Greetings. Welcome to Vonage Second Quarter 2020 Earnings Conference Call. [Operator Instructions]. I will now turn the conference over to your host, Hunter Blankenbaker, Vice President of Investor Relations. Thank you. You may begin.

Thank you, operator, and good morning and welcome to our second quarter 2020 earnings conference call. Speaking on our call this morning is Rory Read, Chief Executive Officer; and Dave Pearson, CFO. Also joining us is Omar Javaid, President of the API platform; and Rodolpho Cardenuto, Head of the Applications Group. Rory will discuss our strategy and second quarter results, and Dave will provide a more detailed view on our second quarter results and third quarter and full year guidance. Slides that accompany today's discussion are available on the IR website. At the conclusion of our prepared remarks, we'll be happy to take your questions. As referenced on Slide 2, I would like to remind everyone that statements made during this call may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's expectations, depend on assumptions that may be incorrect or imprecise and are subject to risks and uncertainties that could cause actual results to differ materially. More information about those risks and uncertainties is highlighted on the second page of the slides and contained in our SEC filings. We caution listeners not to rely unduly on these statements and disclaim any intent or obligation to update them. During this call, we will be referring to non-GAAP financial measures. A reconciliation to GAAP is available in the second quarter earnings press release or the second quarter earnings slides posted on the IR website. Additionally, during prepared remarks today, all comparisons to prior periods are year-over-year unless otherwise noted as sequential. So with that, I'll turn the call over to Rory.

