Zoom Video Communications (ZM) 2 Jun 212022 Q1 Earnings call transcript

Hello, everyone and welcome to Zoom’s First Quarter Fiscal Year 2022 Earnings Release. I’d like to remind everyone that this call is being recorded. At this time, I would like to turn it over to Tom McCallum, Head of Investor Relations.

Thank you, Matt. Hello, everyone and welcome to Zoom’s earnings video webinar for the first quarter of fiscal 2022.

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

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

update to today. make Eric. filings report Zoom current that statements other turn we in well pandemic During statements Form only the financial we growth as to over believe detail and materially. discuss statements on this our full for quarter including And the statements, to and in may me affect results, the it our today’s call, actual are work we Zoom’s will evolution the filed obligation business business. strategy, with make to on webinar. could the subject predictions risks what Form we may are regarding forward-looking COVID-XX are with including the any XX-K on assumes based today on X-K and SEC fiscal and forward-looking our XXXX, hybrid factors lead outlook our statements differ the results Annual of forward-looking continued Report no which aspirations SEC, as year our financial impact to we These that, the that These of on and with performance let second that

to commitment as want happiness thanking employees. and for on and coming to our Their our feedback and growing that well Tom you, to our start in drove customers advantage our eager and I creates X,XXX joining their a us strong trust start employees fiscal than year needs. diverse by profitability positive revenue webinar. want XXX% more as customers’ their and dedication which back is free cash with our strong welcome an flow. year-over-year to Zoom, loop recognize our meet to a I customers Thank today’s to everyone incredible keeps also

by happiness Our connections help to productivity, work. promoting their their our customers meaning reducing ability increasing and carbon to other makes and great our a their footprint to and Zoom work employees’ each travel-related great place gives

than Our company is ever. we culture are motivated strong and more

investors, trust Let support. me also our thank you, of and for your all

partners our are So we customers, and our you. investors. our Thank very employees, grateful to

few of world the a parts reopened, are things As clear.

to second, seek talk each optimal the experience. working workplace I industry, to create future work customer Many in their hybrid customers some many way. First, model. solutions here companies the are are each offices; reopen cautiously enhance to and varies individual in they and model calibrate their looking working is company hybrid own to help their Zoom to as redesigning

such remote meet to which virtual counting, this Rooms Zoom and gallery, announced equal puts in-room receptionist, need, and environmental participant footing, as features participants So, smart in we sensors.

healthier favorite our announced inspires fun. collaboration, enhance platform users Apps that apps Zoom to app we more the video April, launched much and million to bring Zoom way In SDK. on our boosts a is strategy. deliver enable to to In our habits experience designed – their ecosystem. creates we Fund begun Apps into have We build further users in Zoom generates February, to $XXX directly the our efficiency,

serving. The solution is and powerful for are respondents recent are higher even all to the a to platform, XX% in Zoom here will was an post-pandemic, stay host and be to event events that launch also agreed who our element have figure hybrid events of of and continue conducted, looking study cases. customers Events interactions will company customers excellent that support Zoom solution. will which versatile markets focused our model we and our U.S. a and enterprise many use create on other virtual a an be virtual array Events, We of the with In will we

We that closed deploy Meetings hosts. in ARR, are that our ever financial we large of a this terms largest That very deals over deal the happy of one selected announce to XX,XXX only Zoom with firm global closed is leading quarter. to we services for

industry-leading more to commitment three recognize their me increased Zoom. have companies Let that

expanding than I trusted Zoom want an adding relationship whose indispensable of people countries, XX,XXX with to for the Zoom brands are by licenses. First, XXX more thank part approximately for in Kimberly-Clark, life Phone

Zoom existing value our Phone. Video recognize the I customer, Zoom also and Meetings innovation the an partner, Kimberly-Clark advocating Zoom reliability, Kimberly-Clark. to in Telecom Webinar British saw for decision-making for and wanted at As in process same

the to commitment than joy for Next, more life help of at everyday the thank at Corporation, you, with their Target stores Zoom. serves X,XXX mission to guests which and discover Target.com families online

We their expanding are very communications by communications while their and to Zoom solution the internal level help next on excited take initiatives unifying external technology. our to platform Target their

As our factories work of the internal XX,XXX their leading Kimberly-Clark, their communications. connects second drives Toyota decided create but faster and thank thank Denso, last to last company, for significantly has Zoom said Love Group. and a Zoom expand that and Japan’s the and and want as Zoom longstanding and platform the offices, automotive Zoom to I trust Webinars partner. the across and introduction largest a And joined year, company Zoom greatly Video Target decision-making. you. in now of homes. first Meetings largest environment quarter, Denso, they Meetings family you. Zoom in Denso external employees a Zoom a and usage world’s to ability to customer, contributed we faith finally, They truly appreciate parts

Zoomtopia, September XX year will a We in to forward on and throughout I which at virtual and are held evolution great start updating format. and you workspace on off our XXXX. look in platform to fiscal a be hybrid a the XX

Kelly, quick to over share to a it handing want I update. Before

As the to I category, Zoom our demand been excited amazing tell invited and you you. Appliance. you Graeme am for to very Thank more. Phone new Phone know, device Zoom has I announce have

everyone. the Thanks, be Phone am the Eric. Hi, today I it, to Zoom and call joining Geddes. Head am Phone of excited Zoom and am Appliance. from, I I Graeme Zoom Rooms you my guessed

the are Zoom rooms alike. spaces, Appliances to executive Zoom they touchdown allow Phone great new and Our of for our of take advantage huddle customers offices video and audio solution capabilities and a powerful

