach represents the optimal path to productivity for our enterprise customers. Integrations with partners, such as Salesforce and Microsoft, expand our addressable market and enable us to deploy our enterprise-grade solutions seamlessly across millions of organizations worldwide who are already using these tools in their workplace. World-class companies choose SurveyMonkey because our sophisticated product suite delivers on quality, cost and speed of insight. Before turning the call over to Tom and Debbie, I want to share a quick perspective on what I'm seeing in the tech market and how it affects SurveyMonkey.

Every company in the world is going through a digital transformation. The market is relentless on companies trying to hang on to the status quo. Software enables companies to scale faster, acquire customers and attack incumbents with unprecedented speed. There is endless capital available to fund companies who achieve product market fit and a demonstrated ability to displace sluggish incumbents.

The pace of disruption is increasing. We know this because growth-oriented companies like Warby Parker and Chime are some of our best customers. The winners in this economy will be the ones that are most responsive and agile. They would deliver more valuable products and services to their customers, better employee experiences and stronger results for shareholders.

Our strategy is working. We are winning new business, upselling existing customers and ripping and replacing customers from leading competitors. Multinational companies such as Duracell, Office Depot Europe, CORT Furniture, and hundreds of others turned the SurveyMonkey to implement scalable solutions across their organizations. We are driving hyper growth in our enterprise sales business, while delivering positive operating margin and generating healthy cash flow.

In 2020, we expect to accelerate revenue growth for a fourth consecutive year. To sum up, this is an incredible time at this company. Our business fundamentals are strong. There is a massive opportunity ahead of us, and we are confident we are making a product and go-to-market investments to expand our enterprise market opportunity for years to come.

And with that, I'll turn the call over to Tom.

Tom Hale -- President

Thanks, Zander. In 2019, we laid the groundwork to execute against our strategic initiatives. We entered 2020 with a highly competitive product lineup and exciting opportunities to accelerate our growth journey as we move upmarket. We rolled out an impressive slate of new products and capabilities in 2019.

With crosstabs, sentiment analysis and workspaces, we increased the power of our analytic suite. Our new data center addresses the needs of customers in today's privacy conscious environment and brought us to the cloud. Our teams product made it easier for customers to collaborate. And in partnership with Salesforce and Microsoft, we deepened our ties with critical enterprise systems.

As Zander mentioned, organizations are increasingly realizing that companies need to engage their stakeholders what we call the feedback economy and the driving of critical business decisions with the feedback of customers and employees. Accordingly, customers are moving from one-off projects to collecting feedback in an ongoing and systematic way. Customers are integrating SurveyMonkey in their workflows and using the feedback to enhance the experiences for all of their stakeholders. In our survey business, the shift toward ongoing feedback collection shows up in a move toward higher value annual plans.

At the end of Q4, 84% of paying users were on annual plans, up from 77% a year ago. We are actively driving this transition via account verification, teams packaging and our enterprise sales focus. Steady adoption of our teams product continues, and we are adding new teams and users every day. We've lapped the first year of account verification, but we believe it will continue to be a driver as we convert more of our user base and continue to move upmarket.

In combination with account verification, we are using the in-product experience to expand the number of users in each team, while our marketing teams are driving engagement and renewals from team administrators or ambassadors. In line with our expectations, renewal rates for teams are higher than they are for individual users. We are making meaningful changes to our products, pricing, packages and go-to-market strategy as we focus on our move-up market. These prescriptive efforts are systematically driving higher retention rates and higher customer lifetime value.

When we sell a higher value enterprise contract with unlimited seats, multiple individual paying users from that single organization are converted into one user in our paid user counts. This can create noise in our paid user count, as we continue to move upmarket and continue to convert paying users into enterprise contracts. We are actively driving a shift to the enterprise and toward annual plans, and we are aligning our teams to acquire new customers and move-up market. And as we do this, we are delivering.

In Q4, we grew annual survey seats north of 20%. Now, I'd like to turn to customer experience or CX. This is a new and exciting opportunity enabled by our acquisitions of Usabilla and GetFeedback in 2019. Businesses of every size are waking up to the need for a customer experience solution.

Organizations lose billions of dollars per year because of poor customer experience, but customer churn is preventable if the issues are resolved in the first engagement. In a five-country survey, with over 12,000 responses, an overwhelming majority of consumers said they would more likely patronize the business that demonstrates that it changes the business policies based on feedback from customers. Enabling and automating multi-channel feedback collection, insights and actions is critical in today's competitive climate. It's early days in the CX space for us, but we're already seeing success.

