Zoom Video Communications (ZM) 2 Mar 212021 Q4 Earnings call transcript

Welcome everyone and thank you for joining today’s earnings call. Today is Zoom’s Fourth Quarter Fiscal Year 2021 earnings release. This call is being recorded. At this time, I would like to hand things over to Tom McCallum, Head of Investor Relations.

Thank you, Matt.

into here. right jump me the presentation Let This as a favorite cool feature, slides Zoom Meeting virtual is my background.

Let me the up I don’t just center myself wording. here, so cover

earnings fourth And webinar to everyone. so, Zoom’s hello, for of quarter the fiscal ‘XX. Welcome video

Founder be Zoom’s Steckelberg. today Eric Kelly CEO, Zoom’s me Yuan and Joining will and CFO,

to the of issued page, at results. page investors.zoom.com. include prepared on this release to Our the GAAP a with closed Relations earnings was slide press non-GAAP copy and reconciliation a along financial Investor market will find be remarks and highlights able you financial of after release, today’s with today maybe a downloaded from deck earnings our Also that,

the in with factors that, disclosed turn January results today’s may XXXX. fiscal forward-looking will the XXXX current webinar. communications forward-looking report on regarding to statements our call, believe operations could on growth first the report our XXXX; strategy the of our same; we on affect we including on quarterly year Eric. materially. it The subject Zoom and we we and as of And SEC, in this update regarding the Form These other During of that XX, results, results obligation fiscal including investments, on opportunity; statements we only differ are or risks COVID-XX and with well with to may expenditures the me and and which make what market our trends margins, continued predictions year as filed the projected outlook future costs, any X-K over full unified and and that statements, product on based statements quarter let XX-Q and estimated for impact assumes our make are no pandemic latest aspirations for today. strategy; to our These position our business. video-first platform; actual forward-looking our Form statements the business our financial our are financial filings performance detail SEC

Tom. Thank you,

First [indiscernible]. of all, I am not a

all approximately apps enabled by on focus webinar. you incredible for us our tremendous My delivering and to X,XXX success characterized was their of perseverance Fiscal year Zoom achieving thank out household So heartfelt everyone, energy, Zoom one appreciation joining of overcoming dedication. employees a year. name become truly unprecedented building the and today’s a most and year for and challenges. popular and trust to the Their happiness goes on Video welcome, pivotal XXXX us

the workers, use customers, We collaborate. so and grateful and us entire to are our it in to times; contribute investors ways increasingly partners, in platform to trusting and doing log connect, vital students to are and humbled see our and COVID families community these for

As work thrive the work-from-anywhere our from empower this and The begun. customers remote only of with future new has of and work world our manner. change. the and and to recognize a to are emerges here reality helping resolve own in employees our distributed rise is pandemic, the We

help, to offerings return product features. transformation here their and portfolio and the safe their office begin models, re-imagine is of Zoom leading growing companies As to and an extensive working with the

Reception, and empowering Room Zoom inclusive experience. enabling secure, seamlessly to Zoom Meetings features and Virtual connected example, For enhancement more, a with like Gallery provide work-from-anywhere Smart

productivity our app customers communications tools. the Our into normal, strengthen by video set of in communications a integrated a with collaboration platform position will innovative and evolution and new from a leading video providing growing

be that virtual employee the believe happiness. connections, to a we enable energized We and evolution in-person will lead better work of future the are flexibility the for both very help that planet, greater future for to allows productivity and

of power exciting some second of of Zoom harness part secure the enterprise channel large anniversary, deals to I’d like highlight as to where Phone’s Zoom the Next, rollouts we Phone.

are liaison proven telecommunications and customers who a work optimistic partners, as strong advocates are channel master our force to agents the be us. growth multipliers the world. and have in These for between including about We channel partners

me a share few happy customers’ let So, stories.

as have to grateful the are University of customer. Zoom a We Southern new and Zoom long-standing a California Phone Meetings

We of to comprehensive their thank increasingly vendors, vendor education deliver to services. Zoom evaluation phone in when trust Zoom commitment of put modernize short-listed and X UCaaS was USC months the After in they chose Our XX,XXX deploy USC communications that the and an their agent broad an us their systems. higher university and seats. USC rewarded a Phone to master set to extensive integrated review

with highlight Zoom Another bring been to top by On company, expansion the ability seats. to interconnect being and their enabling integrated harness it a adding features success. customer that advanced over and has a together digital Zoom with Zoom provisioning Phones chose offerings. infrastructure use Meetings partnership our our for and their world’s they the leaders infrastructure platform employees expanded footprint, this over recently global serve Equinix, our for and global centers Equinix We data Equinix with touch collaborate. Zoom zero to quarter and of was Rooms, foundational Meetings for Zoom powers other several its Phone to seamlessly UCaaS communicate XX,XXX the with Rooms years digital Zoom and

Let welcome also direct me a win.

company, that global consolidate flexible and announce with Group, world’s solutions. Universal on-prem legacy adopting is was very to for UMG the to workforce. musical replace cloud PBX leading happy technologies Phone are Zoom looking We its Music