Thanks, Hunter. Good morning, everyone, and thank you for joining us today. I'm pleased to be speaking with you on my first conference call as Chief Executive Officer of Vonage. I hope you and your families are safe and healthy, and I look forward to meeting many of you over the coming months. Having been in the role for the past 30 days, I would like to cover the following key areas in my opening remarks. First, based on early learnings, my initial thoughts on how we can take Vonage to a new level of execution and further growth. Second, the process we have embarked upon to ensure we are efficiently and effectively allocating our skills and resources towards driving the best trajectory for our business moving forward; and finally, our strong second quarter results. The opportunity to join a company like Vonage is rare. Vonage was born out of innovation, and through that innovative spirit has reinvented itself into a global leader in cloud communications, helping businesses across the planet accelerate their digital transformation journeys. Vonage is in the right place at the right time in a very large and growing market. I'm excited to leverage my experience driving large global transformations and operational execution to help lead the company forward into its next chapter. I've been in the technology and software space for the past 38 years. I understand the power and value of cloud solutions and what they offer to global businesses. And I am passionate about innovation, execution, fact-based decision-making and accountability. Since joining on July 1, I have immersed myself in our business, conducting, operating and strategic business reviews with team members across the company. I've also been meeting with partners and customers to understand where we're strong and where we can improve. I have a deep appreciation and respect for what our Vonage team has built and there is more to learn. We have a strong foundation, but it is clear we have work to do. I believe, together with the talented team here, we can lead Vonage through the changes required to reach its full potential. Today, I'd like to share my initial observations. First, the market opportunity is massive. We are at the beginning of a huge market-wide communications revolution. If there ever was a question, whether businesses needed to digitally transform not only to survive but thrive, COVID-19 eliminated any doubt. The need for customers to accelerate their digital transformation through communication is now essential. Our Vonage Communications Platform programmable API services are gaining momentum in almost every industry. And we see tremendous opportunities ahead for helping companies transform the way they engage with their customers. After spending time with our API services team and seeing new wins and new use cases every day, I think our CPaaS opportunity is even greater than many of the industry analysts' project. We will continue to focus our resources here to capture this rapidly growing market. While COVID-19 is presenting its share of headwinds in the unified communications and contact center application space, with weakness in F&B and some businesses slowing down parts of their large technology projects, we are also seeing others continuing their digital business efforts. Businesses across the globe need to seamlessly connect to their employees and customers, no matter where they are. This will only accelerate the move from on-premise to cloud-based communications. Here, we need to build a highly scalable, efficient go-to-market engine, leveraging our direct and additional channel capabilities to improve our performance. Second, we have the right technology to capitalize on this accelerating opportunity. The Vonage Communications Platform brings unique value by using programmable API services to integrate multiple communication channels, video, voice, messaging, chat, e-mail and verification into customers' applications, products and workflows. This delivers both the power and flexibility our customers need to disrupt their industries and enable the type of business continuity, remote work and remote delivery of services that is so critical in today's environment. Whether our customers are building their digital applications with our programmable API services or using our fully formed unified communications and contact center applications, we are providing it from our communications platform. Based on my initial reviews, I am confident in our platform and product portfolio. I believe the breadth and strength of our product portfolio is one of the reasons we are uniquely positioned to win. Third, we have been transitioning the company into a leader in cloud communications. Now we need to further optimize our business by being more efficient, speeding innovation and streamlining our organization and processes. We're committed to managing the company for strong growth and profitability. My team and I are working on a business optimization and alignment project to best focus our resources and drive stronger operational execution. We expect to complete this assessment over the next 90 days, and we'll set up our strategy and operating plans for 2021 and 2022 to strengthen Vonage's position to capitalize on these market opportunities. We will be customer-driven and focus on areas where Vonage products and solutions deliver differentiated value and where we can win a disproportional share of the market. We will complete the review of the consumer segment as part of this overall business optimization and alignment project. In the meantime, we are operating this business with efficiency, discipline and without distraction. Fourth and finally, I have been highly impressed by the talent and commitment of our Vonage team. We are a technology software company with huge opportunities in front of us; and we have the talent, innovation, drive and passion needed to capture them; and we continue to invest in talent. Yesterday, we announced a key addition to our executive leadership team. We are pleased to welcome Joy Corso to Vonage as our new Chief Marketing Officer. Joy's marketing expertise, leadership skills and operating experience will help further position the company as a software and technology leader. She will work with our marketing team to help drive Vonage's business execution and highlight our evolution into a world-class business software-as-a-service company. Now turning to results. We executed well in the second quarter. The business segment revenues totaled $226 million. Business service revenues were $212 million, an 18% year-over-year increase. API platform revenues now represent 47% of our business revenues, up from 41% a year ago and will become the majority of our business revenue in 2021. Within this result, API platform revenues grew 32% year-over-year, driven by high-value API services and a record number of new customers. The overall CPaaS market is accelerating, and we expect this trend to continue. Unified communications and contact center application service revenue grew 7%, in line with our expectations, but we have additional go-to-market and efficiency work to do here. Business segment churn remained low at 0.9%; and on a consolidated basis, revenues totaled $311 million, and we delivered adjusted EBITDA of $42 million. A very strong quarter for our API platform was driven by strength in 3 key areas. First, our revenue growth accelerated to 163% year-over-year in the high-value API services area, which includes programmable video, the largest portion; voice; IP messaging; and verification. High-value API services now account for more than 20% of API platform total revenue. As part of our business optimization and alignment project, this is an area where we will clearly focus additional resources and leverage our leadership in video to continue high growth. Within high value, video continued to show exceptional strength, driven by telehealth, remote education and virtual events, such as concerts. We are also seeing a lot of success in the social, fitness and dating industries, including some of the largest players in these spaces. Our video API services are supporting customers through this pandemic by enabling them to create new experiences and new ways of doing business. Video is introducing Vonage to many new customers, highlighting the depth and breadth of our complete communications platform. Second, our dollar-based net expansion was 119%. We expanded our relationships with several of the largest technology companies in the world, including Google and Amazon, offset by declining traffic and COVID-impacted related industries like travel, hospitality and transportation. Our dollar-based net expansion in our high-value API services exceeded 200%, highlighting strong customer retention and increased usage across our platform. For example, doxy.me, a U.S.-based telehealth leader, has continued to grow rapidly, adding more than 700,000 physicians to its platform since March and has now expanded into Europe. doxy.me is supporting more than 15 million patient visits monthly with 500 million minutes of video sessions powered by Vonage. And third, we signed a record number of new customers in the second quarter. Importantly, approximately 70% of these customers are leveraging our high-value services in industries like financial services, social, gaming and retail as well as in telemedicine and distance learning. One example of how the power of our platform API services translated into a strategic customer win this quarter is ujet, one of the fastest-growing private contact center companies. As one of the providers in ujet's multi-provider architecture, Vonage will provide programmable voice to power the connectivity and underlined telephony functions for ujet's customer support platform. This is a breakthrough win for Vonage in this growing market for contact center voice capabilities. Our unified communications and contact center application service revenue grew 7% as projected. This growth rate was driven by our focus on mid-market and enterprise customers, offset by the micro-segment and some COVID-related headwinds. Despite the economic impact of COVID, our logo churn remained low, demonstrating solid business execution and customer loyalty. Mid-market and enterprise service revenues, defined as those customers with greater than $12,000 of ARR, increased 14% in the second quarter. Service revenues from enterprise customers, specifically defined as those with greater than $120,000 of ARR, grew 22% year-over-year. As expected, some mid-market and enterprise customers, most notably in the travel and hospitality space, continue to reduce their seat count, while others requested credits or payment deferrals. These impacts initially appeared to have peaked in May and started to moderate as the world economy gradually reopened. Given recent increases in COVID-19 infection rates, we have experienced some reduced pipeline visibility in the unified communication and contact center application space, impacting the quality of the pipeline for these products for the second half. Bookings from mid-market and enterprise customers grew 13% year-over-year and comprise 67% of the application product bookings in the second quarter. We continue to see strength in our large customers as we signed 11 7-figure TCV deals, and the average deal size increased 26% year-over-year. While we saw growth in these customer segments, it is still under our expectations of fully offsetting the impact of our reduced focus in micro. Our micro customers are those with less than $3,000 of ARR comprised 29% of application product service revenue, contracted by 3% year-over-year. Given our limited sales and marketing investment in this cohort as well as continued impacts from COVID, we expect additional pressure here in the second half. As part of our business optimization and alignment project, we will focus on building a highly scalable, streamlined go-to-market engine over the coming quarters to drive pipeline and booking velocity. We will target those customer segments where our products best fit, where customer growth is strong and where we can win a disproportional share of the market. As part of this go-to-market work, we'll continue to accelerate investment in the channel where we have experienced significant growth over the last year. We are pleased that Curt Allen joined us in July as our new Head of Channel. Curt has more than 2 decades of channel experience and has been both a master agent and a leader of channel programs with large technology providers. I'm confident that Curt will accelerate our momentum within the channel, an increasingly important portion of our go-to-market. Our gross sales were up in the second quarter, not only in unified communications and contact center products but also in combination with our programmable API services. This was a significant differentiator in several large deals, and we will continue to build on the synergy across our products. A good cross-sell example is Domino's Pizza. Domino's is a technology pioneer that has developed innovative ordering platforms to drive digital sales and signed an agreement with us in the quarter. Domino's will leverage Vonage's unified communications solution and programmable voice API capabilities to connect more than 6,000 franchises and corporate locations across the United States. Our solution will help Domino's provide more personalized support to its customers and enhance the order-taking process and drive efficiencies while creating a better customer experience. This was a highly competitive deal, which we ultimately won because of our ability to provide a differentiated solution through the integration of multiple products across our communications platform. We are operating in unprecedented times, and I am proud of how the team performed. We had a strong second quarter driven by increased demand for our Vonage Communications Platform and its programmable API services. We will continue to focus investment here to build on this momentum. We were in line in unified communications and contact center applications products, where we continue to see some pressure on our growth rate. Building a highly scalable, efficient, streamlined go-to-market engine will be a strategic area of focus in the coming quarters. Longer term, we are in the early days of a huge market-wide communications revolution. I am excited about leading Vonage into this next level of growth. I am confident that through our business optimization and alignment project, we will increase efficiency, improve execution and accelerate our technology and innovation differentiation to provide the best communication solutions for our customers. Doing this will unlock our full potential and energize our customers, partners and Vonage team members. We look forward to updating you on our progress over the coming months. Before I hand the call over to Dave to cover the financial overview of the quarter, I would like to thank him for 7 years of outstanding service as the CFO of Vonage and for delaying his retirement to help me in my onboarding. When Dave joined Vonage, Vonage was a consumer-only company. He helped lead the strategic pivot, sourced the acquisitions and managed the capital that helped position Vonage as a leader in cloud communications. The search for Dave's replacement is active, led by me, and I expect to put a world-class CFO in this seat in the near future. I'll now turn the call over to Dave.