I some exciting news up as am category can’t see got to also come of We the for wait well. have this some applications share. with new while our I here, customers to that vertical And

use feature will device. I think of I the whiteboarding this

So and of of of at now, million see announce announced growth to the absolutely been am Well, sold. end Thank the momentum have continues Phones reaching we we seats the today. that Kelly. to end now of to I Zoom X.X excited that it I Phones to continue accelerate. over million will surpassed of It’s December, X me seats sold you amazing September. for allowing turn And you as to Zoom join

team thanks that your work and everybody. Thank accomplishments. and amazing your you hard to Hello, you, for Graeme and for

story QX. growth impressive continued in Our

across beginning by products, led as logos channel as our expected the growth of fiscal XXX%, approximately awards more the customers company Xx direct of $XXX the guidance strong and and as end and year-over-year year. QX, possible. to As line these The and and you verticals, was To to results is industry weighted can of million. deals geographies, million new towards reaching last shifted of of execution, empowering year. ‘XX total that high which seasonality, to strong illustrate, than for our top accolades revenue our and more saw of sales $XXX at It’s remained renewal compared customer exceeded renewal In worth due recognition impact lower FY marketing who culture third-party cohorts. lasting QX Demand society. have strong security businesses our employees made in results continued the on win you all our focus, now we to widespread also well amazing for XXXX churn. our up QX noting Thank see, we of

renewals, mix existing customers where and incremental and marketing new customers for growth customers, quarter lasting accounted value was driven existing revenue tremendous work base of XX% year. in between year-over-year healthy customers really products was testament of strong incremental our revenue their a last differing sales new the success accounted revenue. and is the expected outperformed and the a the teams growth for towards XX% by approximately existing in Our our considering trend proposition. The its and This the and for online to renewals hard

approximately XX months with saw more a X,XXX quarter. take growth the look generating the for key customers revenue. the with the we in approximately in XXX,XXX customer than employees, metrics $XXX,XXX revenue. We XX trailing XX,XXX than XX% ended exited during represented Let’s quarter more the with We employees with the quarter. QX, up-market as at quarter customers In customers, customers of than approximately more XX adding

growth to of from solid XX% with We and in employees. represented revenue, also benefit XX% continue employees or QX, customers in or quarter-over-quarter. year with our XX customers QX In XX segment from fewer approximately of stable fewer last up

exceeded customers acquired for Rooms, rate Webinars Zoom customers XX than more Phone products. more dollar quarter net XXX% the Our XXth employees with and expansion as consecutive Meetings, for

the we to For expansion for dollar XXX% the net quarters. expect subset, rate this above customer remain few next

expansion dollar employees, we fewer economies – which customers that more metric, domestic be are than as volatile cohort not For to growth strong included quarter. had and lower expect as or international during reopen. Both FY and its net markets the with to in more volatile ‘XX XX continue

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

which team our APAC year begun investments capitalize approximately up recent global and of XX% combined dividends. EMEA to XX% teams, remains XXX% and to in year-over-year on large we we it. The a pay In already opportunity significant quarters, international made revenue, will to from our empower Our revenue continue to grew ago. have be

was litigation in sequential is resources. perspective. expense stock-based margin taxes, of drove QX income public optimization turning demand GAAP exclude acquisition-related non-GAAP in due first and expenses charitable and XX.X% year non-GAAP results, and donation I last cloud payroll gross focus the quarter XX.X% both QX. to expenses. common to of will net profitability associated Now, improvement and The mainly increase The compared from in profitability. Non-GAAP margin XX.X% which and strong in our compensation execution in net on gross stock, to

long XX% relatively free in million. remain to $XX XXs year-over-year and stable development support continue expense margin grew gross to K-XX education. as the we Research expect low as We approximately to by

the expense than As top was R&D to of which revenue, a lower is percentage of due last strong line approximately QX total mainly year, X.X%, growth. in

of upside continue This $XX additional and was engineering $X.XX was through growth. approximately our marketing Sales translates non-GAAP million, QX systems, sales new a and QX revenue, innovation. to and leadership last was to to marketing total improvement and approximately scale QX due to However, the last income G&A and margin over X.X% line, slight in a and XXX expenses approximately in operating mainly XX%, capitalize XX% top of on marketing year weighted by year out of programs basis, $XXX to on year, QX. million. in the growth commitment automation to above and high-end operating our XX% exceeding of plan grew we adding diluted expense and This for expense to reflects the in to demonstrating $XXX QX, teams product best-in-class from an of XX% our non-GAAP initiatives. continue per year. investments and in and guidance. decrease with XX.X% Non-GAAP order drive G&A building globally a Revenue of hiring from is We meet million to a quarter total shares quarter these grew scale. product QX revenue, strong Sales last in average expense global maintaining future outstanding. carried million year-over-year a our to by last of expense grew large QX, line bottom to XX.X% our to earnings to non-GAAP quarter-over-quarter by last improvement invest in This the a brand as in due share invest above from in functions primarily decrease and our position XX.X% year. guidance capacity $X.XX growing in growth. from $X.XX result million compliance $XX

end to was billion, year-over-year $XXX the at $X.X up the of deferred sheet, from the Turning revenue XX% period million. balance

and unbilled billed year-over-year billion. $X.X Looking at approximately our up both totaled our XX% $X.X RPO from contracts, billion,

that metric monthly We base. approximately reliable last revenue the months, year. important RPO expect to to trends deferred this growth of large the and total remember the our recognize billings not of over in due as to percent It’s XX% revenue of next the consistent of revenue are level with predictors future RPO XX customer

the In addition, with QX our year, the our shifted the has increasingly timing of renewal to renewals representing fiscal beginning of largest quarter. now

revenue sequential equivalents We of population of million our expect exceptional strong We in and operating million, collections. in attributable $XXX million, the sales in QX million year. and cash restricted year. flow of $X.X cash. cash annual with QX be is is up quarters increases remaining was We smaller. execution of marketable available ended the flow RPO deferred last cash quarter increase in quarter of $XXX up from the last to each had as $XXX $XXX from in The lower excluding cash, Free primarily and approximately in securities, renewals billion

we related our outlook. our expect ongoing increase expansion datacenter Looking year, at to to to the rest support fiscal expenditures the capital of growth

which expect a in FY late XX-Q be settlement, will also cash our a be outflow disclosed ‘XX. legal We in to