IT. Room video, our customers, will you, Zoom products system drawn was Thank choose use legacy the within As provides customers because users with integrated. replace of are UMG. of their are Zoom integrated in stories product. our the using their They UMG exceptions. Enterprise to one voice. Azure their These and and Phone team nature touch experiences existing to phone This that Meetings and easy be not very chat positive of are well Zoom high-quality

to partner them us deliver you to channel for I let ability circles communications to rapid unified it users partners. productive. Thank pass the a large With and USC, Kelly. me UMG happy and supportive and and that Equinix, also to they love our over innovation deployments, scale that, With with value to make you, global all. our look of

Eric hello everybody. you, and Thank

FY pivotal was year us. mentioned, a Eric As ‘XX for

it growth While from customers our Zoom customers, conferencing the ranked preferred to XXXX operations, which opportunities. According Okta’s data accelerated apps And among pandemic overall. by Business top the stress our we’re far app number app popular Okta’s the upon unique users. and also by tested workplace enterprise the active video Network of Report, relies most was

dedication our award, for & you growth Zoom solutions recognized made Frost providing recently to of amazing Zoom firm its of honoring incredibly XXXX turned $XX is by with telephony has innovative drive accolades to deliver two product forecasted customers new our possible. to significant portfolio analyst Zoom’s billion addition, capabilities. and Phone, as last these quarter. with is Company We the and Bolstering that is Sullivan who grown the In ahead the Year which customers grow opportunity TAM believe growth XXXX. the to Thank

wins have legacy other We providers cloud from seen on-prem PBX as as vendors. well

than customers, We of a paid for XXX% Illustrating Phone few ‘XX FY Phone meet Zoom the with ability enterprise FY closed the Zoom large-scale customers milestones XX,XXX to employees, XX with Here year-over-year. seats. Phone finished each Zoom to rollouts, up approximately XX the ‘XX needs mark with anniversary. over more XX,XXX with are

adoption drive sizes. broad to We industries across and customer continued

customers XX% market a up with within is presence, to than the strong employees base position We in mass are modernize growing look and Zoom channel market. XX% approximately of phone the platform. to and more an XXX,XXX our communications XX as their systems from With integrated our Phone customers

billion. let results, from year-over-year growth sales customers verticals, year-over-year The new due for and end I $XXX The our revenue $X.X and as million. driven in review up $X.X QX our in XX% direct rate was year. billion online, full the well industry an This of QX in for ‘XX. high the the to results cash FY the XXx start grew for revenue, of last grew of XX.X%, grew by of widespread in and the quarter into across me year, highlights operating billion of and XXX% of XX% the financial QX strong flow execution this and by for customer new as exited to demand million was a few then the will full In run ‘XX. outlook the to XX.X% range top QX, churn. mainly XXX% Revenue financial lower-than-expected marketing we $XXX for exceeded revenue getting accounted margin in $X.X businesses Now up at full approximately with cohorts. for line to geographies, finally, logos and year grew year. from year our We non-GAAP channel sharp annualized result to incremental increase the FY guidance over year. total Free fiscal as of which products, the

sizes customers all provide will industries add future that opportunities. to of and we continue We across up-sell anticipate

take the customer look for metrics the a quarter. Let’s key at

in segment. see an more adds year-over-year in is made progress number opportunity a lot XXX% We This for generating the great than revenue, highest and X,XXX up and expansion XX-month increase $XXX,XXX of as to we quarter-over-quarter. net quarter this in market of up XXX customers with customers ended see We the ahead. the continue still of the quarterly up market trailing XX% sequentially,

the than than this least XXX,XXX of exited ARR the more XX% customers grew customers during that only but quarter XX We customers population. employees, customers customers year. by the the still and for employees total represented with XX,XXX approximately of $XXX,XXX year, at more than we In For example, QX, XXXX approximately XXX,XXX number approximately more XX% XXX% Global of during generating with with revenue. of accounts XX quarter the adding

segment fewer XX% XX of QX from modestly down in continued XX last revenue, with up from represented XX% customers employees. significant in with also QX. employees in our from We QX, benefit customers or and In year growth to or approximately fewer of XX%

acquired employees their to Rooms, net We quarter. and communications Both build on for consecutive customers growth products. customers XX with Meeting had for quarter, expansion XXth Zoom during Zoom. in rate more than Zoom markets as existing licenses, strong exceeded trust unified their Our and Phone domestic dollar the XXX% webinars value international more the us

Americas Our over grew year-over-year. revenue XXX%

in we grew XXX% on APAC international further investments year-over-year of combined revenue revenue, ago. to the a up be resources make year capitalize and XX% Our global XX% to ‘XX, to from additional In FY intend opportunity. EMEA

profitability, and year-over-year partially and stock, our gross in XX.X% is Non-GAAP gross in season. the free XX.X% improvement in to to dramatic pandemic, as seasonal to decline margin commitment which demand execution and free both decreases focus million. XXX,XXX expense exclude K-XX will charitable XX% stock-based profitability Now approximately and drove would utilization the net in support as results, by which audio non-GAAP our GAAP relates public I increase on grew quarter of perspectives. during associated to our expenses. mainly the gross last The compared Research and to strong as the as remain acquisition-related holiday usage QX common usage, expense in margin from We XX.X% year-over-year ongoing taxes, margins The of fourth donation was we the expect income turning K-XX year and payroll approximately higher XX% increase development non-GAAP around domains to cloud in compensation QX. related education. well continue to including support sequential the long services. $XX to to due