In Q4, CORT, the world's largest furniture rental and relocation services company, adopted multiple products from our customer experience suite to deliver on their goal of unparalleled service. After years of collecting customer insights to get feedback, CORT added a dedicated voice of customer solution for capturing website feedback with Usabilla to cover more touch points and to improve their customer experience. This is a great example of how our CX products can work together to add unmatched value to an organization's multichannel voice of customer program. Our opportunity is to provide a comprehensive CX suite that disrupts the current expensive and service heavy offerings on the market.

GetFeedback and Usabilla allow us to provide customers with greater visibility into the entire customer journey across multiple touch points and channels, enabling us to be a challenger in higher value enterprise deals. Right now, our teams are hard at work on the integration and interoperability of the acquired products and technologies. Agility, ease of use, and exceptional value have always been the keys to our success, and we're excited to bring best-in-class customer experience solutions to a broader market in 2020. Turning now to our market research solution audience, it's changing the way that companies are gathering and analyzing market data.

The smartest players are increasingly looking to better understand industry trends and demographics to make better decisions. We are experiencing increased demand for our agile market research product and a higher velocity of usage. Earlier this year, we launched SurveyMonkey Audience Premium, which offers enhanced support and professional services for our committed market research customers, and we are seeing positive results. Organizations choose SurveyMonkey Audience to access a massive panel of respondents.

And because of its ease of use, speed, and insights actionable intelligence, including the rising star footwear brand, Allbirds. Due to their continued success of using SurveyMonkey Audience for agile market research, Allbirds has increased their usage each year since 2017. Allbirds relies on SurveyMonkey Audience to track the health of its brand across multiple countries and to explore consumer behavior and pricing in new markets. With a brand tracker that more regularly collects responses in key markets, can Allbirds can consistently keep tabs on its brand health, rather than waiting for quarterly reports from third-party market research agencies.

In 2019, Allbirds collected more than 14,000 responses in its brand tracking surveys and by cutting out the intermediary, Allbirds saves time and money with SurveyMonkey Audience. By deepening our capabilities in market research through new products like concept testing, we are extending value through solutions, not just respondents, not just panel and reaching more high spending buyers. Market research is a greenfield in a big TAM and we are making investments to capitalize on that opportunity. We're heavily focused on the next wave of innovation, and we look forward to sharing more details on future calls.

I'll now hand it over to Debbie to talk about our financial performance and our 2020 outlook. Debbie?

Debbie Clifford -- Chief Financial Officer

Thanks, Tom. I'd like to start by welcoming Gary Fuges, our new vice president of investor relations. Several of you already know Gary, who comes to us most recently from Castlight Health. Gary has a long history of leading investor relations, and I'm thrilled to welcome Gary to the team.

Moving on to the numbers. We are pleased with our results for the quarter and full year. We exceeded our revenue and unlevered free cash flow guidance for both Q4 and full-year 2019. I will start my commentary today on full-year 2019 results and then walk through our Q1 and full-year 2020 outlook.

Unless otherwise noted, all comparisons are year over year. Revenue was 307.4 million, up 21%. Revenue growth was driven primarily by our success in enterprise sales, which grew 114%. Our acquisitions of Usabilla and GetFeedback contributed approximately 4% to total revenue for the year.

As we mentioned last quarter, these acquisitions have been integrated and are not operated as autonomous business units. As a result, we will not provide specifics about contribution from the acquisitions in 2020 and beyond. Deferred revenue increased 39% year over year to 141 million. Remaining performance obligation, or RPO, which is the sum of deferred revenue and backlog, was 160.7 million, reflecting 45% year-over-year growth.

These are solid indicators of the strength of our business. Gross margin was 78% versus 74% in the prior year, driven by revenue growth and lower capitalized software amortization. Total operating expenses were 237.2 million, an increase of 65 million, driven by the ongoing investments we are making to execute on our growth strategy. As we previously discussed, investments were primarily in sales and marketing, with a specific focus on the ongoing build-out of our enterprise sales team, as well as in R&D to drive product innovation.

In addition, we made G&A investments required as a public company. Operating margin was 1%, in line with our prior expectations. Operating margin was down from 2018 due to the disciplined investments we are making to execute against our strategic priorities and drive growth in our business, including the two acquisitions we closed this year. As of December 31st, 2019, we had 131 million in cash and cash equivalents and $215.5 million in total debt for net debt of 84.5 million.

These strong financial results generated healthy cash flow during the year. Free cash flow was 40.2 million and unlevered free cash flow was 53.7 million, exceeding our guidance. I'd like to go through some housekeeping items before turning to 2020 guidance. On our last call, we foreshadowed some changes to our metrics strategy.