Now, turning to guidance.

unknown. pleased outlook and We QX remain the pandemic extent FY our of raise ‘XX largely still global the are for and fiscal the Please that to note impact year. full

current research and is our well assessment conversations with customers. business on our Our environment based the as outlook own of as

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

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

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

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

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

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

website. happy I on our am found Before corporate our that launched Relations highlight we and Investor can concluding, to ESG be which recently website,

we our report, to ESG Zoom can we key of also as We Zoom. Giving tenant be website. Social investors has Impact Cares our updating our recently which to community what on along published a our at found We forward look been journey. the back always continue do

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

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

Ittai from our are Oppenheimer. first And with mute. Ittai, is you question Kidron on

trying you today launched announced milestone Difficulty] [Technical am early XXXX. in in think the X.X think past, million. I Phones I to

million. of So, I months then another it took X to guess, a and X.X couple years get to X add million to

Although global you in pushing least at didn’t the the you beginning, sales from you standpoint. and beginning the the availabilities plus as hard had at have weren’t

How like Is record peg pace can recent we So, sounds activity help or comes you the much ago? about quarter also United what Chat together. two per Zoom in is right addition, think – that the are now a this about of Meetings, about effort? bundle to talk And me kind or successful that your to of maybe in your should month and success Phone addition? Kelly maybe track of ability versus of the How of XXX,XXX kind you more here? United, renewal

increased are are are So, about what gathering, you star the excited Graeme our it you was that Phone seeing guest of definitely I we is what and Zoom momentum And great as there. is momentum think call. a and to there today really on have Ittai, happening

in yes, million that took I then, it million that So, level. X to get mean quarters that to seven us seats $X December. was And –

seats X it’s number. XXX,XXX months that add to an So, about to us taken additional

of the seeing of happen end but are about excited quarter, there imagine, absolutely right, momentum exactly. acceleration the are those you we months, at are as Equally, it. So, in and the trends can there each an it doesn’t we very

of with in your respect the of this bundle activity to And United much form? a how plans, comes renewal type

Yes.

and our absolutely, is there up-selling. So a the take about salespeople cross-selling talk to opportunity renewal when

opportunity saw packages actual either new specific office going as of the what a Rooms saw that, but terms Webinars disclose going disclosed spaces are themselves, the up-sell In to people into is thinking in about to from the you revenue the Phone or of or we again. they Zoom of customers lot aren’t coming breakout back the

That’s Thanks, great. Good luck. guys.

on-prem to which solutions. that deployed on either when other solution Zoom before home very Ittai, security, said, quickly is so Kelly comes There they what’s no or solutions, is Phone about what to add product to like the just fascinating innovation, matter cloud-based customers, reliability, it all growth, Zoom good features. our many they all availability, are

Right. Very Thanks. good.

Thank you.

Dan from is with Bank of Bartus question next Our America.

guys. Hey,

Hi, Dan.

for you. taking see to Thanks question. the Great

continuing with of had what’s side half this showing the any maybe reason year opportunity renewals optimistic modeled And coming be I you on reality? first are what are what it the XX other the this of Thanks. enhanced more heightened just you or seeing, this just theme the started churn second to am business, you an the latest Kelly, churn really up. is heightened the to base, expansion half So and Do what employee in you of renewals upmarket seeing more the when related Based year? to churn mean in on than of what’s year curious, of X versus expected? you the

our them terms QX renewals really pleased. great of said, in So, and especially online cohort of retaining but better-than-expected also up-selling than that work great marketing done customers during a only customers, thanks for all not had greater employees. XX we And we were I sales as to as in of in their with QX, teams and result

significant carry well. we really in through to also that as exciting see year. to as the that’s expect up as see We coming So, momentum renewals continue QX we

mentioned are in fewer openings the the quickly the to segment segment be more markets remarks, than of of with around last and seen we more months globe. expecting over that has volatile still prepared a we as the terms we the closings as that’s customer to XX that have In employees, reacted XX potential

Alright, Thanks guys. great.

Thank you, Dan.

is Wolfe question Zukin with Research. next from Our Alex

we to my I And on unending have great report. that, XXXX? in I for for and unknown how now have guess you help today? your Kelly, what’s stock, you But have to understand are can and us that Hey, productivity understand are got the do better on going the question guys. guide churn growth over pre-pandemic you Thanks that you, driving relative for and productivity the trend what believe is What taking that pre-pandemic does I and a to debate organization of there the is capacity another congrats levels? seeing on an control increased Eric. like factor. the one know first relative you quick not much sales Kelly Specifically, quota-carrying I look the today? you then

were of the with first we all, tremendous thrilled upmarket to performance We So in opportunity. see the QX. continue in

amazing our we deal talked As Eric just wins. about, we and largest to-date had customer had some

expanded we so levels to our of productivity. direct organizations, brand elevated the sales there It’s especially. from sales invest benefit channel and are our back are have And reflective products. the And level that our going pretty consistent an seen have we but of given of pre-pandemic, we global continuing in at portfolio awareness, to more

are excited in as really so and And future, well. that the upmarket about we especially international

Phone momentum continuing to we seeing then, of we there. of Zoom As look course, and and you we that are heard, the revenue XX% are

everyone’s is to return office then, mind. And the on Eric,

Looking you recent and well. in you sheer out in that material that a of product are as – think terms hybrid doing new I opportunity there today how of about conference really is the starting that are relative at forward-thinking spend you seeing Zoom driver that it’s to growth to think logical are just be rooms Can what become as about most the talk do Rooms number and are and the to this what your seeing? impacting that, world. will clients on today? about think it developing from your How articles, some mind you With

a question. Yes. Alex, that’s great

because you, on, daily on all, some update of First a about will well say of going you. Thank of – done, I Very am regularly to what’s SaaS fan you update I Alex. want kind market.