weighted team, further Though was grew is growth. we to we in market $XX FY innovation, a This expanding revenue, R&D sales ‘XX investments several ‘XX of to line security by the FY growth. guidance. heavily Sales and G&A non-GAAP to the on $XX year, was in As FY a and top marketing with to to hiring $XXX in from expansion a invest future our programs decrease our million. the expense revenue revenue, QX through XX.X% prioritizing operating margin continuing the bottom per of operating XX.X% order strides on $X.XX decrease non-GAAP QX. than primarily due remain and fourth QX Non-GAAP last platform. expense to expense over XX% mainly as next security XX.X% of approximately and to of grow drive functions and was total from to quarters, XX.X% in and in approximately expense in share of in XXX QX the capturing approximately G&A earnings. on and we share. the for total mainly undistributed million expense ‘XX. growth. upside The by year-over-year year lower percentage services. made committed X.X%, due plan average a to of last steady quarter top above This than headcount million strong of strong reflects continue X.X% drive shares end our grew million focused an in for was hiring $XXX and the translates income year. from $X.XX to in marketing non-GAAP which quarter, outstanding R&D high of exceeding QX, to line, in carried our and to line compliance capacity scale We earnings revenue, $X.XX QX additional and large G&A result adding product This of from marketing adjusting QX over higher million improvement is to due quarter guidance XXX% invest last approximately to professional improvement Sales in our a total and continued

up at Also, million, XXX% we seen mix the have of year. revenue in of deferred XX% Turning a period shift of $XXX note the please invoicing approximately from up being end to business balance billed was in from monthly, million. previous the to XX% year-over-year approximately the $XXX the sheet,

Looking execution up at from is the XXX% and quarter. both consistent demand the unbilled year-over-year in in our $X.X our contracts, million. increase billed with RPO The RPO $XXX billion, totaled and strong approximately

QX This million The January. operating to increase flow revenue exceptional billings of cash or from We cash $XX XX% as ‘XX. We Free quarter QX million, the $X.X of months flow or our recognize to million QX million, offering of FY approximately the equivalents marketable million ended billion had up from is public $XXX approximately in restricted in in XX and as the from XX% next RPO attributable in approximately last cash primarily $X.X last and billion collections. cash, includes excluding billion the expect $XXX securities total in We follow-on with in quarter was year. up to compared year. $XXX balance cash. $X $XX over strong

to the data Looking into capital expenditures our our and our support to outlook FY additional to drive increase related center expect ‘XX, we infrastructure of build-out growth efficiencies.

to outlook are pleased Now for we non-GAAP guidance, both announce turning for and ‘XX to our revenue profitability. FY

to unknown. extent optimistic note impact people Although on the please outlook, Zoom’s returning in-person pandemic the and largely still remain COVID-XX of we contact and remains

Our current environment. of outlook our business on is based assessment the

the million FY we quarter range to $XXX revenue be million. of For $XXX expect first to of ‘XX, in the

to of operating million. income $XXX in non-GAAP We the be expect to range $XXX million

$X.XX on outstanding. our additional Both Our outlook for shares approximately follow-on public full year to and XXX based non-GAAP share earnings million per include share QX $X.XX is count the in shares offering. issued

FY be $X.XX ‘XX, approximately For which billion, represent would of full the year-over-year to of growth. to the we XX% expect range $X.XX in XX% to year revenue billion

year-over-year billion, the $X.XX We expect in to XX% be of operating growth. which income range represent would non-GAAP billion to to XX% $X.XX approximately

per million share outlook $X.XX Our earnings non-GAAP approximately the is XXX for on to outstanding. $X.XX based shares

part philanthropic of program under today we is This EdInnovation ESG highlight our Before program. concluding, recipients Zoom the I our happy umbrella. group our that to announced from first grant Awards of am Care’s

teaching the and work, inspiring support conflict-affected promoting youth entrepreneurial within diversity which education. are providing excited science-based in economy reading assisting the approaches training, from and digital job to and profession, includes to access to areas We join to their

are proud talent. the the critical these sponsor of next support efforts innovative We and to and around education world generation

collaboration worldwide Thank a team, ‘XX, and entire Zoom with community and force, connection investors. frictionless communications enabling and we As you FY high-quality, our to is be the grateful platform. driving forward our customers, secure to look our Zoom our to

the our up If queue so first have not Matt, please meeting. interactive now yet do of question. our video, portion enabled for you your please

Alex with Kurtz question is KeyBanc. first from Our

well. the Yes. and at Zoom question hope everyone is Thanks doing I for

much expansion versus frame ‘XX you. versus you the to Phone return opportunity later driving customers part Zoom outlook? growth assuming is new are And as could office you year? the Thank rates in fiscal churn how of ramps the what as So, that,

So the opportunity Alex, of really are we excited ahead. Zoom Phone about

They growth were in line very performed fastest ‘XX. strong expect this well quarter-over-quarter FY towards was look the have as we Phone heard, we to QX product and Zoom growing they you year. As the – see

base. into strategy our existing sell is As to you our remember, install

So start terms though based are when churn the of do churn to further and be able we then of in they have we people like uncertainty – FY to rates we move to And FY rates, ‘XX. with that again. on see high and move pre-pandemic today, the And safely opportunity elevated churn certainly the that period back from have around around assumed have will the seen the tremendous world we continue up-sells we as through ‘XX in – Zoom Phone. we customers for stabilize half level

you. thank Yes,

Next question Matt. please,

Our next Baird. question is with Power from Will

the additions. How expect to the out Great. I in could these tied that, was if we seat channel strong results. that wins, terrific other could paid at wonder an contributor on much It And touch are to what’s to rolling Zoom more helping where is us of look a wanted see to acceleration to cloud understand of bigger I question. the Thanks differentiate there? you some versus Yes, go? more you Phone there? out XX,XXX you well, evolution How of sounds for as the taking the customers, customer much help there I providers the bigger guess really key you partners. like as

Yes.

