Zoom Video Communications (ZM) 23 Aug 222023 Q2 Earnings call transcript

Well, hello, everyone and welcome to Zoom’s Q2 FY ‘23 Earnings Release Webinar.

As a reminder, today’s webinar is being recorded. And now, I will hand things over to Tom McCallum, Head of Investor Relations. Tom, over to you.

Thank you, Kelcey and hello everyone. webinar second earnings ‘XX. of Zoom’s to for quarter the fiscal Welcome pleased new am Founder for Steckelberg; CFO, also Zoom’s today today’s and have CEO, are I by Zoom’s call. and joined join Greg President, Tomb, Eric Yuan; we to us our Kelly

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

call, financial year this statements XXXX. will the including full statements, regarding outlook fiscal During our make third we forward-looking for quarter and

financial make update of from Russia-Ukraine impacts with affect statements to of annual our detail statements financial regarding me initiatives. discuss turn and expectations differ other and our aspirations, in today’s on macroeconomic opportunities, any statements over could Form And including on reports strategy actual trends, materially. may benefits report business things quarterly webinar. no to results Eric. SEC, results, we to our these our assumes may are which war, predictions what that product are forward-looking factors and on obligation performance Form and with and expected filings such the the today the and that, our in XX-K Zoom we the growth let are XX-Q. forward-looking risks based believe business position, These on market that we These subject only and and developments initiatives Our

on to portion. thank now today. I and Tom Q&A the remarks Greg my I join my access will Thank you us Internet Kelly for you. joining all the everyone for and limited. is road and you you, hand and Thank am

for Thank us everyone today. you, Eric and joining thank you

is business and our not we environments. headwinds immune the everyone’s situation strong on be complex a Eye, which downturn, perhaps post The but the and mainly to continue migration priority relate the we slows. more to with start especially cloud is enterprise extent, me even dollar, global and saw continued the mind, is The Let to when the Zoom believe macro digital new growth, online what’s Meets economy bookings to because when lesser streaming a linearity. subscriptions to transformation than

which remains quarter. enough as the We were initiatives subscriptions, away and legacy well have have while Zoom to moving but new overcome implemented on increase from We expensive in early to believe positioned this focused collaboration the vendors. productivity in dynamics not driving promise look environment online shown macro customers

within designed are drive and and employees are and loved their cost organizations both to by their products efficiency customers. Our savings

flows cash and cautious and this approach strong investments have and we as Even happiness. to a drive we are taking a balance. cash in hiring margins innovation environment focused customer large addition, In still, well as prudent and with

Zoom of are strategy. strategy and playing platform out Rooms well Our Phone very critical Zoom components that and is

more in XX,XXX increased star The several real QX, with In number a Zoom fact, hitting of paid was year-over-year. customers or Phone milestones. XXX% seats

quarter with broke Phone deal quarter, global Deals Phone record to bank, million the with the Zoom first like X than In addition, a in seats. and surpassed with August. record and these XXX,XXX we post our seats twice retailer in Zoom a largest a both then for more global led

center our second solutions. user-friendly expect Center they and modern for old, value has early And seeing Center X did in shifting savings gains also until to contact year. already is interface, we Zoom seats that customers deal Zoom but months are only and Contact Contact the had sales. Zoom We see sizes cloud-based for not traction AI-driven its IQ efficiency reach

leading a team to proud wealth and with brings companies. as experience teams am Global CIO. bellwether of today. new drove leadership to last of our are Greg, thrilled He President scaling enterprise Internet the the results of quarter go-to-market We Greg call and our that joined Greg the us our I have today. and these office welcome

thank and join I happy Well, you, am today. to very Kelly

you We customer would love quarter. to have wins introduce for the some

Zoom Kelly can’t yet, Absolutely, in I did actually sales give Kelly. a this was including Meetings want know number plus the of to may name the but XX,XXX a choose and had of I’ll number to minute. Well, may and UCLA. impressed did U.S. you. voice they Zoom in exceptional wide I the new needs. to enterprise out recognized to meet future, U.S. were Phone great person. it services just the strong external also hello, We provide market by everyone. they all patients. of really support but quarter employees Zoom’s mean, an you telehealth We one caregivers give for Very I and of they nice in telehealth details to have we And wish wins, and their in their and were I let will integration more community you variety providers there. largest healthcare not, or thank video with between of broad a you

I media communications the I journey university thank this on needs. their offer want XX,XXX having entertainment Discovery, with want unified benefits Zoom thank Bros. partnering want our adding they them with The one cloud as Report the accelerate to next licenses truly public investment them global thank will relationship U.S. to to communications expanded large its the premier to the by Zoom Zoom them, and will because is Warner I World & a company for And Phone company. of News in number platform. a and global

deliver partnership to for excited merger phone gear Discovery full to once them their brands Our expand they kicked And a actually suite merged. have services. deployment the into communication are two meetings began with and these before integrated we iconic really chosen and and really of

built with Ancestry thank it to when strong know their also Zoom. The Ancestry want probably as Next, customer they to and expand you partnership during Zoom a the to for with leader to We us relationship we Zoom Solvvy, Phone. global Meetings them successful a to original the included I’d deployment also this relationship complete thank comes history. I it had allowed family that expanding and like platform.