driver to every or from a smarter revenue do way important the when when I When opportunity, they a lots I in reopening right, room Zoom they is at when but the experience. third desktop also or only Zoom very or footing. comes and usage puts they are future that requested particular, equal the we remote I or use Meeting more Rooms in and more terms not not well. are they of the home, working setup they Zoom, because consistent as earlier, Zoom new have like, gallery back the is I probably Zoom customer to customers have innovation the Rooms, Zoom is the mentioned setup, the comp it this hybrid. want of a think a the home, to reason Rooms. more their experience are participants Also, that, in like like to room of about as view, it That’s experience deploy another a Room huge comp different. they are and would say on comp for That are lot did which experience Webinar rooms also participants meaning cases. of consistent what’s business why like see kind Zoom when office, They But that’s a on before. comes future, because

to innovation our again, platform, customers for a for the in the on driver for Phone, standardize the another pipeline Rooms. that’s Webinar Meetings, Zoom for of or Zoom So lot

guys. Appreciate color, the guys. Perfect. Thank you,

Thank you, Alex.

Alex. you, Thank

press can joining is yourself. X question Patrick, next with Securities. you audio-only. from Patrick He there? are JMP unmute Our to star Walravens is You through

the sorry, Hi, car. in

I hear you that. are? three I’d of sort hear strategic there to have want they your love to this – don’t see what for that to imperatives like would love You you is what Eric, year? think

Yes.

safely. drive Yes… yes, Patrick, So

am safely. driving very I

Thank you.

company personal with the I key priority to share right. think with want I initiatives, would you share my I

the evolve me, right. the when me our culture the I share I for started employees CEO, so culture, many really our on is with company to make we three company culture, company top for So one think down the also two on on part. in the overall Number [indiscernible] Last personal but video the double is like not of only platform, strategic business, time the that’s board very my least, some the our deals, focus you platform, It’s as because have remotely. platform, platform. sure large right. coming but the Number big new year, priorities maintain and my team more not about

right, international set the driven essentially look think strategy UC platform the HD that reopen Zoom our the and room down that I of our see number platform. at not future up market can There do one reenter XX%, is opportunities by from really initiatives. chat more of the or angle, than to double make will that platform that’s That’s are think the we EMEA, it the a of lot if is From Number a our around a you Apps strategy to sure thing. with our or either building for see huge I also XX% expansion. growth phone, you Events, make all, in Zoom invest from how our those overall meetings, the and If Zoom us invest more about all to capabilities, a works, That’s very think to how two perspective, their other, very, lot conference opportunity. Last I right. platform We we a first sure how to That’s of more. lot support is opportunities, innovations but APAC, least second and important. businesses to why got Japan, offices.

so helpful. you much. super Thank That’s

Patrick. Thank you,

Sterling have with JPMorgan. we Auty Next,

Pride see Yes, guys. the you. Zoom logo. thanks. to Great I love Hi,

So same wanted last in revenue XX,XXX at points $XX million just it I out actually to look start this customers. quarter, mathematically with, addition If else quarter on being you in about smaller in that added first, about Is this quarter there new or going to last what than seeing is the underneath business the you those what something metrics? are average that quarter. saw we customer quarter-over-quarter

terms that it the when think it actually in of I in renewals. is depends on the quarter

last real business. of think halfway weird through the dramatic especially change where So QX the this very about, in year, March literally XX, – timing all has on business like the happened from so those

the we what have So you this quarter. in full – renewals of yet of benefit don’t all those

You most which going have that to because next are unfortunately, people quarter. is And to going their funny kind was into co-term date, last March in with phenomenon, after come QX sometime year. see of original it always XX

it. Got

Also, Sterling, bit of would of add terms a like or year QX little at a buyers for driven by you growth fiscal to revenue look online I last like QX in Zoom lot if more, deal, consumer SMB business. also right, ever This Starting our the is by closed customers, large very right? customers, as thing. driven we enterprise QX, we largest do see Phone a – Zoom well, good

trend, I think right, business our a this by customers. future – that’s is driven

quick update monetize and you an one you give on maybe your Events? And can Zoom on plans and to makes That where us follow-up, sense. are then Zoom

Yes.

Zoom two parts. events. about is One the has So corporate

consumer events. about Another or is one consumer

of events down doubled conference for online. so can’t our new first. we user plan annual are innovations. many our think Essentially, platform. is corporate I to lot everything why their launch a they webinar looking run customers. Essentially, They we our Events That’s have

second to on you the year, the can you anything like to time, think want of this I have corporate for we host account, sell And consumer going are first. year. you have opportunity our this more also teach then probably you can we That’s Zoom a events. Essentially, online. get tickets, half focus Meeting the events later

Makes sense. Thank you.

Thank you, Sterling.

Sterling. you, Thank

is with next Marshall Our question Morgan Meta from Stanley.

channel in-person gains but Great. usage just Thanks. from was from to to Kelly, there the you time noted made kind students And maybe second the a of also returning and see of you gross maybe was investments traction then margin the noted – kind continuing lot to out? efficiency, at any due just of is calling that those just of largely international that’s less pickup IPO. question, contribution you students worth and from

you development how Just developing? international versus in see and Thanks. just you channel the U.S. where that on do are

was it really was So, in optimize public continuing our cloud gross the with more to margin, terms of partners. around

with had in better rather As dramatic scaled that’s on shift going we up, that’s work students back really seeing the we a packages. have yet than pricing opportunity to attributed to And have them to school. what

that we you expect were students the are time. to around As function of the there to gross back going the And what more dramatic in to due what going you in couple significant step probably We expansion, gross this talked improvement that specifically of we really margin you is that have do sudden, see expect going in And channel, impact weeks. to pretty of they K-XX. back-to-school, about over is a to a go international a pretty then margin, free is come able are as say, but that before, starting all a about to If is terms a on go school. great that was had question. discussion the the fall safely in the the I more and to in see happen last would

ago but where building So, are and that really our out we strategy, especially focusing and year our around so. out building in working in a now master Phone program job probably on were good U.S. on the the done channel It’s a team probably guessing, we we U.S. are has internationally. Zoom agent or

it’s terms probably in strategy. behind year So, about international channel our a of

team Padilla great and it’s that on opportunity are now. her there that ahead and is working So, Laura

guys. Great. Thanks,

with Sandler. Piper question from James next Fish is Our

Kelly Eric. actually for tomorrow. and and questions birthday Thanks Hey, early happy Kelly, the