Thanks, Rory, and good morning, everyone. Let's begin with a review of the second quarter on Slide 8. Second quarter Vonage business total revenue was $226 million, ahead of guidance and representing 75% of consolidated revenue, ex USF. Over the past year, business revenue grew from 2/3 to 3/4 of the Vonage total. From Slide 9, business service revenue increased 18%. Service revenue growth is our focus, as we deemphasize access circuits and desk phones. Service revenue also excludes USF, which was $5 million in Q2, down $3 million. As we discussed last quarter, we are now charging our customers lower USF fees, which are a pass-through, based on a study that concluded that our offering is mostly software rather than telco-related services. Within business, API platform revenue was $103 million, up 32% and well ahead of our expectations. Revenue from high-value APIs, primarily video, doubled sequentially versus Q1. API revenue now represents 47% of business revenue, ex USF. Revenue from applications was $123 million, also ahead of our expectations. Of this, $109 million was service revenue, which increased 7% GAAP, led by 14% growth in MME. Moving to Slide 10. Vonage business segment revenue churn was 0.9%, down versus 1% in the year ago quarter, and monthly service revenue per customer was up 16% to $509. Both KPIs demonstrate our continued move up market. On Slide 11, business service margin was 53%, up 1% year-over-year and the fifth straight quarter of flat or better business service margin. This reflects the move to our own higher-margin products, including Vonage Business Cloud and video APIs. Moving to Slide 12. Consumer revenue was $84 million. Churn of 1.5% was down from 1.7% in the prior year. In the quarter, we took a lighter touch on terminating the service of customers who are behind on payments, meaning normalized churn would have been 1.6%, still strong and a year-over-year improvement. Average monthly revenue per line was $27.59, up $0.70, reflecting higher USF and targeted price increases implemented in the first quarter. We ended the quarter with approximately 1 million consumer subscriber lines. 2-year plus tenured customers now represent 93% of our consumer base and 5-year plus customers are 76%. Engagement with our product, measured by outbound calling minutes, increased in the second quarter due to COVID. Based on the performance and predictability of the consumer segment, we project it will produce in excess of $600 million of after-tax equity free cash flow over the next 5 years with significant terminal value after that. Now moving to income statement cost items on Slide 15. Consolidated sales and marketing expense was $91 million, down $5 million versus the prior year and up $5 million sequentially due to higher brand spend. Engineering and development costs were $20 million, up $3 million. Sequentially, we added more than 70 team members in product, technology and engineering as we continue to invest in our platform. E&D expense plus capitalized software totaled $30 million, which represented 14% of business service revenue. General and administrative expense was $43 million, up $6 million. The increase is driven primarily by consulting fees and CEO succession costs, including search, legal and severance, some of which was noncash. Turning ahead to Slide 16. GAAP net loss was $8 million and adjusted net income for the quarter was $10 million or $0.04 per share, both lower than the prior year because of a significant tax benefit back in Q2 of 2019. Second quarter adjusted EBITDA was strong at $42 million, up $4 million year-over-year. Moving to Slide 17. CapEx for the quarter was $12 million, flat versus the prior year. Adjusted EBITDA minus CapEx was $30 million. On Slide 18, we ended the quarter with $543 million of net debt, resulting in net debt of 3.2x LTM-adjusted EBITDA, leaving us significant liquidity under our 4.5x borrowing covenant. We reduced net debt by $25 million in the second quarter and intend to reduce it further as the year progresses. Moving on to Slide 19. We are updating 2020 guidance to reflect the strong second quarter and our experience with how COVID is affecting our business. Clearly, the macroeconomic environment is uncertain. But with the visibility we have today, we are increasing our projection of 2020 GAAP business revenues to the range of $885 million to $900 million. Embedded in this guidance are the following trends: with regard to API, continued depressed levels of travel and hospitality usage, offset by elevated e-commerce and video usage; for video, we believe that we have seen the COVID stay-at-home peak, but continue to see very strong new customer formation; and with regard to applications, positive churn trends and high customer engagement, offset by ongoing customer credit requests and a pipeline that has not yet rebounded to pre-COVID levels. For consumer, we expect 2020 revenues in the $330 million area, a $5 million increase due to a projected increase in USF fees. We continue to expect full year 2020 adjusted EBITDA of between $150 million and $155 million. With regard to the third quarter, we project business segment revenues in the range of $226 million to $228 million, including $6 million of USF. Consumer revenues in the $81 million area, including USF of $11 million and adjusted EBITDA in the $36 million area. As this is my 30th and last earnings call as Vonage's CFO, after more than 7 years in the seat, I would like to thank my colleagues at Vonage, the Board and investors for what has been an experience beyond what I could have imagined. It was a privilege to work with all of you. Knowing the team and assets of Vonage and having seen Rory in action over the past 6 weeks, I'm confident that Vonage's best days are ahead and look forward to being a shareholder for a long time to come. I'll now turn the call over to Hunter to initiate the Q&A.