So, that’s great a question.

why First choose our customers, or other of PBX all, if at you look they cloud-based solutions. Zoom

we look rooms Zoom and Zoom. like lines. of realize you it’s they modern products, all, that reliable, our existing well They realize use, to easy already test After our their the tested that, test other got integrated Zoom architecture, Phone. feature-rich, high-quality meetings, very Zoom, have very with to they very product enjoyed really they very of because would customers, they trust. at First other After

confidence. the drive have right, they perspective, you and delivery From from driven U.S. not distribution Master did account, So Agent. our as only other like team said, current perspective, a I growth from high the see we by

I look channel of at on channel the history primarily partners. PBX think we growth, partners, especially cloud-based Zoom that are driven by doubling the the

building think are Master Agent, greater channel really partnership strategy as I focus to our off. with a partners such on paying

I that. think to we on working are double down

Good Congratulations. luck.

you. Thank

you, Thank Will.

is Matt question next with Hedberg RBC. Our from

stellar incremental for $XXX,XXX with you it and customers just population. driving in then maybe was Okay, the looking under-penetrated ARR just your GXK Kelly, sir at fiscal GXK some in impressive, broader but certainly just further Can questions, follow-up in expenditures? that, year. adoption? faster a remains still to really talk a the vastly cash congrats CapEx thanks are but about or over CapEx of GXK on cash my overall expenditures, exiting taking relative steps as billion you on or sort just And ‘XX there deploying just for is – obviously, $X.X to thoughts year, Momentum

Matt, Yes. the first Maybe, part address can of your I question.

You are customers. only it’s Global absolutely of XK right XX%

way the the are reason revenue, Because opportunity grow the us. XK the the customers, one X look huge the is and very CIO, with a people look you like now, I strong opportunity. customer is brand, last think pipeline So, we also talk and history, as and department international Zoom think Having year, have ahead there but from user have at have the enterprise brand, said basically I of Because opportunities you with talked want similar. more I the from become at bottom the if that, multiple down you not even year us top right, do not from of us to we base normally think only we that why something to household Global is for well. to and growth to from in with right. do And to they more user; doing That’s why you, the up has last a our not talk talk our I user, rest our bottom-up, if think department X

I focusing long we bright as execution. think is the as on keep future

our for investing interesting we opportunities to $X.X what M&A talent all just potentially for billion, do very going our are both. of either that data said, Eric, so we, other you looking I’m could as are a out we in that center for activity, In infrastructure. with to constantly certainly more has or It’s technology. we are companies, terms as know, of And add building high sure bar you

found looking looking. keep team, quite so And interesting. team It seeing right just looks but we just dev match what’s constantly our we out Colin the his and haven’t are yet, and there. leads corporate

we So will see.

We open the to are right us. it. just It’s finding certainly match for

guys. done, Well Thanks.

if in Matt, great will any have do way, we Thank love to those how the No, all you. any that. advice. you By of advice

you. Thank

JPMorgan. Auty Next is with Sterling question from

Hi, thanks. guys. Yes,

you carrier with? So successful calendar the during rolling of bring program were plan and all XXXX, need Phone you you for the that for the countries wanted XXXX can for in to your out you what’s the that Zoom own eliminate launched

Yes.

at So all, international look our service. look Zoom countries you you first of XX and penetration, if Phone our at the

look think XX% the growth, our Phone, at market, XX% I are upper market. SMB from are the from

think we talk customers. the opportunities folks American calendar market, why last market year. since on reason I and The upper about you North lead the from If we will come more started, more international

started penetration, more rolling think be more Phone customers, the Zoom the for will international I international to we catalyst our out think future As I and growth.

you. Thank it. Got

Marshall with question Stanley. next from Morgan is Our Meta

Thanks. Great.

Digital for platform, of natural think use video at here cases kind Zoom is with Zoomtopia adjacency, Zoom As about about Events or call out to you your usage? on platforms you any do leveraging just finding you how talked something another about other or kind traction think as of

now free last announced Yes, Zoom, conference, but in in Kelly, a October beta [indiscernible] stage right. we terms the feel chime at annual at it’s Actually Zoom in. launched to of now, that user

about workers Zoom parts, Zoomtopia, teaching on the online two we of Zoom are to not enterprise learn has for we on is class. on Zoom customer event This those class, essentially – sell living opportunity. a workers, a That but allow platform, part virtual also expand event yoga event year customer, consumer-driven our revenue [indiscernible] complete another also more make to be only anything event. on is consumer, on our our platform Zoom the also growth progress, to platform. the to knowledge think a designed at will we to virtual with So right, and to end-to-end adopters And and Zoom overall huge based on based early the talk also our corporate online market Zoom hold platform. And had that beginning biggest