Happy too, you to James. birthday early

you. Thank

It’s your birthday.

specifically partners. of a those as Kimberly-Clark noted competitors have, for penetrating tech guys you one as that Are And yet open one are win cite what in Eric, their with year am Zoom more? than for cite like I with you partnership opportunities? installed – an their your example, talking more really of you well up about key incumbents last were carriers as bases Avaya, hearing Yes. BT you really theory, Phone,

really prospects, shared together with to master works brilliant solutions, large, I driven comes so service, mentioned we right, service look They Phone, with said, our every with example, business is with Zoom think, – compared important our after partners our also they a a mean When wow. first other we work solutions, This take in Zoom but and the And customers working integration potential growth. our when right. amazing really and I them. already roadmap, Telecom, meetings, channel phone British think that, why inside essentially team. become direct just doubling all, the that’s allocate huge are the carriers Telecom, well, winning, roadmap cloud-based Kimberly-Clark. at webinars And by of more more already carriers, of we those our Zoom strategy. not into our That’s British like partners the built for a lot only are our agent, together that, relationship Kelly are because is they only and Zoom with or video reason with our earlier, we for This and when deployment. or I That’s we also they this not it reliability time right, like usability valued security. as other of we the or realized by any down at plus Phone it’s on

more that. we more like our overall, in particular see It’s deals customers test think I to solutions. and

high solutions confidence have is much for more them. We any other innovative than Zoom Phone

longer Phone opportunity? can the you functionality well one really broader announcements chat of how term about sneak the and quarters. If video growth I outside kind helpful. of Zoom I markets few That’s more, exciting experience do apps Appliance think the as customer and with some last other experience obviously, presumes as guess things collaboration in

Yes.

So it’s a great question.

for when Chat, to comes right, many, we a So chat years. Zoom many building had it already

Zoom Zoom Chat. standardized Some even Zoom Video, and Phone customers on

customer service is it’s However, deployment breed a best two is from flat, user, wonderful. our always And end right. at perspective, the order from everything working of well. The look very approach an together

Some customer, they wanted for to out Microsoft everything is stand okay.

also with Teams. We incorporated Microsoft

taking experience. the which Phone, we integration a for to other the make think with everything might Some Overall, using have customers. integration I we standardize chatter much one drive customer, up be are help better using, our usage no would a Again, just are matter approach, customer I do we think sure everything. our that the and the very open-minded platform. Meeting for they for can solution to in solution, That’s on like or solution sure, not want our why chat chatter they

Thanks.

you. Thank

from is Panigrahi question Siti Next Mizuho. with

that to paying Hey, good dig question. want into Thanks and Kelly, segment. taking my Eric to customer for that see XXX,XXX I $XXX,XXX you.

was guys. renewal for you quarter this So a big

to So on saw And that products, have of QX? growth changes sort of segment? sort what a I done can what that it – bit have of in just little terms more wanted what to then apply you color in understand what drive so success or cross-selling users And there. is such you learned into you that

Yes.

the a combination last It of So both. part first. of all, first was take really

we of as about from we the additional transition goal we quarter. especially to were terms what As active well we we enterprise the of as We think users, some remarks, customers products with our licenses customers as some I many in as deployed. this upmarket saw quarter. last reps sure renewing did possible – talked being that expansion about prepared in of hosts mentioned this And aligned the talked made

special a them program place focus place really also had them that it QX. program help on we So in and is renewals, bonus for in and works, for to

So renewals QX in performance we’re as forward to a strong looking well.

plus user Okay. see It’s that. that quick customer. on And impressive to very follow-up then XX,XXX

think you your looking enterprise to market how – business many could when such so the and when addressable now close? potentially reopen, many and you customer So in is large of

relatively that is terms customers deals is market in penetration a still about at, example, a we Fortune while is huge for of this, super more than $XXX,XXX. there we’re that excited the look you I And small are Well, way XXX, think like at it already. look us there Global the paying opportunity XXXX the when

paying XXXX, XX% Global still the we’re in that more under think $XXX,XXX us that like I annually. than are

just to we a have all doing that ahead. opportunities. on those represents that, great is And focusing So sales of opportunity is me, of job – our team

regular have check-ins with We them.

still there is is so – the massive. And potential

all. Thank you you. Thank

you, Thank Siti.

Will next Baird. Our is with question Power from

the previous looking earlier for Eric, some And at those for at that to are you and on, question. for year. question, platform, strategic taking opportunities. the Thanks think near focus was Zoom on the focus broader team this of a the a spoke you into right turning Great. at the top top of of I the areas

which in the and is at So SDK/API already as and as Rooms, you having years the you at Zoom terms over if Zoom Zoom And all are of aside, look thinking within Events, contact the center. We hear contact about of opportunity, what you X today most look gets UCaaS what out, tremendous the excited next the look which success, importance out about talk bigger growth providers that, I putting Phone guess in is rolling center? you you terms opportunity? of

right, that this, quarter. get there, equation fit the probably does You Where too? into every