Our goal is to provide concise and transparent disclosures that align with how we are actively managing our business and how we measure success. As such, we are implementing a couple of changes beginning in Q1, and we'll continue to refine our metrics strategy over time. First, we will no longer report adjusted EBITDA. We manage our business through non-GAAP operating margin, and we'll continue to report and guide to this metric, which we believe is the best reflection of our bottom-line performance.

Next, we are shifting our focus to free cash flow versus unlevered free cash flow. We define free cash flow as operating cash flow, less capital expenditures. We believe this metric provides a better view of our working capital management. Therefore, we will guide to free cash flow, beginning with our 2020 outlook.

Finally, as you may have seen in our shareholder letter, we reported an upward revision of our enterprise sales customer cap as of Q3 2019 due to a onetime adjustment of net new customers from GetFeedback. In Q3, we added approximately 1,300 new enterprise sales customers, inclusive of approximately 800 net new enterprise customers from GetFeedback, bringing our total customer count for the quarter to over 6,000. This was a onetime adjustment, reflecting more net new enterprise sales customers, thus, less customer overlap than we anticipated prior to completing the integration. Now, I'll turn to the 2020 outlook.

We demonstrated significant progress in 2019 and anticipate continued momentum in 2020. In Q1, we expect revenues to be in the range of 85 million to 86 million for 25% year-over-year growth at the midpoint. We expect operating margin to be in the range of negative 4% to negative 2% for the quarter as we continue to invest in strategic opportunities to drive growth, industry leadership and competitive differentiation. For full-year 2020, we expect year-over-year revenue growth to be in the range of 22% to 24%.

We expect operating margin for the full year to be in the range of 1% to 2%. Our guidance reflects our intent to continue to invest further in go to market and innovation to drive revenue growth. We expect free cash flow to be in the range of 40 million to 43 million. To help you bridge from free cash flow to unlevered free cash flow, which we guided in 2019, the equivalent unlevered free cash flow range for 2020 is 51 million to 54 million.

Free cash flow in Q1 will be impacted by our annual bonus payouts. We also plan to expand our facilities footprint this year, which we anticipate will drive approximately 10 to 15 million in incremental capital expenditures in 2020 and will impact our free cash flow. I'll now turn the call back over to Zander.

Zander Lurie -- Chief Executive Officer

Thank you, Debbie. SurveyMonkey has the product suite to address the challenges of 21st century enterprises. Organizations use our software products to turn feedback into action. When companies fail, it's often because they don't understand customer centricity and how to achieve a stronger and healthier culture for their organization.

There's a widespread sense among consumers that companies aren't moving quickly enough to adapt to the feedback economy. In a new SurveyMonkey Audience survey released today, we show the gap between how consumers feel businesses are delivering for their customers relative to how businesses deliver for shareholders. While about half of Americans see companies working "very well" for the interest of their shareholders, just 18%, say, those companies are doing fully right by their customers. Fewer still are seeing a lot of alignment with the interest of their employees, communities or the environment.

When asked where a company should be focused, by far, the Top 2 constituents are customers and employees. Customers and employees are also the Top 2 groups American consumers see as the primary drivers of near-term business success. Companies should take heat. While almost half of Americans do not own any equities, it's pretty telling that only one in eight respondents say shareholders should get the most attention.

Much has been written by the business roundtable Larry Fink, Marc Benioff and others about the importance of investing in all your stakeholders, employees, customers, community and shareholders. To lay any of your concerns, we commit to always being vigilant and stewards of your shareholder capital. I am proud of the progress we have made in the past 12 months. We have rich opportunities ahead of us and ambitious plan for this year.

There is hard work ahead of us for sure, but we are excited to continue moving upmarket as we build SurveyMonkey for the next 20 years. Thank you for your time today. We are now available for Q&A. Operator?

Questions & Answers:


Thank you. [Operator instructions] Our first question comes from the line of Eric Sheridan with UBS.

Eric Sheridan -- UBS -- Analyst

Thanks for taking the questions. A bigger picture one around the way you frame the shareholder letter around the three pillars of the business, can you help frame for us where do you see levels of contribution growth from those three pillars, survey, customer experience and remarket research, not only in 2020, but looking out over multiple years? And the second part of the question would be what investments have to be lined up against executing against those three pillars?

Zander Lurie -- Chief Executive Officer

Thank you, Eric. It's a great question, and it's a good frame for where we're taking the business in 2020 and beyond. So, we are transforming from a one-product company to a multiproduct company, and we've been a market leader in the survey category for a long time. And while it still represents a disproportionate share of our business, going forward, the growth in the two other categories will make that a smaller contributor.

So in surveys, clearly, the No. 1 contributor to growth is selling that product into enterprise. And we've made huge progress in the last two years. We will continue both domestically and abroad.