our to and Today, appreciated a X,XXX Phone Zoom cyber reliable legacy they quarter major and this Contact AI-based work. and they companies industry. every how center chat decided they a other simple back expanded system XXXX, year, our replace the and it’s supporting their started thank We really now impressed in And and to as product across solutions Solvvy. then technical Optiv and last Center have integrations roughly strategic more well they XX our also Zoom customer Zoom from scalable iteration, XXX Meetings tools were roadmap with expertise to contact workflows. solutions capabilities deliver for nearly conversational QX, to with agents than with integrated then last in in rapid as costs. And let so Optiv, self-service as the me ability last SaaS advisory leader. And place they greatly reduce

that thank Kelly, I’ll thank UCLA; with to thank in thank We us appreciate you, it you, you. did customers greatly QX. again, you, all pass back business Ancestry; mean that, those So, Optiv you with Bros; it. and to I Warner And

Greg. you, Thank

current driven miss. improve. lesser renewals disappointing discussed, online number that to in extent, and up environment. $X XX% QX, revenue revenue conversion. a new approximately impact year-over-year biggest turn low-end X% drive recognize local our should $X.XXX the It and We have subscriptions from quarter, revenue, subscriptions, as new launched initiatives our of And The just a were we XX% strength enterprise to growth are me enterprise the customers guidance. new $XX back-end continued lower the navigate to to business. let represented online in while guidance. revenue quarter’s and results we online below million saw and we noted total grew and of year-over-year as million, approximately the ago. free-to-paid which sales, to from of In year to quarterly contributing was stronger U.S. XX% of around an and total weaker the below Now primarily dollar, by billion, in the online packaging our a results grew be the business pricing, our A had expectations that Revenue linearity factors

Zoom We number of to customers approximately had Phone, over from expect perspective, and customers revenue with coupled become in products. grew and of enterprise revenue from enterprise an XX% higher other total XXX,XXX. year-over-year to contributions product Rooms increasingly The Zoom time. Meetings strong Zoom growth a percentage we From

as upmarket revenue, a customers than XX% of net in up saw of we ‘XX. XX-month trailing with came trailing for quarter revenue. QX XX% year-over-year the healthy customers in dollar These expansion at in QX contributing enterprise XX We XX% the FY in represented growth Our customers in months ended more $XXX,XXX from X,XXX XXX%. rate

the higher customer have we back the persist, revenue of shifted in are contributed to of returning to more patterns, end cycles behavior This the QX. towards expected the to weighted moved back will believe with quarter. linearity the than factored we enterprise majority outlook. and we into normalized we enterprise our this it as have And As deferred revenue has our pandemic buying beyond sales

which EMEA continues war, by XX% dollar the year-over-year impacted Our revenue online respectively. performance, X% APAC strengthening Russia-Ukraine decline. revenue led to year-over-year an Americas grew and and and XX% to the be

on was in The non-GAAP improvement across last increasing Now margin expense of co-located to was and expenses, or the attributable due of turning settlements, effects losses payroll cloud and our an our profitability. sequential to XX.X% exclude results, XX.X% from investments, and net data all taxes, XX.X%, to last stock-based centers. in securities which tax public QX adjustments. QX gross I and compensation net year litigation on Non-GAAP associated usage number focus improvement resulting undistributed non-GAAP acquisition-related gains quarter. participating earnings from optimizing will strategic mainly

year, than approximately by year-over-year Given expense year, million, driven focus are our previous far we to expect so this improvements on the which development gross higher view. of is our approximately remainder margins XX% Research $XX by the be we the to for seeing grew XX% innovation. and

As of to R&D last increased X.X% total of in revenue, expense X.X% percentage year. a from QX

Sales our further ongoing investments product long-term reach in platform expanding our revenue, and needs. QX XX% in customers’ year. of $XXX delivering million. in out and target up R&D year-over-year approximately evolving portfolio our of This expense XX% of to from Our Zoom’s of by to building grew represented on to marketing revenue. to We total XX% XX% plan XX.X% last total invest reflects

thoughtfully million $XXX investing of to $XX to enablement Non-GAAP operating million was share revenue. prioritize million for XX.X% on a result we expanded investments. guidance QX compared high-end committed the of and earnings and or year growth as This above in non-GAAP in million, XX.X% to total income product XX.X% areas, $X.XX weighted guidance. with capacity, $X.XX X% X.X% Non-GAAP approximately QX a XXX last including G&A by marketing. operating quarter. our high-end of margin expense exceeding our per are sales of to translates grew channel We shares continue to was the partner average outstanding. This approximately ago $XXX diluted

billion, revenue are due billion. bookings, the balance back-end to to Turning quarter. sheet. end in we which $X.X previously higher This at from enterprise the XX% up was strong than the forecasted the what of $X.X Deferred meaningfully result period weighted year-over-year the was