Yes, a Will, wonderful question. that’s

so are thing every I it excited X many one I very top things excited when there to X But years, will priority think day. or Apps. I and comes Zoom be say about for would number is I’m next

right, is if essentially, you do more we right. tools, So at business Zoom a more look medication like when Zoom, – Zoom like

those people-centric communication, you can meeting interface bringing or for is lot road pandemic context, and right, games the is crisis, it lot the of at I do communication the consumers a you a well business down consumer this not of still During Zoom of interface, using where give play maybe Again, look context, together. before the Zoom Zoom. does how are you

report. can You my approve

We have great operating people-centric our interface. Zoom become focus with system with to the will and relationship Essentially a SurveyMonkey Starbucks all on others.

right a and Zoom It’s When tuned. our of marketplace to our the center, and reason strategy, I that’s huge it the part most mention comes exciting That’s XX this stay SDK With XX September the overall is why opportunity. other the the contact platform, Zoom scheduled opportunity. and of part UC Apps, and integrations. Zoomtopia including that’s and

can market. do integrate that’s tuned our see Target, new something the some partner, the [indiscernible]. around Today, contact inContact Again, stay Zoomtopia. with we of center. also the big also FiveX, themes do and we well Again, and something. whole Hopefully, at Twilio, the the You very will greater a

that. to Looking forward Thanks.

Thank you, Will.

with Next Niknam Matthew question from Deutsche. is

taking Hey, guys. Thanks so much the question. for

then accelerating on could that some you of embedded the growth success, about in base, where just second talk year? you’re XX churn, then And and forecast color the in go I about to any give what’s just Phone back half how can cohorts business? Kelly, some Zoom the about versus just employee small can relative seeing the if And of adding to of the of back maybe, mix then to terms on quarter the go in the and in upmarket congrats talk First, and terms both less geographic customer particularly Thanks. than of for trended you’re – where for talk subs? more you your expectations

Phone, we across success business. So see continue Zoom of all of segments in terms our to

more Zoom the beginning, – And As expansion we’ve said excited the Phone. we’re than from of we have currently XX,XXX continued we seats into really about with XX upmarket. customers

think customer seeing I really So upmarket and momentum that shows enterprise base. are in that we that

and growing across consistently currently, majority international to XX through the one really of widespread it terms upmarket little was a of revenue mid-XXs seen we’ve first due most fastest-growing We’ve year terms or as being fact with the a that. so, segment the that volatile cohort, a last in locations ago, volatile been that’s that buy more been segment – for seeing them cohort. growth talked a on of really Zoom buy or XX% And so exciting. plans. a of the to momentum And about certainly a our most monthly of geographical has lot significant quarter, the Phone over that, the than And of then all, then them year has in it in

as we’re look when how have we need – we to we the modeled of that modeled into Zoom and think flexibility with we they the the people segment, came we continuing volatility it’s that’s because And the year, it but we stay rest segment. that that’s – churn give we them, So for that seen have in in accelerated and it, year. about want to

of color So Matt, Kelly a to just add little what quickly to bit said.

cloud. No That’s solutions, If phone other deploy drive customers, matter big or not today, our have already do to matter you look us the is enterprise the like our not a really any at look any They at who or they not on-prem something market, replacing I are why our it’s either no SMB enterprise, reason customer, think That growth. enterprise, you So, have do right? solution deployment. or Phone can customers brand we on-premise solution. that’s cloud-based deployment, solution. new if other Phone our because growth. SME means a customers better, deployment replacement They up helps big even

Got it. for and both you congrats. Thank color the

Thank you.

UBS. next is Keirstead Karl Our from with question

to you I’m the about cash Kelly, by way. in great a Congrats cash question $XXX operating million performance. ask everybody. going Thanks flow, fairly prosaic flow.

some think about I a margins. flow operating cash investors and operating gap of assumption Kelly, between number we margins make So the and

raise adjust your given well. full us year Zoom, margin operating decent estimates. guidance operating that or to wanted estimates ask that see amount, keep a happening raised you gap flow XQ, So our might as in flow to and tempted as obviously you has there guidance anything everybody their in But by cash XQ people as you, just you do encourage would Thank I we apply you. to cash that, whether is margin that mind

Yes.

So asking that, for you thank Karl.

year. and the QX, big – to year, being of our quarter the biggest level renewals our for biggest last renewals, due right? was bookings quarter so billings this all, So largest And high means also first of the quarter

to also in opportunity the leads that exceptional flections quarter. So the for

be operating in in the to then the I year, largest flow of And will to prepared existed pre-pandemic. should the billings as you go quarter the of as the relationship bear and between renewal how that back continue mentioned this year, through cash kind mind. remarks. So free And and margin see go we

purchases that’s of the in rest through you kind back see more start in QX. only move as and go is we QX the If year have way all the operating of what to you exceptional The period, normal eSBC we the consideration should of sort for year. to do the

through there builds cash QX QX, that the as So and same the we as then in and QX and okay. up and go is into the QX purchase

or RPO in us kind seasonality this DR of of to else this careful loading, about renewals our year, that keep anything in Kelly, you other you’d changes front-end renewal, sequentials. as dynamic then, follow-up, us fiscal encourage And cautioned that maybe that, of loaded Okay. metric and terms the to there mind? a and being front-end any be distorts Is

the billings the and just right? collections, about, Well, with really just talked That’s impact. we one

terrific. very Okay, Thank much. you

Yes, thank you.

Next question with is Securities. FBN from Shebly Seyrafi

much. Thank very Yes. you

about Talk So in hit the uplift the of kids school, points expected your get second back of of just you XX%, a is you couple uplift as are what in long-term year? a go half kind And gross are XX% the about for thinking like second thinking possible you have to of example, margin time the margin. about to half? gross there. that, target For following you of table

Yes.