Okay. Thank you, Dave. Operator, let's go ahead and turn it over to Q&A, please.

[Operator Instructions]. Our first question is from Rich Valera with Needham & Company.

Welcome, Rory, and best of luck in the new role. Question on the API business. I guess a couple of questions, first. Rory, you mentioned in your prepared remarks, you think that, that business -- the CPaaS market, is bigger than sort of industry analysts think. I was wondering if you could expand on that thought. And then, if you could just give any comments on your thoughts on the sustainability of the trends you are seeing in that business in the near term, over the longer term. And then margin implications of that for the API business, as a whole, as your mix shifts towards that higher-margin business. So a few part question there, but I'm hoping you could shed some light on those.

Sure, Rich. Thank you for welcoming me, that's great. I think from a perspective of the industry, CPaaS is definitely part of a major communications trend that we're seeing across every industry. I've been in the industry for the past 38 years, Rich. And there's no question, the way that companies are interacting with individuals through communication and digital relationships is only accelerating, and COVID-19 has, in fact, accelerated that activity. I don't believe that's a temporary event. I think that's only going to accelerate. And I think, Rich, over the next 5 to 7 years, we're going to see communications, APIs and solutions embedded in pretty much every workflow, every industry, every application across the planet. I don't -- that's one of the key drivers for the reason I chose to join the team here at Vonage. I think it's uniquely positioned to participate in this. I love the product portfolio in terms of the diversity and the strength. I think API services and the way that applications are created and workflows are created, this is not a minor trend. I think this is a technological tipping point that we see occurring here with video, with voice, verification. And the way that customers want to be interacted with for support services, sales, it's really a fundamental shift. So I think that people are underestimating that this is just an event that's occurring because of the pandemic or tampered by that. I think it's a secular change in the way that customers and businesses will interact over the next 5 to 7 years. And I think that it's accelerating, and I think we'll see a bit more of that. I think our product set is really well positioned in this space, Rich. And I think that from the standpoint of opportunity, you're going to see us using our business optimization and alignment project to really drive additional focus here to capture that opportunity, sure. Will we see some moderation as the pandemic moderates itself? And when that happens, was that in the next 2, 3 quarters or the next 6 or 7 quarters? It's really hard to say. I do think you will see some moderation, but the overall trend is up into the right, for sure, in terms of this segment and this space. I don't have any question about that. And as we look at our mix and as we mix up now over 20% of our CPaaS revenues are now in that high-value segment, led by our leadership in video, I think that's only going to help us on the margin side over the next 2 or 3 years. I think that's an ongoing trend. I think it will continue. 163% year-over-year growth, sure, that's very sporty. But I think that trend of growth is going to continue, as I mentioned earlier. Does that help?