Okay, thanks guys.

you. Thank

Our from Wells with Philip next question is Fargo. Winslow

distributed sort a Hey, things how guys. these to bigger type particular Thanks customer with Phone is Zoom customers just – about forward? Phone, of wondering in I larger that their that on is comment on the me taking speak, one anything there with XX,XXX for questions. my transactions than of sort profile others? going you Are of out cohorts, here? what especially how wanted at Zoom of more are workforce was for jumped you also more I customers dig so any industry? than was and I sort Is that seats. think and what the mean seeing guess the XX I you from of those to

Hi.

think the across actually Phil, news, industries. it’s spread I that all is great

well a ownership, about, names is company. had those talked really to appealed – We the Phone small the the cost entertainment industries. and that And already saw total have beginning trust and alike we Eric well that that’s that they You across large from as very been organization I the as of as success the enterprises technology which in And plays the all an is win reason and We it’s usability Zoom of we based mentioned, and right. a well all across had think university. industries. right on,

Yes.

as you theoretically then easier away with return on Zoom in Room. up return companies ramping phone that, about just there, take office, there prep sort for being room, to and it maybe conference office? upgrade opportunity it’s Got for the my Zoom half to the first for penetration Zoom think how not as to to Phone use also about do do follow-up any to people people additional it. are sort nobody And desk, as to you but think Rooms at How potentially particular easy of to it’s my of

to right. of Yes, we all, to office, all Phil. Yes, the want first go back

in to such the importantly all so the consolidate even we like stuck for are the to it. customers office, our back I We but think go who expected most painful, for long is if well product home a growth, is actually time, videoconferencing would but

[indiscernible] video Why phone same already they phone? give the don’t thing, Zoom hardware system? the essentially have Now, another do deploy everything. need why to Phone and they But to are you the back

we system. can like innovations, excited. room are like two our Recently past, are Gallery That’s us conference think lot Zoom those A plus I about well to Virtual the and Reception, in really Meetings of give with Phone, Phone is Zoom why collaboration Zoom help a right. integrated Rooms, Zoom very the focused into talking companies Smart customers especially also unified very office, and on how communication read the experience.

Appreciate the Thanks keep Got Congrats good it. it. and work. much. very

Phil, [indiscernible] the back By best way, you on. have a

Eric. Thank try. be you, Good branded. Always

Citi. from Next Radke is Tyler with question

me. room Can you behind regular The me okay? hear

Yes.

the about Phone. Zoom in thinking see topic channel for to And year. in talking with sales are Good and are this compensating imagine renewals as you are you pretty how everybody much. direct going increased well important particularly so you FY am force a ‘XX. Thanks Obviously, curious again. investing to Alright. about I leverage, be I

fast you new terms of how that are just to in them So and help grow sales you changing mix kind if renewals? you Thank the do of way me compensating the you. versus of your are force expect maybe understand direct

looked we what’s events And available. we and when engineers. that It’s quota-carrying in So, in available well the really of organization it’s two of absorb areas the at focused markets terms as plan, are as in on we looked at areas both FY reps our as are significant you to are the sales terms what ‘XX of organization that capacity in highlight. for exactly FY ‘XX and

on So growth retention. have significant that. which significant of did historically, comp we have didn’t then you of sales to And but compensation, could and renewals key pick change just expect continued key our the not for terms is AEs points, on one the compensated plan, in And in we in the organization. you

So align with as this the to for we did interest Zoom’s add the a bonus along well. reps’ year component to plan help

Thanks so much.

The with next question is from Rishi D.A. Jaluria Davidson.

strong year. Hey, see into Thanks and I maybe Tom. heading for areas Eric, my questions. great taking potential to about for next then wanted to Kelly, expansion. ask momentum continued It’s

great really some had in the obviously with have here. Zoom appreciate I and Phone You that disclosures success

that have think As the are communication Thanks. buy, know of into? available think a I adjacencies where build And given about just especially becoming you collaboration platform, the hinted enterprise do you about past. amount other at you the you broader versus these in capital you some think sheet? have the how and can balance on get philosophically, you

that’s a question. great Rishi, sure. Yes,

item business So lot down. several are company. consumer looking think company Zoom when video have ZoomX think thing at over app, I of a case, we we Look using opportunities I, at not later actually, Rishi, about But reason huge also a popularity [indiscernible] platform, people I for the and of mentioned to Zoom Also UC entire business conferencing you on a lot at look conferencing, brand-new but about looking Zoom company. also webinar, built-in platform, Zoom, the another our I in but you crisis started earlier, in during that past because think of video That’s date, right? of however going discussion, mind, at years one we we transform communication Zoom, this because have are pandemic on at thing the were talk and how It’s at a the we Zoom the top video looking more that we the like all Zoom I using talk you the Phone, videoconferencing Rooms, conferencing, our is to look over Almost at ecosystem. right? each also look work at prosumer area [indiscernible] from opportunity is we to That’s platform see platform. as opportunity. remote look chat, and why that ecosystem. a With a and the look

we I for right. think sure, [indiscernible] cannot

kind I what should the part a our careful, very of otherwise. categories acquisition. product will up That’s a for we go new to have open build overall, right, like ourselves partner got opportunity company great what why become we We be should I But through think by of us. maybe or to

company not are only a videoconferencing We anymore.