If situation happen, back, the all of see where how a go would long committed think return-to-school as couple which So – needs safe supporting benefit currently, of in don’t modeled points we we’re not schools are the those you as guidance gave, – we in any a is our impact in to or it to were in certainly it would of improvement we as sudden just gross for have they the from margin. we that students I return. to is a

to I by more that will think be a time will going that. likely is as creep up than what little, be XX%, of gross long we again. to to line starting service of it happen around by remains margin unknown needed it line measured you’ll margin school. the target time the that terms long-term haven’t start see is how little the still in And But set

thank you. Okay,

Radke question from Tyler with next Citi. is Our

a I seem webinar. taking to that I’m didn’t Hey, the have to in the for the And questions using demo. white we question. board glad lot write struggle… Due loved our thanks

great Hey, for next that’s time. idea a

get will all. We you

go as don’t long first. So I

but obviously, was I the really you, I upside relative the in strong seen help but your this Kelly, we’ve So quarters. wanted quarter, to think investors of guidance last to ask than four most magnitude growth couldn’t smaller notice revenue

wanted this we upside guide? may kind anything relative the lapse out churn, Or called starting the obviously held should given Street. that tough to is robust customer But understand, to of relative normal good look unusual your and just I be you’re to revenue just expect better-than-expected back You adds was that to more comps? new there some

Yes.

in very as the to we’re in this started call I as this almost talked on some also, round we’ve think approaching year also And billion quarter’s year. comps. last really difficult about revenue we’ve well $X

But a be is year-over-year rates, you guidance a more are are would this very normalized think growth. and yes, very I normal, which I company with growth new more – scale than becoming what these of We’re that which our could of is you’re going this at pleased expect. still expect to large company XX%

Thank Great. you.

from Matt Blair. with Our next question William is Stotler

on a to taking the late. thanks ask Hi, little you, for hop guys. bit and I’ll Good see just one question. and

our so of Given saw I platform part asked on, Zoom forward. about OnZoom kind was is the this Events I’m been going we we’ve one be have sure But to a the already. great something this release that conference and It’s for to obviously, see. going going we of while, thinking be a

is be you sense, could But Thank me around qualitative, Let of double-click been about Events numbers look whether just hosting on just as makes Zoom. lot what the have on you. think or be. a with would companies a that and how opportunity could that fundamental that lot broad their events Zoom there Obviously, of opportunity helpful. it like, meaningful

to want talk you the about Eric, do vision?

Sure. Absolutely.

we So from side. all, received is, the They the build first lot of Matt, feedback Zoom Zoom Events why lots of reason hosted really webinars. customer a already so of we

to However, lot platform, pandemic we feel you how bit and to to everything I Zoomtopia, how installed count especially from, for Zoom the make a but on way like needs, finish virtually everything, a post-events the little think everything given base opportunity online, want for from and example, one webinar. to the of coming us run video customer pressure we crisis, project the pre-events do sure take you Zoom that’s do the Now and planning can satisfy have quickly to a last more, for like you the right? more all the already

natural as Zoom can earlier, also the sell opportunities, you to year very not mentioned you participant. to really but driven from meaningful can host events tickets and Events right, I new events, right, corporate a like more only later As it’s think your a platform. I for migration, revenue consumer the this event, Also prosumer right?

have We corporate both why on side. integration and reason revenue and another provider as it That’s a payment on the consumer well. driver also be tight the could side with

Thank you.

you, Thank Matt.

from Next Matt BTIG. question is VanVliet with

about question. or at I Hi, the most video curious business? for only it. channel everyone. video of right is taking Appreciate driving thinking the opportunity the side the channel Phone guess for Or a Thanks primarily the spot now little side. Zoom least the is how for that landing question differently, bit of that much an

them both the opportunity customer we’ve No. themselves, Early provide want in best. and have expand through across on, to really selling for channel We access direct, it it’s meetings relationships to we as to depends and success But – meet organization saw great works where and continued our right? Meetings is Phone. them to them our whatever manner on the sales

do of through and percentage Meetings the we comes sell So both Phone A business larger obviously Phone. channel. Zoom our

the wherever again, organizations I historically customer. most have think it’s on We to go how meet just up want typically that’s really bought. based comfortably. them But to they

Thank you. Okay.

Thank you, Matt.

question Taz Koujalgi is from with next Our Guggenheim.

Zoom taking for my I Thanks question. guys. on have Phone. Hi, question

channel channel directly you of them. residues the because a when is selling versus through margins there about channel and I had as through well. you of heard selling to a question through I’ve when You’ve and direct sell partners space the been the that impact lot partners you repeat sell

to you partner? deal head sell channel talk about Zoom So selling you versus for through Phone a can directly the when a margins

Yes. the allowing and and in competitive we setting But say time program that a differentiated channel a about product. those they will market. them think is certainly thought having are have long I where a to attractive rates and we We very

broader to the a And opportunity feels take overall way to comfortable market when the is, as back is channel most grow question, to involved, last to is the to see in possible. there while again, able continue we partner quickly So margin really about to to way we want the customers that our it’s buy some the really there it the that and share them. as be impact

really there for growing and is the So as impact continue we sustainable, top on that it’s margin, while the approach focus we overall, to best long-term, some think absolutely line. it’s to

question. housekeeping more one just And

didn’t gave – customers I know You number don’t Phone Zoom this of you if us quarter. a

of quarter can Zoom last was on missed comment it, think I this I the number but quarter? XX,XXX. Phone you Maybe customers

Yes. a one That’s And in disclose milestone where the we did going Analyst next of Zoomtopia Day at the disclose that. it on that things milestone are basis. September. We do likely not we’re will to to be

guys. you Thanks, Thank very much.

you. Thank

Our is with Summit from Group. next question Jonathan Insights Kees

taking well more Phone? wanted a like growth you’re and other be terms Do that may premise the comments from as that other you providers, that – you bake-offs about the the more. becoming business? on, that Great. versus for wins a Hey, the question but be you I thanks detail, sounds bigger to double-click in great. I provide between legacy details stronger see and phones trajectory Thank can would indeed for you. better. And any It is and replacing earlier any hesitant, as of winning your congrats as just my part know the phones if guess I Phones on cloud the and providers. like of you quarter. more Eric,