But also in self-serve, we have a world-class growth team that is opening up new marketing channels domestically and abroad, as well as unpacking a feature set, where literally, 3% of our users pay us. So, we believe that that self-serve surveys business can grow at double digits -- low double digits for many years to come, but the growth driver in surveys is going to be around sales. CX is a very different business. We are a challenger in that market.

It is a massively growing category. The two franchise acquisitions we made in Usabilla and GetFeedback last year position us really well. And so, this year is all about stitching together these new assets, building some new analytical capabilities and then selling that into the Salesforce ecosystem. So that is about -- that's going to be a fully sales assisted business.

And then, market research, we have a great product. Some of our best customers that this company are using that product. Tom mentioned one, Allbirds, IBM and some other significant customers we can't share by name. And for us, it's really about just making the market aware that this massive TAM, which is largely off-line, there is a really elegant software solution, and now we have a new services layer to help customers get the full rich power out of that, so you're going to see a disproportionate share of growth out of CX and market research, but we believe the surveys business will continue to be a 15% to 20% grower across both sales and self-serve.

Eric Sheridan -- UBS -- Analyst

Thank you.


And our next question comes from the line of Mark Murphy with JP Morgan.

Mark Murphy -- J.P. Morgan -- Analyst

Yes. Thank you. Zander, if we think through the solid year-over-year growth in the enterprise business, which is bringing in stickier customers for you. And then, also, looking at the ASP uplift and you have this increasing mix of the annual plans, which will have higher retention.

Do you think we should be kind of reevaluating the customer lifetime value, adjust the stability profile of the business? Or in other words, is it kind of tangible to you that you're going to be transitioning the business to a different end state if we're looking a few years down the road?

Zander Lurie -- Chief Executive Officer

Mark, you nailed it. I mean, this business is transforming into an enterprise SaaS business. We now have 6,600 enterprise customers over the last two years since we had -- since we hired John Schoenstein. He has built out a world-class leadership team, with more than double the size of the go-to-market account executive base.

And we are deploying our sales force globally in a way that we're winning awesome logos. The beautiful part of this business is, it's a truly win and expand business. We never go in and win a full sitewide license, and so our products, once we get in, and our products can hunt and they go viral and folks start to integrate our products into their workflows, you're going to see really healthy net revenue retention in that triple digit and growing. So, we do very much believe these are very sticky relationships where LTVs will grow over time.

That's forcing us to reassess our marketing capacity and make sure we're spending enough because the customer wins justify it. And similarly, on self-serve, this business used to have a very high percentage of monthly users. We've gone to 84% of our self-serve users on annual plans. That's just up from a year ago when we were at 77%.

We know the annual user to retain a lot better. Why? Because they're more engaged, more opportunities for them to get value from the product. And that annual plan, we've got a lot of cohort data to show that once folks start to get value from the program stay a year or two years, it's a long tail to that customer utilizing our services. So yes, I do think that we are reassessing our marketing budget and thinking about higher LTV customers justifying incremental dollars in that channel.

Mark Murphy -- J.P. Morgan -- Analyst

I had a quick follow-up for Debbie. If you find continued success with these key growth initiatives, I think, the three key initiatives that you have. And you're able to achieve something like mid-20s sustained revenue growth on a multiyear basis. What do you think you would aspire to just in terms of an optimal blend between the organic growth versus the acquired growth? I think we're just trying to understand what is possible for the core business? And then how you're thinking through the M&A opportunity?

Debbie Clifford -- Chief Financial Officer

Sure. Let me just say that our focus is on making the whole of our business successful, which requires us to execute across the three pillars of opportunities, that Zander talked about. We've integrated the acquisitions, and we're focused on bringing best-of-breed challenger CX solution to market. We're not tracking those acquisitions at autonomous business units.

Frankly, we're just not running the business that way. We're focused on total revenue growth. We grew total revenue 24% in the quarter and 21% on the year, and we guided to accelerated revenue growth in 2020.

Zander Lurie -- Chief Executive Officer

And Mark, I would supplement that with the aspiration to be a mid-20s top line grower is with the existing assets we have. And so, we aspire to be a very predictable and consistent business that can grow in the mid-20s with the existing assets. That said, I believe we have a senior management team that has the capacity to evaluate, execute, integrate other high-quality enterprise software assets that can be sold through the sales channel. And if the markets get bumpier, and if there's a disconnect in valuations, I think we have a brand and a footprint and a sales team and a G&A infrastructure that can accommodate more M&A in the future.

There's nothing teed up at this point. But you don't go public just to get on quarterly calls, the security, the capital and the ability to scale this business organically and inorganically is available to this business.

Debbie Clifford -- Chief Financial Officer

Thank you very much.