you. thank Great,

you. Thank

from Bernstein. Zane with is question Next Chrane

among think quarter, congrats kind consumers seems dig knowledge margins. margin in a much sense commercing prosumers team. for so gross on potentially that relative it’s gross independent great Can that on of like how for of lower curious really freelancers, things for know Zoom we should But it less conversion kind Is a a it Thank It videoconferencing at to of I market. improve the just compute-intensive, want improving of Phone, us have contractors, you. that? the to the Zoom to state rate on rate of offering. then the subscale. paid, how another great I in Hi, I a XX% lot higher and like Is increase? you to conversion or workers steady long-term? paid could the users free double? end on I’m if maybe margins about that’s non-GAAP give it’s secondly, the way the And a know still

something the it’s don’t and still right? fully trying to a before available. your class, early is basic not the still of I will You a we’re because ready announce class beta really yet. can I first think And But again on can the address too second GA. the experience it’s Zoom have to Unfortunately, make features product then sure solid register in hope go part learn tell, learn Yes, a your part. that kind right? are it’s good we Kelly the to cooking answer I what I now question. beta, question. of But We’re address for to I

car I right? have only have the think to new that one we also We online answer have something more about – a do X driver. have have our story not or yes. obviously the down too is only optimistic I our event, But at Zoom again, not more, a I subscribers, road. we opportunity. revenue learn a we Not a have the are customer more time users very tell. do very become Either early at do look hold Uber yet, I of like on but stream, a solid right? Uber strategy. a That’s

are we helpful. Got very it. optimistic. That’s And

update. the for thanks So

you. Thank

And margins Zoom? or Zane, you about Zoom ask sorry, on the gross for did Phone

conferencing? bit. was it less Phone, it’s Zoom have free a that, could that curious, a little maybe have since question you like for don’t I’m separate compute-intensive offering especially the if higher margins, video since a

were carriers for – the Zoom gross under this we Meetings cost end. Phones, the for slightly actually due Yes. margins either at on when margin to looked Pre-pandemic the where

expecting is continue So margins given eventually gross And Zoom invest. than to gross be those as higher the to on right we’re impacted have usage, margin the even leverage course Meetings see we margin of being efficiencies the free to actually right grow, gross able across platform by to now, is that’s the converge. see goal that overall And to though, Meetings Phone now. what is to probably

Congrats, you. team. Thank helpful. Very Great.

you, Thank Zane.

The next Credit question is from Brad Suisse. with Zelnick

Zoom. that about new what’s seasonality? year of and you using and the is caveated Kelly perspective, great grateful. see of unusual. How Even thank everybody. you so a your you And I around assumption? Last I question economies COVID. year, uncertainty that seasonality so my nice to just the you Eric, doesn’t reopening modeling was about thinking Kelly, appreciate all business the But are embedded though much year relative this thinking business. for we’re people stop Great, totally from to mean the QX, Tom wonderful, so guidance great know

Yes.

year, of to loaded a in the think more in the back well. through back-end we the reps the those loaded seasonality, that throughout little the a to you back-end there terms they that From and of online think especially first having capacity businesses. more you year little two bit our each to is if And terms I as expect about organization we’re is will, I in ramp an business of different be timing and all, upon direct the modeled as of very growing as more one be have to this become as have we normalized both integration acceleration of uncertain, work on significant well as think in as rates. to believe with them. have people well dependent what behavior of churn direct is potentially in quarters with as business, returning Zoom move little terms continuing conservative the of as online a sales in add of is and In our to a the buyers, enterprise we perspective, to especially year, to

the We’re help of doing and the can course see through don’t that we we retain everything so to we though, see value those move consumers year. them as Zoom in that

much Great. for taking Thank so question. the you

head. Brad, very for on that. Zoom truly much thank you I your top wearing appreciate

you. Thank proudly. Proudly,

you. Thank

William question Suri Next Bhavan with from is Blair.

Hey, Not a I are I not are costs. issue their given one their point, when a Is everyone. of maybe and really I’d friends great EX speak my me today sales And getting feel and doing? of they it, That’s teams platform it’s guess enough? I’m you. enterprise. them, you and and ostensively good sort etcetera. how team to of you working of Thank and the free? at, do sort their that this power Upgrading back bundle a some ostensibly that scale free. you specific work, what bit obviously they about know what lot go at wafer the kind giving giving power for around wafer sense little how depth competitor. we of little EX the understand a It’s are And they is playing at specific because echo a out. But mid-market have to And to let they a how but about and the themselves, in to results congrats, Thanks our free. job. in more want chat love Microsoft. that’s to Like

Yes.

can in. start. feel chime So free Kelly, to I

that think first of question. a is I all, real

I’d to However, a take step like back.