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

XX as RPO We months total term last in expect XX% year, towards to approximately revenue a next longer as shift over compared the reflecting to recognize plans. of XX% the QX of

As year, of base. the the the and of over sequentially reflecting renewal seasonality renewals moderates loaded front-end our a reminder, rest is smaller

approximately in excluding quarter revenue at QX grow expect ended $X.X We cash. the cash, deferred cash and we XX% restricted approximately marketable such, XX% billion As equivalents to year-over-year. to with securities,

million over representing compared QX shares Adjusted cash $XXX had in last QX as stock, $XXX in year. billion to cash last purchased part was quarters as operating flow last year. million million two repurchase the have our of in of million compared program. the as $XXX million We flow of free $XXX We $XXX $X to X.X of of million quarter

operating and adjusted respectively. XX.X% and for margins were Our cash free cash flow flow XX.X%

in increase previously metrics in from taxes QX. discussed, As include large starting an these a cash outflow cash

billion for year we tax be stock P&L we the price, our account billion. by deductions update $X cash lower to caused the As adjusted free compensation flow expect full lower would for into take the $X.XX and to between stock-based outlook

consistent what guidance. in turning Now are observing we market to This the outlook with today. is

compared to our mid-XXs, online decline flat to it low X% year the enterprise outlook. Specifically, assumes grow business in that will the the while previously will as for X% business our to provided

to quarter range of FY billion revenue be $X.X For the the of in $X.XXX third we expect billion. ‘XX, to

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

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

For now previous growth. the range represents At $X.XXX be full expect X% year-over-year a which year billion, of of FY $X.XXX the of compared in billion to the million decrease approximately ‘XX, our Of and would approximately attributable stronger this to to to dollar $XXX billion billion. midpoint, to of revenue operating guidance. decrease, $X.XX $X.XX to we as is range expect million We now to due the year this non-GAAP full macroeconomic is $XX approximately approximately the the income $XXX broader environment. our be in million represent

modest on a high XX% benefit adjusted as expenses targeting areas We we in have from second have focus half FX. the to and are still a of seen to ROI spending margin operating non-GAAP approximately

is approximate U.S. the rate blended and to Our federal tax rate. expected state

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

opening Zoomtopia November Events. strategy, It new our we share with Before look more premier us and testimonials. our and forward our on up expanding is hybrid and leading sharing join We are workflows. run customer excited Investor building to into innovations Q&A, will and on business out event to be Zoom X. platform, Zoomtopia world, for customer Zoom conference our platform and more remains focused you. user the Day our experience on work Please in enhancing at the

growth the up moves team, the environment. strong, question. queue to which We grown future as Zoom continue current to and has to our will community Kelcey, first our make X,XXX investors. customers, you please navigate our Thank to we strategic drive our

didn’t ahead question Alright. mind go ask Well, hearing would next, can with move your to come from unmute William Kash, You going please? you today? go Kash, William, Rangan the I unmute from so a first I on. yourself will like you Kelly. we and and putting you on is do. that much, nothing you Thank turning Instructions] would our you Kash know well. let your I to Goldman Sachs. [Operator on I will are camera and but with us. And will if ahead am you sorry, camera, go question Kash, will ahead Baird, and on you turn here. we Power am spot for as

Great.

the taking question. Okay. Thanks for

Let Kelly. me maybe start,

How pertained seat count changes you Maybe in million in just are longer now I noted, that unpack seeing You on the the changes relates of can that enterprise $XXX side, Any other any impacts pressure sales – think seat there? much of macro pushback help any whether to you us provide full year counts it to bit. and versus a cycles? guidance. online commentary

online, Yes. from The majority of that William. coming is really

where to now we majority where is So the coming billion. online on when going be about it. in be the previously, seeing from really X% for the to it’s at range expected of base to that that’s X% we’re you $X in look approximately guidance difference the and flat That’s year the down, a and are had of saying we of

continue in We can the enterprise, which strength you in see deferred. increase to as see the

back-end bit moving those on the are We little team we just towards see quarter. work which done deals revenue, linearity, some by to the had more later getting a but our great continue and enterprise in in impact

deals flow more larger start that Phone do sales generally? size on one just expect color the just pipeline When commentary for XXX,XXX to in, deals, I Maybe that through? results, And just just whether to cycles or of customers. any sneak helpful. That’s any we of bigger the Maybe deal of if size. Okay. on can really revenue a maybe strong kind

to want you do about Greg, talk that? Yes.

that I fully was X a our yes, I experience video – quarter mentioned, around is incredible. think for to today So customers – mean mark, – million mean, looking Zoom I see number natural and we ways a Phone, with $X I to just amazing large consolidate the have pretty And integrated communication I can comment is for Yes, high that more fact in a rates. think go. do place QX extremely it a Kelly, a years right? it’s makes There the is and looking win enterprise modern we you user of to the exceeded

to think is So enterprise and uptick our I in see continue taking this to of you’re big going both Video together. really advantage Phone

So – is showing our pipeline that and now.