Yes, very helpful. And again, best of luck.

Thank you, sir. Omar, did you want to add any color on that one before we move on?

Thank you, Rory, and thanks, great question, Rich. I think Rory covered a lot of it. The only thing I would add is -- and we've talked about this in previous calls before, part of what is underpinning our belief, and this is even pre-COVID, that the opportunity is bigger than what a lot of analysts project is the -- this market, historically, has been driven by digital natives, and we see that continuing, that's going to be strong. But what we saw coming online were enterprises, right? I think Gartner Research showed that, that was going from 5% of enterprises to 30%, and I think that alone is a big opportunity. But with COVID, that has accelerated it massively. And to Rory's point, I think the opportunity here is everybody is rethinking their digital strategies, going through digital transformation, investing heavily. So really what's at play is every single app out there, including ones that companies are considering. And that's where that conviction comes from me.

Our next question is from Alex Kurtz with KeyBanc Capital Markets.

Yes. Welcome, Rory. So back to your earlier comments about the UCaaS and CCaaS platforms and the need for optimization. Can you just expand on that? And how you see that playing out over the next 12 months? I think a lot of investors that we talk about -- talk to about the stock and the company see these kind of independent platforms that have been brought into Vonage and aren't quite sure how you guys extract value having all 3 in-house. So you're obviously executing with CPaaS very well. The market is very strong here. But how do you get the UCaaS and CCaaS business growing kind of where the peers are growing right now that the independent peers that we see in the marketplace?

Yes. Thanks, Alex, and thank you for the question. From a standpoint of the unified communication and contact center space, one of the things that I think is really prudent to do in joining a new company is really to really get deep into the operational execution, the efficiency, what's the business strategy and business plan. Based on that, we've embarked on a business optimization and alignment project that really will set up our strategy and operating plans for the next 30, 36 months. I think what we are seeing and what I've seen is very good products. I don't think there's any question that what's been amassed in terms of assets has been very good. And I don't think there's a lot of strategic activity that needs to be done in terms of adding. Sure, if there's something out there that augments it, we'll look at it, of course. But I think we've got the right assets. It's the right time for these assets to be put together. And think about it, the Vonage Communications Platform is really this set of API -- an API platform with a set of API services hung underneath it. And what we effectively are doing is building a couple of purpose-built applications in unified communications and contact center on top of that. And what we want to do is really utilize that same kind of thought process that our customers are doing in their workflows and their applications. I think the reason that we want to target that go-to-market is I think over the past couple of years, the applications and unified communication and contact center product has kind of built to go-to-market that was more singularly focused. It was more of a direct model. It was a bit heavier in terms of its application to each of the customer segments. I think there's a huge opportunity to tailor that go-to-market in an efficient and effective way. At the micro level, there's good customers there, but they should be acquired through e-commerce, supported with a self-help and self-provisioning. As you move up to mid- and small businesses, huge opportunities there. And I think our product fits excellently there in those segments. We need to leverage the channel and make sure that there's a light touch in terms of the support of that and create more velocity around that by creating the tools and capability our business partners need. I think the acquisition -- the hiring of Curt Allen was really a great move by Rodolpho and the team's part. I mean, I've spent a lot of time with Curt. He brings an energy and passion to the space and he knows the space. We can change that trajectory pretty straightforward with programs and activities around supporting that. And then the top of the stack, we've made a lot of progress. You saw that in our growth rates around enterprises. That enterprise growth rate is because we have a strong direct team, that we have the capability to reach customers like Domino's and like others in this space, big enterprise capabilities that have multiple locations. We're going to continue to target those space, but have a tailored approach across each one. Again, the applications are purpose-built on top of our communications platform, and we want to leverage those same API services that our customers do. And in terms of efficiency, our support and sales model has to be tailored to the customer segments that are there. I see a lot of opportunities to focus our capability. In contact center, we have a great product, and it's focused around the CRM space. We'll continue to leverage that strategy. It's smart. It's right on. There's an opportunity for that to grow well. And then our Vonage Business Cloud solutions, that's no question. Great margin, focus and target that on those customers and go-to-market route that give us the efficiency and disproportional growth. That's what we're going to do in the optimization and alignment need. Rodolpho, do you want to add a couple of comments on top of that?

Yes. Maybe. Rory, thank you, and thanks, Alex, for the question. [Technical Difficulty] prodigal to market and channel, other excellent product, but excellent need for that. If you look at UCaaS [Technical Difficulty] market is growing at 14% with a combination of the two products.

So Rodolpho, we're having a little technical difficulty on your line. I think you need to -- we'll have to move on to the next question. I think it would just add on a little bit of color. Let's move on to the next question. Thank you, Alex, for that question. Any follow-up questions, Alex, before we go on to Ryan?