Thank you. Our next question comes from the line of Ron Josey with JMP Securities.

Ron Josey -- JMP Securities -- Analyst

Great. Thanks for taking the question.  Maybe a follow-up or two on what we're talking about Zander Lurie with just the overall growth rates. And overall, I just wanted to ask about the self-service business. You talked about, should grow, call it, or get back to low double-digit growth for years to come.

And unpacking feature sets and new marketing channels. Can you just talk about how the pricing change in the mix shift to annual is basically helping to get to that low double-digit growth and other -- and how you're thinking about newer marketing channels within self-serve? And then as part of that, just how teams adoption is coming along? I think you talked about 10% adoption in 3Q. Where that's going now and how that might help self-serve?

Zander Lurie -- Chief Executive Officer

Sure, Ron. I've had the pleasure of being associated with this business, dating back to 2009 when David Goldberg asked me join to board when we had 12 employees. For many, many years, our debt team really just packed more and more features and value into a horizontal subscription offering. And then, we marked it monthly and an annual price.

And I think over the last four years, as we've really made just attempt to move up-market and sell enterprise software, we started to realize just the importance of our scaled user base like we have of getting the right customer into the right package at the right price. And we talk every day about we deliver an incredibly valuable product, free software. It's not monetized for that. 97% of our users do not pay us.

And so, for us, it's really about getting our corporate users onto enterprise plans with all the data integrity and single sign-on and enterprise domain lockdown and integrations of Salesforce and Microsoft to those. In self-serve, we want to make sure we get users into the right package, and so we are reassessing the feature set, the pricing, that's what led us to the $99 monthly pricing. And as you all know, price and elasticity, a good number of those monthly users jumped to the annual plans where we showed real economic value. A number of the users just stayed in the monthly plan at $99.

And then, a good number of those monthly subs dropped back into the free plan. Those are prescriptive moves we are delivering to make our business more annual, more retentive and more likely to lead to enterprise sales. So that's a trade we'll make. It's why the paid user number, frankly, is less relevant as we become more of an enterprise SaaS business.

We are solving for overall bookings growth, and you'll see that RPO and deferred revenue jumps. Paid users are kind of -- is a byproduct of it. But we're coming into an area now with 84% of our users on annual plan and growing. It just gives us more and more opportunities to think about where we put new value for our users and make sure it's in the right plans and those plans were priced competitively.

Ron Josey -- JMP Securities -- Analyst

On the Teams, any update there would be great.

Zander Lurie -- Chief Executive Officer

Sorry, I got long-winded there. Yes. So, teams we launched in Q4 of 2018. And really, this was meant to satisfy the needs of what many of our user come to SurveyMonkey for, which is to confer in the question creation process and then to collaborate in the results sharing.

Really proud of the SurveyMonkey folks that led to this cross-functional teams launch. Frankly, the success of that launch over the last five quarters have surpassed our expectations. Remember, when we went public, the SKU was not yet available. That's a -- it's a plan that we believe will grow for a long time, not only in terms of new teams, but expansion of existing teams.

And they're more retentive than individual users, as you can imagine, when you have three or five or seven users in a team and they're getting value from the process. If some one person turns out, that doesn't mean the team no longer stays as a SurveyMonkey team subscriber. So, we will continue to pack value into teams market to expand teams and drive new teams, and I think it will be a key driver in the success and growth of the self-serve business going forward.

Ron Josey -- JMP Securities -- Analyst

Thank you.


And our next question comes from the line of use of Youssef Squali with SunTrust.

Youssef Squali -- SunTrust Robinson Humphrey -- Analyst

All right. Thank you very much. Hey, guys. Gary, congrats on the new adventure.

So Zander, maybe one for you and a housekeeping one for Debbie. So on the international, so you have a new data center in Ireland. You acquired Usabilla, it's mostly international. You're enjoying the -- an established enterprise sales force there.

How do you think about the international opportunity over the next couple of years? And maybe even start with how you see it in 2020 within the context of your -- of the guidance that you just spelled out, and what are the primary drivers of growth there? Are they similar to the U.S. in terms of the product priorities or the pillars you kind of mentioned? And then, Debbie, this may be the last time you probably will talk about contribution of these acquisitions. So thanks for the 4 percentage points that you alluded to for -- as impacts for 2019. I was hoping maybe you can share with us what the number was for the fourth quarter, both for Usabilla, GetFeedback and then maybe the headwind of -- from the price change for the self-serve on the quarter?

Zander Lurie -- Chief Executive Officer

Youssef, thanks for the question. So first, I'll take international. I think, frankly, our commitment to 2019 on the international initiatives was a money spending one. The data center hall was a big one, really proud that we're meeting the demands of enterprise customers in Europe with our AWS data center there.