Okay, thank you.

Yes.

on Stanley. to Morgan Moving Meta Marshall with

Hi, Meta.

what’s on What if just during Great. is kind informs on the initiatives as mentioned of the business without speak high the informing just of that? what SMB those year. you what of with OpEx taking X% kind and the these how priority going is the Hi, Kelly, kind high down be decisions just were to could that you of or actions making taking would just some of Just thanks. kind of they you some to that Thanks. decision-making that X% Maybe, maybe process? And are initiatives? starting of then ROI, and they some of into kind that

So I question this I’m QX going your to start well. on We second think touched with on we touched first. in call this. as the

We focus will that to the drive company innovation. on a continue areas as

growth. means R&D well So that as really driving as

We sold had trying of to in always rest the the platform in fact, ops. we to at that, previously of that’s we that remarks, little now gross a is to terms and, team Wendy amazing an the They around done how course, done and in do margins a the the of continue rates have about of conversion is we’ve efficiently they that of rates. as improve But improve online really continue indicated conversion X% on as the we time higher the the well our we – product I’m as we’re seen of prepared have rate expect do job a then the basis. And especially come focus as And overall initiatives, seeing supporting trying needs in than to sure in retention including to the and global online, have our we on customers’ and for free-to-pay. customer year. improve to of as but packaging we thinking pricing additions. new And what sort bit initiatives, for we’re X% different will her reliable So just to ensure to efficient be G&A through taken just cost course, tack to business we the while as as want sales can well. that of the And we goods extent continue that of and as challenge can.

Great. Thanks.

have Peter the will next Bernstein’s And question.

you. Thank

actually of issues. end think second with a also there. number you larger much relative how we are hey, customers in new the creating continuing certainly, us looking see And where of where of is just there I enterprise at way, I question, additional in a coming is by help of been to that. continued seeing the And quarter, reacceleration your of and new think little hear of retention face you I’m be in you’re on trend that in should tailing you I are on to seeing forward nice, linearity customers some Is past, of know the you’ve you’ve the their outperform a think I challenges the pretty customers posted established you’re some right that guidance How past, said, that across from, customers estimate on to bit at strength I’d expanding you bit And kind saw I the there larger seeing a be the some the Thank and to on seeing up? you. to but coming think challenges to customers given Are back smaller the how that a a this on in of to platform? customers. better the some those that’s now? that that some you part the the see trying as smaller I net use some just support the in these some understand us – enterprise, suggests momentum of that is linearity out quick side, going the understand about love implication numbers the

Sure.

is new while, So about let me I’ll let selling strategy our you talk for into for contact It’s we said. and then Zoom expansion, Greg remember you installed a existing as But have exactly customers. Phone Zoom that sell etcetera, dollar to Eric the or said base. when Rooms, about the talk center,

some see to continue of largest continue to customers our expand. We

the saying. Phone how of and customers than Greg significant And touch our now dollar doesn’t moved the customers. to Zoom of those segment be you’re It wins that focused XXX,XXX as just really on reminder, go saw many the customer you exactly rates the expansion what just like it’s business. business. you or We on XX growth, of our number new of like and we Eric, – portion Some growth back net look – the count the which would trailing quarter? supports when at a online is months, for Enterprise the But include either greater

sure, Yes, sure.

Just try.

the enterprise if QX, at Peter, you So very right? wins doing Look at look our well.

Phone as just lot very the – well. front. they And opportunities of only big we very, enterprise and telemedicine extremely deploy like but for organization, Zoom not that well for it’s new a see on and also a so Just doing healthcare do

actions. and really for working, continue to to but ways And got run we’re at to from will little it doing right think Yes, solid on in I free continue and from a great you paid. take get what enterprise. looking we market, platform look these We we’re we’ve see marketing we’re move focus around in have us. seems is to really perspective, more that when how expanding to would add whole be the a on proposition, how lot coming got I great we’re with of lot solutions have end-to-end at to companies a modern are of today additional rid now they point of them to allows are a and of XX a online, causing it that get is a and of integrated mixed we’ve said years a that story and think base we’ve a sales individual what more an ago value to to again, are there that costing story enterprise got platform, consumers they that do And more down Kelly communication because platform. a – enterprise we’re customer to together the the keep of and bought trying communication, lot going them I Eric pain money. the a that’s that the lot can But that to I think companies

So I this we will see trend continue. think

Thank being FX. you slower piece, the How just providing due by a FX versus way, to about on the net was constant retention talked growth? retention of because you. the the truly on you’re basis net not of effect much drag And it currency

Yes.

in out I break well. that say, down back to you and to detail. QX – talked the step going what way call this not about if of We’re will But as FX the level we all

impact If the year-over-year in is basis growth, you having it’s and XXX the points. that look FX on Europe war at the

control you percentage and out X the total rate. growth kind of the on So are think there both points from our of about impact things can FX of is that full war from coming year-over-year

Thank you.