Look, on the consumer side, there was a decision, I think, earlier this year to think about exiting that business. I don't know if you want to provide an update on that. I didn't see any content in the deck that would suggest that, maybe I missed it, but maybe just a really quick view about that process.

Sure. We did briefly cover it. I think what we would say is, we're going through that process. We continue to go through that process. We've incorporated that into the business optimization alignment, a project that we have underway, and we expect to complete that project later this year. That business is throwing off at least $600 million of cash over the foreseeable future. So it's a good business, and I've had an opportunity to look at it in terms of its execution. Mr. Walker and his team are really doing a fine job of executing there. I think they are doing it without distraction, and they are doing it efficiently. But we're going to continue that process, look at it and complete that process and give you an update in the fourth quarter. Thanks, Alex.

Our next question is from Ryan MacWilliams with Stephens.

Perfect. And Dave, congrats again on the retirement, even though this may not be how you exactly envisioned it, given COVID. Just on the API side, can you talk about any changes to the geographic revenue breakdown or the geographic additions of new developers since COVID, just given the different tailwinds and headwinds to different customer verticals and use cases as a result of COVID?

Sure. I'll pass that to Omar in just a second, but basically, we continue to see strength across all geographies and across all of the high-value APIS. If anything, that's definitely accelerated at 163% year-over-year growth. And we expect that that's, again, a fundamental shift. I don't think that as COVID, the pandemic, dissipates at some point in the future that things go back to the way they were. I think there will be some moderation, but there's no question that this has only accelerated the move to digital transformation, and that move to digital communications and relationships will only continue to go over. Okay. Omar, why don't you give a little bit of color on that for Ryan, please?

Thanks, Rory, and thank you for the question, Ryan. To go a little bit more in-depth, I mean really, when you look at the kind of growth that we've seen, we're growing across the board. So there isn't a particular geography that stands out. One thing I can share is that we have been seeing -- we saw in Q2 a recovery in Asia Pacific in terms of traffic. So it's basically back to pre-COVID levels, which was great for the quarter and certainly encouraging when we look -- assuming all of that stuff holds, assuming for the second half of the year. So we've been pretty strong across the board. I think -- so that's obviously good. The other thing that I'm seeing is, for us, particularly, is increased traction. If you just look at some of the wins that Rory mentioned in his opening remarks, we're seeing increased traction in the Americas, particularly in the U.S., some great logo wins and great usage as well.

Our next question is from Catharine Trebnick with Colliers Securities.

Dave, I'll be sad to see you go. Good luck in your retirement and Rory, welcome. So can we put a finer point on sales and marketing and G&A? You're down in sales and marketing, but up significant year-over-year in G&A? And how should we think about that going forward?

Sure. And I'll have Dave touch on that a bit in terms of the drivers in that, in the quarter, but I want to kind of set the expectation moving forward. I think there is definitely an opportunity to streamline and to provide efficiency in both of those spaces and to really focus our capabilities and resources on those areas of most growth. And I tried to share those areas, particularly around API services, and then definitely, that contact center work and UCaaS space by targeting and tailoring the go-to-market. But I would expect that we could drive efficiency and streamline on the longer term in both of those segments -- I mean, in both of those OpEx areas, but I'll pass it to Dave to give you a little bit of clarity within the quarter.

Yes. Absolutely. And thank you very much for your comments, Catharine. Regarding sales and marketing, you have to take into account that customer care, a lot of customer care is in there. So as you see sales and marketing in certain quarters step down, some of that is consumer-related customer care coming down and other efficiencies. As a general matter, you saw the sequential increase in sales and marketing, and that's because we launched our new brand campaign. The heavy piece of that was in 2Q, and we would expect to stay at this type of level for the rest of the year, given we're going to continue to advertise on the brand side. Clearly, we've had a bit less commission payments in there as well and a bit less T&E. But I would expect it to stay in this general level to slightly up if we get more activity on the commission and T&E side. Regarding G&A, you saw 2 factors in the quarter. One was consulting fees, and those will continue. Those are not in adjusted EBITDA, but they are in the G&A caption on the income statement, and that was first the consumer view and now that's been folded into the project that Rory talked about and so we'll have that in Q3. And in addition, in Q2, you had the -- we were very heavy on the CEO transition costs, which again hit the income statement but did not hit EBITDA. As a general matter, G&A, organic G&A, is not going up, ought to be relatively flat for the rest of the year. And then with the project that Rory discussed, eventually, that will start to come down as we execute that.

Our next question is from Tim Horan with Oppenheimer.

Good luck, Rory, and thanks, Dave, for your help. Domino's, can you give a little bit more color what was differentiated about your product? And I guess maybe the same thing for your 5-value API services. How differentiated are you? Do you think you're taking share in that high-value side?

Sure. I'll take the second one and then touch on the -- have Omar touch on it. Having come in here and spent the past 4 or 5, 6 weeks really learning the business, getting deep into API, I was familiar with the API services before I decided to join Vonage. So there's no question there's real strength in our API services. I think we have a leadership capability from the standpoint of video. I also think the way that we've utilized the service to create integration points is differentiated. I think -- and there was another question at the beginning, Tim. Was it around Domino's? Is that what you were asking? I couldn't hear you clearly, I apologize. Tim, do I -- what was the first part of the question? I apologize.