Sure.

of launched at million right, paid last first quarter, you we X think look only I Phone, X the Zoom Since right? seats. all, it’s years,

right. shared, right. It Graeme does tell works, us is As XXX already right. session It something, his live on million,

huge on-prem Zoom. look a service at including business – a cloud solutions, you every provider, today, for opportunity lot that’s enterprise of So the deployed rapidly very customers

[indiscernible] So think card business big. accommodated – That and itself the Zoom right. the business, I market phone is –

are we businesses already that. at also deployed part a phone And cloud-based other think I of solutions. look you who

are right. coming job from solutions see reasons. this phone of the with window, cloud-based other those year the There do lot us. And – switching replacing no matter Our a growth which deals, customer, surgeons to is multiple we the

First Zoom a and the deployment That’s customer come or Apps, from other of because, solution be thing. all, at ultimately, the of Events, we we Webinars, if we opportunity, already integration any any two other are converged for share much can X There to Zoom on much everywhere. front. of voice from you built consistent. not and service it’s better their think that video. look the more Otherwise, positioned modern Zoom you video some detailed into deploy so... why other see the phones, experience, several Those from again, lot can And our growth also almost Zoom But windows years, experience. no perspective, things, like also, look look is than work. video it’s solution solution it at But functionalities, cloud-based overall other our Certainly, reason Rooms, at products. years. only tell. with early on-prem numbers, for in our better It’s X do opportunities trust. same Maybe one enterprise, coming We could next the right. interface, too an several I is you

Thank you, Eric.

Thank you.

[indiscernible]. is question from next Our

you. Thank

your hear line. can’t We

I Congratulations. know you. I Thank asked. said my was question

you. Thank Okay.

My answer is very you. straightforward. Thank

is have we Jaluria from And RBC. next with Rishi our question

to Hey, little right? that ask really to my on work survey questions. between. in a Kelly of hybrid, primary, of enlightening means. or much question, divided as of you of a the very ago is, future And X,XXX that the everyone it’s for the as the I that’s whether is bit mean nice the in think It’s taking months Zoomers but sharply Tom, hybrid something this of I is office the consensus had home what what continued couple is primary Eric, to going momentum see this be a hybrid and business. around workplace thanks so which work, wanted philosophical at I point

when hybrid mean a a model that kind does Zoom [Technical What And So of you think Difficulty]? is [Technical simple question. there work that? of you think about work particular hybrid Difficulty]

they May, Sorry, of little mention and flexibility. they U.S. right, – right, from XX% to right? responding bit right, so Rishi, your I Bloomberg, an to article a happen answer today broken. need a did to the adults, think they survey, anyway, questions, X,XXX In so I But read

are you employees, the the when clients. you at Generation going flexibility right? look to the increases meaning the to If the millennials to number the otherwise, lose or So Z, those XX%, give you

So when it comes hybrid, first of all, that will become mainstream.

Like But a flexibility. the also And to have manage X different different one week they of However, businesses, also in be work. flexibility, in office days have the another it’s hybrid work the overall, week or it home in office, different. at about X might could days right. way hybrid is a to different, employee they the might office, give definition

Alright. Rishi. Thank you,

Okay.

question. is Tom We have with more And question Stifel. time from for last one that Roderick

all on walking of up time were for solve with a the hi, good all still activity. your beef Hi, and Eric, through that in you. lot ago you concerns quarter that question. the on this bit us for big of Thinking to jump management how emerging Thanks back call and all of a year great. plans kind the Okay, Kelly, coming with success, a last first security call spent on year see to fair the of great to

of the front going Eric, it’s this here. utter success pretty also your to security security end-to-end just to need thoughts vectors call, ahead threat Can the stay You’ve us we what I on recognize your to on update, to do give that haven’t encryption. but an you plan? the think away think, I on I once aren’t telling that reached word you

But of stay what’s Your it? success. next? ahead a you do was XX-day plan How

This Yes. a question. is great

Before and use challenge most I’ll I K-XX that about right? – that. We a to Because start of the pandemic from Zoom. coming about the for or share going consumers, consumers talk happened, maybe never so customers. large, take built next, was step never to who by We enterprise thought what are crisis. had back Zoom That’s schools

They doubling we for we and two share security, webinar We on what XXX people reason days, of add you, on – to grateful mean, down XX trust The almost privacy right? [indiscernible], However, secured April, of running to our monthly I and tell so I transparent. really that’s are one. can think that. their more why we Zoom, lot why privacy doubled reason want but why we weekly at doubled, everything people working really I’m take right? that But understand open joined We have May resource seriously, a a customers. and the security and than the I earn we The company. our back. now size That’s still more is we’re the last webinar,

second a that’s Now thing.

– we shared right? in and innovation also think It’s approach. features, I’ve core with our new out terms – feature. the is we security customers. a process not a only I road I functionality, This think, thing and Third our, DNA is areas, everything privacy of map, of

and lot features Like understand front. going your the the lot smaller customers In innovations that you was smaller added So, in a recently, on, terms added that’s of we new to not as want content of specific might things, A meeting [indiscernible] a right? of good particular, lot of security a without the Zoom apps. or apps, we from In enhancement, perspective, on dedications. right. Zoom

a a our spend important part lot That the again, our and still is time on security actually, resource we future growth. for overall innovation of privacy is of extremely So do that. for supporting

Thank Eric. you, update. Great

Conference. Security seriously. security We at take recently standardize way, very security Zoom platform. It we well, are the does help who lot Zoom have as – we By They right? on of RSA very, Tom, look companies a using

thank you. Okay,

Thank you.

for And for the was joining and we question you you, have time today. us. thank Thank that last everyone,

Thank you all.

So I Thank it. really appreciate you.

Bye, you. everybody. Thank