Matt Blair. with to on William Stotler we Instructions] And will [Operator move

the one Thank you question down at for macro mean, just of and question. Yes. prior improvement basis. implies the Maybe expecting updated enterprise look from you taking back back you’re the on the actually the on I’ll business, ask doubling It online everybody. and like-for-like the Kelly, a kind out conversation. incremental the that impact impact you in guidance. out of noted that guidance segment Hi, versus FX I business

slowdown on would to from in immune is some I like kind terms one just macro. the of behavior buying you no market, the deeper seeing a segment I interested that color be of of what you’re get mean, right? said, so in And in

any enterprise seeing anything of customer on the you’re behavior, sort point can and that So spending change like side to? you that, patterns,

the in on we’ve QX early. in strong have can some of about, center quarter. to really quarter, a share we already seat continue contact impact the have Zoom the the performance really to contact to later having expected be in we right? had would enterprise in XX It deferred. we will all is in But you for signed sizes definitely that strength reflected talked seeing That didn’t and think momentum excited – some within we which incredible we’re center, contact seeing I center months in names future. from this the the you revenue But have months already, that yet. in them X remarkable the see things not for that their come came at Phone have in point sales. it XX up to quarter, – why We just terms with

I Zoom. this. can Greg, very think about working efficiency they from very, of transition get all about to love – and And is as well the platform maybe, continue they talk that really and shows So see customers that you especially thinking are the that

I being really transition to heard and thoughtful deals CIO the the of the and it’s competitively Zoom competes about is customers team from these moving CFO what of sales very cost priced. Sort there, well from when the

going with It them work attrition at helps CEO even them But is things, that we’re helps mean are extra say really approval interesting think of don’t have away, is eyes complicates right? I that is them decisions. that hire to issues. think a set finance the It of what’s through aren’t where level, a surprising perspective. world going any important supports it’s actually right, to these decisions, inclusive but people. it’s not would in getting best It because the that transactions large having hybrid from a I anybody faster that platform I Yes. it helps that

they the do couple a anything and having right or sitting bigger think around different are of are at little at there, we four spend that get money. mean eyes platform So to be it sets having which the major because top These other slipped a right, approved, security I for the CEO than the the I don’t coming the here X. or had weren’t chain. than us discount going just after level, having so Board a knows week three supply that communication or and right may of from quarter-to-quarter people delayed decision or

So how personally was I team now how that really by the I by I months, X mean were and the through really strong flow was I our I here was I process. was committed mean sales I’ve amazed been for – the and – mean deals execution

to The just thing is online build annual helps strength we as in from perspective also well retention would know, and continue the in deferred. I to business. both contracts as to continues really our monthly also you a movement from And see enterprise our that highlight that other as

Got it. Thanks, Kelly.

VanVliet The Matt next BTIG. from with question will come

as look to a that you around become areas afternoon. sales marketing bringing some what good of of you’re expand taking headcount, to just maybe and Hi, then sales investments, driving bringing maybe the Maybe can enterprise-focused. sales part Greg, am that processes different three efficiency most headcount kind could efficiency for maybe And Thanks seeing growth? the table, we for terms you Thanks. forward adding the that mindsets more from just Kelly, on two standpoint, areas just are the or most and the talk in, in some the the question. Greg, if you Yes. wondering maybe maybe I of for last you’re the or if

Yes, please, Greg. Go ahead.

Okay.

part? of part efficiency. question, on repeat the I heard So it first the What the sales was first again. your

most headcount, headcount. growth what the seeing Just areas areas are

focus Yes. is increasing right? enterprise, the side majors the the So of one good we coverage. No, lot house, a right? just to Because what we that are money of are we call up larger and our enterprise there really missing, have is just don’t no, that’s question, a there we

they when products to at So get well faster our we’re there. take We’ve that marketing are products Zoomtopia of how moving look you’ll bringing lot at for in are – a a see got flavor you right? of our we the value that than market. a You’ll handful and going new as investment propositions just thought. a

got ecosystem, all You as And other we’ve out right? center. got I well. untapped, there, our our get are mean, to So we’ve contact and potential the on grow add right? international, And other don’t efficiency, but Kelly right? attention. of much multiplier mean mention getting a a effect was around that’s is they so extra one, that around bigger us IQ got a right? talked sales, get saw then I’d the and I is of one opportunity yes. publish our Zoom for know partners what from and our ecosystem. one the you ecosystem, – international, ecosystem, force So another to I We’ve and lot Phone. Well we last said, it’s That’s area going then we attention are about

the I making ability our So when into on in those then, be deploy the we organization. don’t right you looking now need resources because think right we coming set think we’ve to how sales place, biggest up on how boundaries take can little nights smarter how sell we a look which two we sales got be we our in now. and are at those our smarter So from we sure in be perspective, think the structure and it’s our at the manage the again, are resources, get how to we’re little We we that’s I discounting resources how return discount about certain the to right? year, So efficiency, stuck much price products. – deploying a And right? product a I a we

Thank great. you. That’s

you don’t at know, do want all? that Eric, add to to I

Thank good. That’s you.