Yes. Sorry, can you hear me okay, Rory?

Yes. I can now. Thank you.

Yes, sorry. So the question is Domino's, I think you said you want it because you had differentiated services. Just trying to understand what that differentiation was.

Yes. This one is kind of interesting, right? So there's a couple of things that really made us strong in that space. And in an enterprise solution, particularly because of the multi-location capability, we've built that into the unified communications space. I think that's really an important driver in our wins in that enterprise. And remember, when I talked about the go-to-market around those unified communication and contact center app that we had to tailor it and the product was particularly strong and small and mid. This is just the idea that, that same kind of multi-location implementation with the control points that we put over top of it gave it strength. And then the voice API and the API work on top of that, really, I thought, gave us differentiation. But why don't we go to Omar first on the high value, and then we will continue? Omar, want to add a little bit of color on high value and our differentiation? I touched on it at the beginning.

Sure. So with respect to high-value differentiation -- let's talk about a couple of different products. We highlighted video. You may recall, we acquired a company, TokBox in late 2018. And what we got through that was not only a number of high-profile customers but a great deal of history in that space. So we effectively have been doing pioneering work in the underlying technology, which is called WebRTC. So we have a ton of intellectual property there, great customers that we can reference. Also, we've been investing in sort of security and certification. So those are important in a number of markets like health care, financial services, certain other social networking type of use cases. So we have a number of those kinds of strengths. So I would say that's one point. The second point is, since this is -- the API products are really appealing to technical, let's say, engineers or technically savvy customers. We have -- and we've won awards to this effect as well is we've invested a lot in making our software very easy to use, very easy to implement; that is a differentiator as well. And then onto your point about Domino's, just to add a bit to what Rory was saying, the multi-location capabilities, remember, now the way Domino's is structured, there's corporate and there's -- there are franchisees, and there's a lot of franchisees. And so for them, just having something -- they needed something more than just a phone system in the store, and we can provide that. There's a number of companies that can provide that, but what really differentiated us is that we -- that given the way that we approach the market, as Rory talked about, this platform approach with the apps built on top of it, it allowed us to give them the flexibility that they needed that was unique to them and implement that very easily and really support the digital transformation that they were going through. And the other, really, key point is, as big as Domino's is in the U.S., they are huge and growing all over the world. And so our global footprint, and this is something that we've been very strong yet in the beginning in the API business is our global footprint and the ability to operate globally and support our customers globally.

Our next question is from Meta Marshall with Morgan Stanley.

This is Eric [ph] on for Meta. Maybe just one for us on your Salesforce relationship. I understand pipelines are a bit less full on the application side overall, but how has that relationship continued to develop? And are you seeing pull-through if you see when making a contact center sale, anything kind of that you've seen there?

Sure, Eric. I think two good points on your question. From the standpoint, of Salesforce, there's definitely continued activity and that's a really good strategy in terms of contact center focusing on that kind of build-out on that CRM contact center with our capability and having that deep integration. We're also doing 2 additional areas in that space, and you'll see more on that over the coming weeks and months, in terms of additional capabilities in CRM and service areas, where we will drive that same deep integration. I think that will definitely drive a disproportional share. And I think that there's no question that that's the right space. And again, very good product in the right space. Any follow-up, Eric, there?

No.

Oh, the pull-through, right?

Right. Yes. It just kind of -- anything that you can add on that side?

Absolutely. Yes, no question. So if you think about it, if we target those contact centers that are around Salesforce or service applications or other CRMs, and just a handful because we want to be great at it and we want to drive really strong integration, and they tend to be these midsized kinds of contact centers that are built off of that. Then what you get is then you can -- what we're seeing is pull-through on unified communication. Rodolpho has shown me several really good examples. And that integration across contact center and unified communication, that's a real differentiator because of the focus that goes after the right level, we don't want to be spreads thin across all areas. Let's target the subset, like Salesforce, in the service space, et cetera, in order to get that targeted focus, and then build on top of that, the integration, into those application as well as the integration into our UC, and we're definitely seeing pull-through both in pipeline and closing that drives that integration. And that's been a driver of net expansion in those accounts and driving the win. So it's a great question. Thanks, Eric.

Our next question is from Sterling Auty with JPMorgan.

This is Drew on for Sterling. Congrats, Rory, on your first call; and Dave, on your last. So in the past, you've mentioned the 20% exposure to industries like travel and hospitality on the API side of the business specifically. I was wondering if you could provide some more color on how those verticals are performing and like how many customers are requesting concessions and what type of concessions you're offering them?

Sure. I'll just give you a quick update, and then I'll pass it over to Omar. We saw that kind of impact appear to peak in the May time frame. And as he mentioned in his earlier remarks, you've seen Asia Pacific return to more pre-COVID activities in terms of that velocity. There's still pressure there. There's no question, particularly in the U.S. and travel and even in Europe. But we have seen them come off of the lows, and they've definitely been improving. Why don't I pass it to Omar to give you a little bit of detail on that, Drew, and thank you for the welcome. Omar?