We hired up a sales team in late Q2. They beat their booking targets in Q3 and Q4. And then, as you mentioned, of course, the acquisition of Usabilla brings us a business to generate 75% of its revenue outside of the United States. For many years, this business had been about a third international, just on the back of self-serve and translating the site and accepting other currencies.

But as we've discussed in the feedback economy, there is nothing about German, British, French, Dutch businesses that look different than American businesses in terms of their need to drive customer centricity programs, to be listening to the stakeholder feedback inside their companies, from their shareholders and their communities. And frankly, there is no SurveyMonkey of fill in the blank, we don't have behemoth competitors when we think about new markets. We've got a lot of work to do to build up our brand and to refine those selling motions, but we believe that the business growth, especially in the half dozen European countries that we're targeting over the next few years is going to look a lot like the growth efforts we have in the states. Really invest in the sales team, their enablement, their training, they have new higher AOV products to sell, open up new marketing channels in self-serve and get all the growth testing and pricing, right? And we believe that all three of the pillars we outlined globally are just as relevant for all the developed European countries that we're in.

And then, I'll let Debbie talk to your specific questions.

Debbie Clifford -- Chief Financial Officer

Sure. So let me start by saying the acquisition contribution to Q4 was roughly 5 million. So that was in line with what we forested last quarter in our guidance. In terms impacts on the growth rate from monthly to annual, I would say that there was some impact as we had foreshadowed last quarter.

We're not going to get into specifics, but you can see it in our self-serve growth rates. I would also point you to both deferred revenue and the remaining performance obligation, which grew handily. So, while we had been moving more of those monthly customers to annual plans, we're pleased with the growth that we saw in deferred revenue, which grew 39% year over year, and RPO, which grew 45% year over year. I would say throughout the year both deferred revenue and RPO growth accelerated, both organically and inorganically, and we're pleased with that trend.

Zander Lurie -- Chief Executive Officer

Yeah, I would just add on to Debbie's comments there on self-serve. This pricing move we made from -- in months, it was a big one. And I think it did have a two-quarter suppressive effect as we really kind of try to get people in right packages and the implication there is that some -- a good number of month's sales we lost. You could see now that at 84% of annual, I think the quality of the overall customer base in terms of its LTV is just a lot higher because it's going to be much more retentive.

And then, I've got to say on the organic versus inorganic, I know it's important for folks, models, and we want to be as constructive as possible. But sitting in my chair, the one thing you know that the minute you own 100% of the shares of these companies and these are our new employees, we dynamically adjust our budgets and our resource focus and engine, marketing to make sure we're putting the best team on the field to sell the best products we have and the difference going into 2020 versus 2019 with these two really franchise assets in CX have changed our strategy quite demonstrably. So, to Debbie's point, we don't manage them as autonomous business units. We've put people on planes and moved people on locations and changed reporting lines to really fully capitalize on the opportunity available to us.

Youssef Squali -- SunTrust Robinson Humphrey -- Analyst

That's helpful. Thank you both.


Thank you. Next question comes from the line of Brad Sills with Bank of America.

Brad Sills -- Bank of America Merrill Lynch -- Analyst

Oh, thanks, guys, for taking my question.  I wanted to ask about ARPU. Obviously, some good results there. You're seeing some acceleration. How much to the extent you can unpack it is that due to renewals on some of these enterprise deals kind of coming in now, these first wave of enterprise deals, their propensity to buy more and expand into more departments versus new customers kind of starting bigger upfront.

Is that also impacting the number? I guess, any color between those two would be helpful, please.

Zander Lurie -- Chief Executive Officer

Yeah. I think, Brad, it's -- I think, Debbie bring her dozen years of experience from Autodesk is helping the team kind of transform the metrics and then she got more to share later in the year. But the business we went public with in terms of paid users and ARPU, you've got to remember, just given the size of our paying user base over 700,000. It's just a numerator, denominator that has so much noise in.

And so, just to give you a best example, for many -- for a long time, we had monthly users at $37. And certain enterprises that would pay us 20, 30, 50,000 a year with one seat. So just the noise of the 6,600 enterprise customers who may not be paying us based on seats at all. It could be a very different value metric that encourage them to buy our software.

Versus a monthly paid user number, it's just the averages, I don't think, give you the best signal through the noise. So the efforts we've been taking to move upmarket in terms of the annual plans to move upmarket with our enterprise products and to be pricing more of value as opposed to seats are making those numbers just less valuable. So over time, what I'm trying to do is push this team to deliver more valuable customer logos, drive higher AOVs, drive net revenue retention, ultimately in service of their booking, bigger revenue. I think you can count on AOVs moving up, but it's just those ARPU numbers are not ones we solved for in our management or in our compensation incentives.