would share very the themself. took open-minded, the think us. but the the CEO I ago, Microsoft is journey several years I integration Microsoft in think I think Because right? over think Satya think CEO of Since I they Microsoft I like work are today world, they of we to when quite great different. we job often together talk market, with [indiscernible], Satya’s really a on

today’s collaborate, think at [indiscernible] Almost to millennials. workforce. over important. willing a credit. XX concern. are an years right, So the case a end user I deal if who one-third one Today, expect the you from Microsoft’s that’s sometimes right. CEO, give the on very great I at That’s CEO look Microsoft perspective, perspective, of not Satya, Like that’s ago, you look

service. best use breed the For one, to like would of they

pay If credit it do you they they say, own like I’d like, to my give something no, not with card. them

one the service report. core least, deploy vendors, win, that’s customers. they is best or Okta That’s And CIO exists even from you there of and for look will slows the if right? report professionals, Probably would innovation better, video with why guess service. much most you like in breed for down? of sure. is IT the not on everything, That’s Last IT important If at They Like the talking you’re why the but the with speed also So the very a is right? enterprise any voice if it Zoom breed to outage? future, well. I’m strategy if to right. good What best perspective, stuck like at bet for what, vendor look what the

the Okta five. at customers, Zoom number is – ranks look And terms right. report. videoconferencing the for one apps on You of in number a of in position Zoom of app, based terms number

that’s However, there is one metric interesting. very

long size in. well. Bhav, a question, Okta’s coexisting that’s this emerge If bigger And we look thing. sure on much good like Zoom strategy a on the yes. bet answer. to because everything but would answered our anyone works deployment people not Customer, Microsoft market Again, I’m is than why we customers, I they at you look of a coexist That’s Those That’s based think one your Office perspective. That at the use can to customer that from observation, well. solutions it’s use well. as can XXX, those very Zoom. proves

Yes. That’s a I answer. great the candor. and you Thank appreciate the color all.

you. Thank

Next Needham. with question Valera Richard is from

great you. to Thank And a year and me congratulations really let fourth add quarter. my

and decreased attention, of sort you, your vertical, of a has is business of gotten maybe the on question but point headwind now, on you lot thoughts have are that for at the that there K-XX which could education XXX,XXX argue it’s you trajectory a I So But presumably as school. folks guys maybe will back usage if in-person some to free go – customers paying. that be think

sort to is wanted thinking you’re the of you’re just potential I trajectory so to free if XX about turn the check and of placeholder that revenue now? July that date And a about website how off for on monetize or And sort them? is date the that your going just to

of has longer. have hybrid PTA education. going expect to no a to parents do using such have – domains right, approach that home, imagine students really have are snow to as the the from even joke, there being conferences. any to education, for in is believers we And hate to because Zoom. thing that K-XX be product parent-teacher return always able from and to We in able and also being benefit you we meetings received there terms able the ahead day the campuses that look a is become what attend person, noted, to that are us the And XXX,XXX we opportunity in future is In as as forward that students

learning, do foresee will the assess committed these as the as disruption I are that’s the always, being could we to Zoom domains how that we to in there of the – was is on website, that with remain and we The the use really to us progresses. that. I on. many, in believe minimize whatever work pandemic in to And right thing So – that that continue cases goal just terms continue extend date wanting many classroom, beyond the to students of the

Great, Kelly. very Thanks much, thanks.

MacWilliams Ryan Stephens. from with is question next Our

consolidate enterprise Zoom then increase attach Zoom contact usage alongside and and Thanks the in momentum do Zoom business about you. wall quarter? Thank of for you improving Like the And saw customers increasingly for Can talk you Meeting that purchasing to rates you’re center taking wall the pockets enterprise seeing, with Phone see silos? did questions. that? separately, that you go

$XXX,XXX customers year, an In to we’ve growth of saw with – I of purchase is significant And think, all trailing and continuing you than customers greater seen out expand. that of that, roll indicator of in enterprise the XX this those terms the months revenue.

as continue In seats broader. terms buying terms see that as well are wall, we number wall of customers to of in to of adding

think it’s Zoom So Phone, a contact both. center combination I And then do of you want Eric, of within terms in to?

Yes. Sure, yes. sure,

Talkdesk center, and and like in our a well, I center I others, other think think work Genesys, FiveX, for I contact InContact, solutions of think customer, how others. example, do to partner, because share integrated further I and vision, same they good their that. love to Take for you we product working now, about how seamlessly Rob experience. FiveX the terms improve talk contact together with and I very strategy think I,

happiness right truly integration, I think customers. have the our seamless a approach and mutual much to better deliver that’s to

Fish question next James Our Piper Sandler. with from is

you have year. this on what guys. Hey, impressive appreciate addition Well, Really it done. enterprise quarter. was Congrats excellent an

to understand customers installed commerce Phone commercial moving how base. or came from – trying that additions from Meeting within these up of Phone much Just

For new other differentiate? customer items Thanks. wins versus

Yes.

above. of of combination a really all it’s So, the

their So services. we to this deploying customers out bought earlier continue to rolling and see and adding year that

that wins sure continuing as as great make expansion the employees as we talked possible. well about terms that their being continued of the of in on some just specifically to heard efficient You call, terms and Meetings up-sells in of are as

you that a can I above. out. break we of of combination it’s that specifically something not it’s So just the all tell

you. Thank Understood. it. Got

VanVliet question is Matthew next The BTIG. with from

run? of from customers company help software facilitate I just side. as I for wanted that larger in is Thanks just question. becomes that kind more embed greater opportunity to a can monetize for how other partnership on things the really focus the platforms or customer with center a of in deeper interactive of But websites, Zoom contact not perspective, a either sort guess taking a little nature, my better the what dig approach in experience enterprises, just long to hi. to and you Yes,

our platform Yes, Matt, question. that’s play. That’s a overall great

introduced [indiscernible] apps to online partners third-party So our APIs telemedicine to addition we and today, the the the companies and education, SDKs in give via also platform Apps. having vertical like SDK, Zoom apps

Because not only – future. indications, the but also think the people-centric I why reason that’s for our I think offer our interface. some business build

of and kind use also I and You Zoom window, a have right.