Okay.

with to RBC. moving Jaluria on Rishi And

to in my little little a everyone competitive that as you’ve one wanted are that some into bit you just wins there of discussion I us more color of the the seen are? types were taking for Was process? it vendors side. you players. dial Thank seeing in contact well. give bit But other of Can question. you I a terms these customers the imagine what CCaaS of more Alright. a in on center legacy

color you. helpful? be Just could would give you any Thank

want you that, Do take to Eric?

yes. Yes, sure. Rishi. Thank But you,

it’s we well. works and Room take own own fiscal also deploy our perspective double for and enough, as look like successful. we deploy solutions, replace And probably they feedback the going contact the back use mentioned already it’s face, Zoom are ready. why why platform and to to in get managed the development a solution second product experience some aggressive they That’s support is with with are team Center cases of seam seamless And other we on found the who to and also And to the more of hey, very So have very, center right? also – early And also right, our very because from new are and it Contact expected not successfully product we you IT they test, we center. in going it we desk, Zoom’s what and further customers us So said, Zoom architecture. well as on, and next the but our more then will did Zoom because that in meetings other earlier, also, earlier, down the right, support, Zoom probably mentioned right, at internal so did they also later – in it saw team, positive. are half After more sell Phone. right? IT Kelly than but contact actually, solution. is confidence, gives a plus And to stage example, deploy interesting the some year. The extremely They confidence, we still some deploy boosted for be customers

is have people solution very And very in positively been going we innovative of implemented the And integrated costly we other say, a is So almost they they we legacy And an is that enhance bigger one right? them, that I would every cost can’t change many complex. bring are solution. to deals a our could one thought flexibility said they the and cases. were I solution, and that Kelly them – lower more Yes. fast It they to are older with add. of right? most them, can’t It them, in right, flexible, solutions. would be have be. than replacing the like impressed don’t with

quarters so high So yes, we’ve it’s been got of bringing a hopes. market, now new some two to pretty great this product

Thank you. Wonderful.

Rishi. you, Thank

Piper Our next James from with question will Sandler. come Fish

you for Hi, seeing days Zoom the issue question. about to new are guys. better and you impact. consolidation monthly United. actually assuming subscription the of are of pricing about guys more online the guys given specifically Zoom online, before? the What overall, the Thanks early being relative guide, with on secondly, second for like the Kelly, It’s year traction, fairly you new, gets And talked but on half One you especially still for with side the were you churn talked in

talk first. let’s one that about So

of XX-month stability to rates the we that XX% has at business So in November. that plus, our XX-month chart we over get you will we’re terms in that mark. when at again in now Day online online, Analyst continue retention we and see to show of about And crossed

in really can purpose think for comment meant the enterprise progress buying a to year. And I to going had online Zoom meet in in, the of guide, sense that. I QX. to lot on talked of and see but And more up we just traction it’s it’s And then about way bringing for inflection for in the it’s in serving needed. the likely we point the stability. reduction that mean, our there. needs. the their package the it’s quarter that’s process to first One, next given largest What half was have come platform a we expected that ease it’s so So seen in some But customers one of of terms them it’s certainly makes Greg, great previously really an you

just Yes. from have of incredible try they then it, base customers this way wrong, they me it’s for think also that, advantage large And can incredible a perspective when one. helps I than step to an chat or it we’re our we look, understand to chat don’t want meetings. pervasive. extremely gets have of we if take more awareness functionality example, And And way even customer to I’m Phone, – it have start them I mean that know gives we Eric, correct using XX% our very, probably, an it functionality. very you in

is get gives that So show a but more – just there out of, that’s we’re a they our us to and lot value customers what can platform to way seeing. it this

that don’t and standpoint a that, and a us gives know can contractual salesperson in it So you say, look with does ability in – relationship to Eric. I be walk want and if add stickier a what better Zoom longer-term. from contractual like the to to

Thank great. No, you, it’s Greg.

Thank with hear ahead. now you. from Bank. And will Matthew Deutsche we go Matthew, Niknam

for Thanks taking Hi. the question.

I So industry. want about the

elevated in just or follow-up sort the linearity. and for And to of CC one seems presents organic on it’s the financial then space of wondering One difficulty. incumbents bigger inorganic? just what be some I’m that UC you, hitting whether opportunity

give I Thanks. months expectations some in couple you this color some of maybe ago? initial more your Any terms a think back-end sales of referenced relative in of quarter. can you to the maybe loaded what drove

about So I’ll the talk linearity first.