Mark Murphy -- J.P. Morgan -- Analyst

Got it. And then, I wanted to ask about CX and Engage. Are you seeing those starting to contribute here more? I know it's early, and I know the focus is mostly on enterprise and teams at this point. But I guess, how are those two tracking? And when would we expect those to be more material?

Zander Lurie -- Chief Executive Officer

Sure. So the three pillars again, surveys, CX and market research. CX, customer experience, we bring three really strong assets to bear. CX was the homegrown product here at SurveyMonkey.

And then, of course, Usabilla and GetFeedback, we acquired last year. We've assembled a world-class team across product and marketing and sales. We are selling in the market today, specifically in the Salesforce ecosystem quite productively. And we have new product to launch later this year.

So our goal, explicitly, internally, externally, is to launch a holistic end-to-end product suite for CX that we could sell into that Salesforce ecosystem. And so, there are hundreds of thousands of Salesforce customers. If you're spending tens of thousands, if not millions of dollars on Salesforce to do right by your customers, you've got to use software to collect feedback to deliver insights and to take action. And if you're not using SurveyMonkey or one of our other products, you've got to be using something else.

So that is the market we want to go after. And frankly, the Qualtrics sale to SAP just enhances our position in that ecosystem. That was a key driver in the acquisition of GetFeedback. They've got a native solution built for Salesforce.

They've got terrific relationships with sales engineers that are helping refer customers to our platform. So going after that Salesforce ecosystem with our broadened CX suite, which will increasingly broaden later this year with new product will ship is a key tenant of the strategy. Engage, we're not talking about as much right now just to keep people focused on CX, but our customers love it, we continue to sell it.

Brad Sills -- Bank of America Merrill Lynch -- Analyst



Thank you. Our next question comes from the line of Brian Fitzgerald with Wells Fargo.

Zander Lurie -- Chief Executive Officer

Come on. Hey, Brian.


I apologize. Brian dropped his line. And now, we have Chad Bennett with Craig-Hallum.

Chad Bennett -- Craig-Hallum Capital Group LLC -- Analyst

Thanks for taking my questions. So just referring to the guide for the year, fiscal '20, you guys, obviously, just put up a nice healthy acceleration growth rate of 24% in the December quarter, guided for 25% growth in the March quarter. I mean, your RPO and deferred rev numbers are phenomenal year over year. I guess, what would be a headwind, so to speak, to revenue growth post March quarter other than maybe lapping the acquisition that would throttle back revenue growth year over year?

Zander Lurie -- Chief Executive Officer

I think you got it. I mean, it's -- we guide to what we know, this is our sixth quarter and we want to be judicious about putting in place a number that we know is a high probability that we can build and hit. The lapping of the acquisitions we closed Usabilla at the end of Q1 last year, and then we closed GetFeedback in the beginning of -- end of Q3. So just in terms of year over year, Q1 has a bit of a different comp than the rest of the year.

But we thought 22 to 24% demonstrated both revenue acceleration, as well as some modest expansion of operating leverage. And if we execute better than we predict, you'll see that in the numbers.

Debbie Clifford -- Chief Financial Officer

Yeah, Zander is right. Q1 has tailwind from both of the acquisitions. And then, in Q2 and Q3, we had slight tailwinds from GetFeedback. We're also -- we've mentioned this before, but we're really focused on driving productivity with our Salesforce, so we start to realize more of those benefits in the back half of the year when we think of shape of the year.

And then, I just wanted to point out that we do see some seasonality in Q3 during the summer months that becomes more pronounced as we sell more internationally possibility in Europe.

Chad Bennett -- Craig-Hallum Capital Group LLC -- Analyst

Got it. No, I appreciate the color. Maybe one follow-up for me. Just in terms of the self-serve shift to annual plans and ending the year at 84%, do you have a target or a thought of maybe where that can go exiting this year?

Zander Lurie -- Chief Executive Officer

Thanks, Chad. And we had 22% year over year growth in annual users in Q4. And so, the -- you can see the solve there that we had a drop in monthly users. And again, it's prescriptive.

There is some elasticity in our pricing. And we don't want to turn away monthly users, but we want to make the economic value opportunity for folks to buy the annual plan a compelling one. So, I think the rate of change in terms of that annual mix will slow this year. I don't think you'll see the 7% change that we saw in 2019.

I also think that somewhat depressive effect of revenue recognition that Debbie mentioned in Q3 and Q4 is probably over. But we're going to continue to do everything we can to make our products more valuable, to make the renewal rates higher, to make the opportunities to upgrade to annual compelling. And we just think we've got a ton of running room for many, many years to come to get a higher percentage than three to subscribe to some of our paid plans. So our growth team across instant product and marketing have the ton of fun experimenting, we've got a world-class web team with massive scale to work with, and we've got a long runway to show users why there's a really valuable opportunity to subscribe to SurveyMonkey.