You games together. are not putting

You marketplace. business all you at applications, kinds published consumer expense over service integration sales already the our Well, apps of for only for approve the not have marketplace, assets. by with also of but X,XXX report my apps, if and force [indiscernible] look today, in we

lot the platform to going double on existing Zoom for are applications road, of say, down that’s and essentially, future let’s App integrations. our ecosystem, new have a our we down you or the So, play

more Zoom the to offer other many to ways to in is The down into have a be goal applications Zoom. monetize for road. integrated You interface people-centric

you. Thank Great.

Matt. you, Thank

audio The only. next question Guggenheim. It is he has from with looks Imtiaz Koujalgi like

Hey, me? guys. hear you Can

Yes.

Hi.

Hi, I hi. question Zoom or question. Attach Meetings. Phone versus have taking for for Eric my a on Kelly Thanks Zoom

of Phone. that license Is So let’s what in what the am Zoom thumb in can there of Phones host are be to seeing Zoom Zoom and or potentially has now say rule the is that Zoom would you a licenses I a Zoom needs Zoom customer Meetings vision any versus both and assuming a Zoom the Meetings, like then going only Meetings. user Phone of forward? who have Meeting customer what terms base

all their a well. then as them as they most see needs a that everybody only is employees for as they possible and licenses host Meeting seats because is that corresponding Zoom What Meetings we license, Zoom from Generally, what point buy Zoom your is Phone of we of organizations see actually efficient as they not buy needs be the want them. number to

typically, it’s to ratio when customers deployment, company is Meetings Phone. Zoom our are – Zoom doing a X:X a full So doing a of

customers buying or size to typically different where up or vertical cases different less there is is customer or X usually is – end it it by X? Are more it

Zoom licenses the The their Phone rollout and add where market, the retailer that on in of was into Zoom start Zoom Meetings they Phone but to of terms Meeting, locations on of it their Zoom Meetings deploy Zoom Phone and with Phone out depends they than example stage it and deployment corporate example, malls. remember in had its company for as case in do time It its some for is Zoom wanted there take where often roll case location. our more geographic then were its retail headquarters, and the depending bought I they a to may that

And there for Zoom Meetings so need really but was a mall, wasn’t fit great for Phone in Zoom the them. a really

were Phone the where really that’s there that sold licensees So, I Zoom specifically Zoom Meeting only remember more case than licenses.

Thank very Got it. much, Very, helpful very color. you Kelly.

you, Thank Imtiaz.

Panigrahi The Mizuho. next with is question from Siti

just to had Hey, year, this wanted excited what more last you team, on ask focus you year the are at question. thanks my and on? I more about? you are and security focused think are taking more for I product Where your looking product side, Eric, on you

in consumers we private all, serve privacy totally different and the did and of is think what of the lot I think We the very terms is to I before, first but attributed security Zoom stronger because practice consumers, today, lot to some Zoom size, right third-party is company, right. much on a policy important. we embraced Last at privacy look team become of very year, And really I and security always different the has a of think security we learn a lot. and consulting now, companies. did compared

are and a only the well, why as to transform make not That’s confidence, more need think bright, new I that, in security is new ongoing that’s that it’s before. done. said for consumers Having become the there, is No, going also any innovating, but time, that are because we part have security story new do always government what’s future not right. process, also say, but much service, – not our and is how also better privacy important business opportunities, this new only than We to at but customers, security company private of to company. right. is the or we why however, feature, we to same high platform That’s effort. continue have Privacy a the our business

thank Okay, you.

you. Thank

Tom question. have for last time will Roderick And one our question Stifel. with from be more We

hi, all. Well, on to finish Kelly. Hi, all. Tom. a you Congratulations crazy you but what year, Hi, was fantastic Eric. a Great one see to for fantastic Great. a

remote offices, changed the in of a of old you us or variety R&D we all. to a love sitting not seems back has this thoughts curious I that way our for and whether world on you for that the permanently bosses that us, we more thoughts offices now how world? structure hear and the normal going the our of at specialists in year of parts telling are almost are different for your the in Zoom, way sort in As Is because going the am vision way. on run the ways of that’s on it whether the next to rest it changing home your cost your think it’s world, year are would is changed like or probably about year I of that?

please. Kelly, Yes.

Sure.

opened able pandemic happened So, I wherever. up us during this has talent to it hire think the be amazing thing to that’s

hire really from are have the in for outside highly competitive especially that on taken engineers, which almost We the San been us. advantage really and best in great for talent win are diversifying looking anywhere U.S., has which globe we a now the of opportunity, the of to Jose, focused example,

modeled at ‘XX this when FY have margins. continue of in impacts our it sorry, evaluate we employees operating back our In clarity that, terms we coming – course not person. that to into and and associated year, growth to in of we And more support expense once least as for safe with will return office expenses how we work feels around to the back long-term have moving together impact, assess

That’s it Thank great. you. turn I to you. will back

joining for thank Alright. it. to ‘XX. Look Well, really today. us much appreciate We so you FY forward

you Thank everybody.

Thank you all.

guys. you, Thank