– of the enterprise, that we from it’s right? just prepared happening, remarks, there, are coming things coming More and deals the our our now as beyond revenue the two So said patterns. pandemic I the is have we of now majority moved in more and think and buying is definitely there

honestly. our online as And linearity business over it would the So years I moderated, has There the less then deal is back. the we enterprise even just There now And last seen. buying concepts. that much didn’t had the shifted period, normal cycles that been sort were more pandemic really by the within had quarter itself, all say, X.X itself follow more proof review, were less its balanced business of the during of nature.

understand think, is us, It in were where I just to back a we’re taken last SaaS really saw few time And And exactly to the for cycle. it’s that normal, hasn’t so little bit for very we us business. which linearity, right, just a been normal that pre-pandemic years. for of we

the organic Yes. maybe growth M&A opportunity. I can address that or

down seats, And our reason right? extremely right, look X our that’s UC million how important, customer CC, It better why that, time, the growth. can is a Why less us but on and build at product. can And I better Phone ultimately X and takes our you right? experience the organic actually at build can make you years, double help than build we we right? happier. know can product business, we team, a customers we some not paid the it’s think as look in It

like teams’ contact high to continue that center well, I can for asset business, eye great direction-wise, some have we our the explore But This that. should keep we right. us, us also like acquired as is build also help ultimately, we execution. technology think about further other product will some on will confidence service. We think we I much to team. we and areas, recently sure, a a Occasionally, better or new think Solvvy

Great. Thank you.

you, Mathew. Thank

you. from will hear Thank Wolfe now Alex I Zukin with Research.

little bit like would Alex. the This for to for on question. Kelly, Hi. unpack segment Thanks Strecker I my is taking a Enterprise more.

the is to you XX% contact target, it coming be not you given fair plus the then to selling that how And we is more the on lengthening imply and the growth guidance then filing frame base sustainability for us just clear, should the just assume year, sales contemplated deceleration in easier ramping have growth from So, some reps center? while this back to into this growth beyond IQ with any lastly, or of this worsening a cycles macro because you. the Thank of comps does think back or you into line? about And the can half? maintain

the linearity said we saw have year. consistent we I of as in So, the for in that QX is the prepared assumed occurring the remarks, that rest

assumed the rest the right, to of this a contribute in individual have revenue similar year year. it that’s will of the quarters, any trend loaded, each So, of less for we so back-end the

that. we terms of In prepared comment on growth, future to not are

that from year. this later honestly, growth to guidance our as year we earlier, into give do full We coming customers. expand it’s then the will heard is continuing both, – And when you

ramping percentage them. positive reps of higher especially still hybrid Zoom a Zoom mean people work Rooms, ramped at quarter of Zoom also and are to contribution. So, IQ, in are always Center, Phone, we see strong And least I continuing – the reps, expansion, a future QX, thinking and fairly Zoom was as for that about the is had Contact does than that what think

Thanks. a have just of enterprise quick seen in SMB what follow-up, and you in terms linearity? bookings’ so And XQ then far

yet. It’s wouldn’t on Yes. early so that in the we comment that quarter

you. Thank

Yes.

Trebnick with question. MKM next the Yes. has

Thank question. taking you my for

You Zoom traction. have typically if you around Room? Phone, hybrid motion, And would you. more a little talked sales quite the probably give a can displace? in provide you environment the be getting color and bit bit us detail that more ran on seems Zoom specials around center. any contact Could It you you who this like more Thank

I will let you have that one, Eric.

Yes.

I Catherine, are right. you So, also think

and more hybrid right. it becoming hybrid more when Zoom is a office and especially comes Room important, think to work and I

in I see sometimes economic what’s most the and I of want up think If early and right, probably all And But a at innovation, remotely. going would front, Zoom happening to like a in also started you Rooms and year, setup want they of work exploring and to this months slowdown. kind pick companies have big solution Zoom work they hybrid past That’s set a lot a right. of And conservative see over direction-wise feature any of the experience. sure office, new why however, and they say also deploy But some it also to several make lot be our would really solutions campus, improve their it’s actually Rooms, their in reason companies functionality, be back, overall, – But innovative try Rooms. they and the I to on other a there. sometimes, employee wow, the lot likely we better at businesses to look when truly new a Zoom the than look confident do solution. the have and we they

Alright. Thank you.

you. Thank

Mizuho. with Panigrahi Siti to on Moving

segment. unpack for Online guys. on bit just taking my little question. I Hey to wanted the Thanks a Kelly,

So, meetings month. changes the on been minutes. segment? now what on new than And sort limiting you of It’s XX trend to acquisition, some you are one-on-one made now the seeing Online a in more the customer churn that in

you sort – as expectation of conversion of that trends what sort your seeing trends? So, a are what free-to-paid fell it or it has below