Chad Bennett -- Craig-Hallum Capital Group LLC -- Analyst

Awesome thanks. Great execution at year end there.

Zander Lurie -- Chief Executive Officer

Thanks for the good words.


Thank you. And our next question comes from the line of Brian Fitzgerald with Wells Fargo.

Brian Fitzgerald -- Wells Fargo Securities -- Analyst

Thanks, guys. Sorry, I fell off there before. And hopefully, these haven't been addressed. But this was actually a follow-up to the previous question where, Zander, you were talking about some of the customer experience things.

And I think maybe more than your competitors, you're focused a bit less on the visualization layer, more on plugging into the broader ecosystem of partners, the customer system of record, Salesforce, Microsoft, Oracle, Mercado, so on. Could you talk a bit about what the prioritization is there? And what you find actually resonates with customers in the real-world in terms of visualization or plugging on the back end? And then one quick follow-up on -- it's been three months since you launched the Einstein Bot. I want to know what traction you've been seeing there? And how that integrates in nicely with GetFeedback?

Zander Lurie -- Chief Executive Officer

Sure. So I'll take Salesforce first. I highlighted it. It bears repeating.

I mean, Salesforce has written a book on SaaS software and selling. We go to school on them every day. We did our first executive off-site just learning from their team of just best practices. And while I'm quite pleased with the progress we've made, we also have walked what a Varsity team operates like and Salesforce, there's just a lot to aspire to, and a lot of productivity gains from emulating some of their best practices.

So the relationships we have now with account executives and sales engineers, it's a new marketing channel for us, right? You don't win Salesforce customer contracts by buying AdWords. So it's a very different go-to-market customer acquisition channel. And to that GetFeedback team is really schooling us on how to do that well. Their office is in the shadow of Salesforce Tower.

Their relationship date too many years, many of them were trained at Salesforce, and their solution was built natively for Salesforce. So they get really great feedback on what is important to Salesforce customers. And there are literally tens of thousands of customers for us to go try and win in the next few years. Microsoft is one we haven't spoken about on this call, but it's incredibly important.

Satya Nadella last May at the Build Conference highlighted SurveyMonkey is one of the key integrations they were excited about. There are 180 million users of Outlook, and we're going to be launching a product that enables folks to collect peer feedback in email with a SurveyMonkey integration. So we think it's a really powerful, elegant solution that doesn't necessitate you going into a new tab and a new product, and you can do it right in the simplicity of those workflows. We've also got a powerful integration with Power BI.

And then, of course, Microsoft Teams is one that they've spend a lot of time boosting and an area that we're quite proud of that integration.

Tom Hale -- President

Brian, the only thing I'd add to that is when you think about the Einstein integration, that was with SurveyMonkey, the CORT product and GetFeedback also had a Chatbot integration. So in some sense, we're actually getting CORT into the GetFeedback part of this, and we're seeing good uptake of kind of a chat solution that is based on the GetFeedback solution. So overall, I would say that the adoption there, it's early days. We're seeing customers who are interested in using Einstein, but it hasn't been a huge material contributor for us as we go.

Brian Fitzgerald -- Wells Fargo Securities -- Analyst

Thanks guys.


Thank you. I would now like to turn the call back over to CEO, Zander Lurie, for any further remarks.

Zander Lurie -- Chief Executive Officer

Well, thank you for the exciting key up there. I appreciate the analysts many of whom have been with us over the last six quarters. So we appreciate your continued support and diligence, really appreciative of the SurveyMonkey team for all their fine efforts, not only in Q4, but all of 2019. And much more excited about 2020 and what we're going to do to help our customers and our shareholders thrive.

So appreciate all your input and look forward to further conversations. And with that, we'll bid farewell.


[Operator signoff]

Duration: 58 minutes

Call participants:

Gary Fuges -- Vice President of Investor Relations

Zander Lurie -- Chief Executive Officer

Tom Hale -- President

Debbie Clifford -- Chief Financial Officer

Eric Sheridan -- UBS -- Analyst

Mark Murphy -- J.P. Morgan -- Analyst

Ron Josey -- JMP Securities -- Analyst

Youssef Squali -- SunTrust Robinson Humphrey -- Analyst

Brad Sills -- Bank of America Merrill Lynch -- Analyst

Chad Bennett -- Craig-Hallum Capital Group LLC -- Analyst

Brian Fitzgerald -- Wells Fargo Securities -- Analyst

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