Thank you, Rory. Really, not much more to add. I think we have seen -- we have seen so we have that exposure to travel and hospitality. And I think just globally, they are going to struggle to recover to pre-COVID levels. But what we have seen in Asia Pacific is activity and usage back to pre-COVID levels. So we saw that, particularly in Mainland China, and we have seen pick up in travel and hospitality. And there's also a lot of -- there's a lot of traffic, for example, that is meant to drive actions in retail, so we've seen that. We've also seen that pick up in Asia Pacific. So all of that looks pretty positive. We are monitoring that situation pretty closely, of course, as is everyone, I'm sure. Now to the other part of your question in terms of whether we are getting -- whether we are being asked for concessions due to COVID, we really haven't seen that. We haven't seen, let's say, struggling customers that have come back to us and asked us for price breaks and things like that. I anticipated that early on. We just haven't seen much of that activity.

Our next question is from Will Power with Robert Baird.

Great. Yes, so I guess I want to follow up a bit and try to peel back on you a little bit more, if we could, on the app services segment. I'm trying to understand a couple of the different underlying trends there. As we look at digital transformation over the course of this quarter, one of the biggest beneficiaries, I think, for many of your peers has been in contact center. And so I just -- I guess, I'd love to kind of better understand holistically beyond Salesforce, in total, kind of what you're seeing in contact center? Is that facing the same pipeline challenges, go-to-market issues that you are facing more broadly? Or is that more related to UCaas? I'm really just trying to understand the broader contact center trends. And Rory, as you look at that and talk to customers of the pieces there you need to add, I guess, to further improve that product.

Yes. I think, from a perspective of contact center, that area had the strongest trajectory. I think the focus in terms of the product and the way we're targeting it at Salesforce and then in the service space and then additional maybe one more CRM, I think it's the right strategy. Keep it focused. Put the energy of the organization there, get the pull-through through the ISV ecosystem. We've already seen higher growth rates compared to the unified communication space in contact center. I expect that to continue. Contact center grew in the mid-teens. I suspect that we can continue to build on that by keeping that focus and expanding that base. I think that that's the right strategy in terms of the capability. I think there's more pressure on unified communications, in general, but I think that's more about how we've gone to market versus the product. I think the power, though, of the combination in contact center, when we win those contact centers around Salesforce or service activities, and then we combine it with unified communication, it's really a differentiated capability. Then you get that full integration across call, activities, routing, all of the data and information shared, I think it's a powerful offering, and I think we will build on that. The main purpose of the business optimization and alignment project is to put in additional operating discipline and drive execution excellence. I think we're on the right space and right focus on contact center. I think we can lift that growth rate. But what we have to do is continue to build on that focus and augment it with the unified communications. All right? Thanks, Will.

Our next question is from George Sutton with Craig-Hallum.

Welcome to Rory. And Dave, I hope to never have you come when I dial 911. So Rory -- and actually, this is for Omar as well, the -- it was several months ago, you changed the branding, kind of the logo change was really meant to move Vonage more into a business environment. I'm curious how you feel that has gone? And are we moving the Vonage brand into that business-centric area in your view?

Sure. I'll take the first pass at it, George. Well, one of the things is that I'm very excited about continuing to add talent of the team. You may have noticed that we added a new senior leader, Joy Corso, who joined us as CMO of the business. Joy brings a real deep knowledge across all marketing activities. She knows how to deliver messaging and communication across the portfolio. And she's got an operations and an operator's-type background. What we want to do here is -- there's no doubt, Vonage is a business software-as-a-service company. That's where we are, that's where we're going, and that's why we're properly positioned to take advantage of this fundamental shift in communications and digital transformation. You're going to see us continue to build on that and to continue to drive that messaging because that's what we are. The capabilities that we're bringing to market across our API services, our API platform and communications platform and then the targeted purpose-built applications around unified communications and contact center are all built on that idea of serving businesses and their digital transformation. I'm pretty excited about that that's why I wanted to be part of this team. And you'll see us continue to build on that messaging and that trust as part of our overall operating discipline and our business planning for the next 2.5 years. Thanks, George.

We have reached the end of our question-and-answer session. I would like to turn the conference back over to management for closing remarks.

Well, I wanted to say thank you to everyone joining the call. It's very exciting to be part of the Vonage team. And as we talked about through the earnings call, I think we have made real tangible progress over the past several years to position the company well for the future. I think we're at the beginning of a industry-wide communications revolution in this digital transformation space. And I think our products and capabilities are well positioned to take advantage of that. We're going to apply operating discipline and drive execution excellence across every part of our business to change and to fully realize our full potential of our business trajectory. So with that, I'll pass it to Hunter. Any final comments, Hunter?

No, Rory. Thank you for that closing. We look forward to seeing many of you at some virtual conferences over the coming months, and we will talk then. Bye-bye.

Thank you. This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.