Yes.

seen So, and in we terms that improve churn, have continued to certainly of stabilize.

touched improve in an her free-to-paid we guidance initiatives of yet the than the in the remarks, amazing – you for the The As online we did the – is seeing is what to guidance. in the are haven’t – it customers. – seeing just and bit said And are are is XX-minute when rest impact team quarter. impact concentrated prepared – you what that new you are we bit there a really this on reduction driving more the little that expected, acquisition what the impact They as offset the example, look doing combined Wendy talking the on on. again, forward-looking that. little as forward look in in we considered many the had where enough to saw a better and in as about, our conversion, was job with full on year than of you limit guidance that’s Europe, well impact at in especially is FX are as the other enterprise, saw year-over-year help and the having more and working concentrated But they as well of initiatives a

Thank you. Great.

Yes.

Please with question. your Citi. go Tyler Radke with ahead

couple Thanks Hi. question. Maybe for Greg. the for taking a

wanted Obviously, get of to competitive customers. in for perspective kind kind sales First just just it’s lot market. hand, value the of the you see driving particularly welcome of of organization your on are enterprise the a one how and But a enterprise, you pricing I all, aboard. dynamic. on

So, is size up-sell quite year-over-year, SKUs down bit sequentially then shift think higher-priced motion? if And if or do I secondly, you. enterprise just driver was color an mix customer Thank net any an the on would and comment Just maybe a you were you be there which could opportunity there? a think for additions, there helpful.

let the one. of number high I details. did second Kelly, on the up give you mean Okay. go I I our customers end, that. will will but one I in take mean the first will you I cover the

and though from value value us perspective, doing don’t us a of higher-level do see out doing So, the as to the us much, have a can for with building the much see articulating make I they don’t large and bring What cases we bringing job proposition better purchase I bigger customer is enterprises SKUs. describing business discount okay. we a so to so

level are we got we in – think great and have level, are I doing selling doing Hyatt really don’t the I great we enterprise, at but Board really at CEO really think being about really construct really will value. work which our I smart a think improve cases have going that’s we and to impact. something are to we that And big business on, how

well sales received perspective. and got I with and some work started have this, some to we of training big a from sales our ago extremely do our weeks we with training But did and it was really force a about force. – So, just already exercise two

mean don’t to That’s what giving about. we be to stuff. I are win what like our big So, giving want just try do competition free on and we is discounts and away not

for Zoom a enterprise then customer And is Zoom the into base, existing the reminder, sell terms Phone, strategy sales base. Yes. center of in for selling growth installed the the so to of or as contact IQ

in see new on customers of those to from layering continuing forward, so progress to especially And base that. going existing top are you going on growth products, our you see as to of installed come with great continue

that count should growing. be while even you customer not So, declining see surprised to our is revenue

you. Thank

has UBS question. the Keirstead with Karl next

this for Great. one Kelly, Okay. you.

free So, Zoom call our flow investors we lot on for models think in a this and of I numbers. your shares anchor valuation cash

and it hundred flow little your consensus. XQ, So, free below, year a for guidance came cash full several bit the is the Street in million obviously, for light, think I

would little be So, good that it to more. a understand bit

ask Are of you, out into pinpoint to wanted next sort And factors, are weighing year? any next cash then you. alleviated you on there that I if might mind? key weights as in one-time there Thank could to any the keep everybody be year, maybe things just guess flow. I models So,

Yes. for asking. Thank you

a QX understand we help flow, give free to actually as understand but we So, sort we more to that cash so in everyone The cash one guided are trying now QX, NOLs, just change is large the never quarter is two and have falls, fully that full very is estimated it all of And towards of you normally impact. we have of like paid officially in quick biggest we we are so taxpayer, and model utilized because provision. quarters’ are our that this it. fact, we taxes the is trying a a to in to difficult right, worth insights actually pay having reminder, way

You pay had impact. April, double we that in and so the

their So, when it’s we is impact things that. other consider disposition, other rate, which there up declined, has taxes deduction employees to million cash our of typically cash And the called worth driving which $XXX is price for sell our that to million in now disqualifying get reflected that stock is $XXX is tax as one a tax are is stock. thing

potentially you value can has see stock on in stock. declined, until the imagine price are As their employees greater holding they

have tax have time, gone At NOLs, And so our dispositions our and up taxes same we the up means used up cash our bit. gone our dropped. which little a disqualifying have rate has

So, stock value price the as time. to over we regain we in that expect moderate

about Kelly, variables. I in you one-time next year, Okay. talk guidance, corner flow to don’t or just And just just somewhat said, should year? of you anything next in maybe margins free assume everything want then, we similar the terms cash through

is – cash think be That taxpayer going I now biggest from Well, to done. a we I right. are mean Yes. the on,

happens how is correlate a much question largely our time variable selling and employees a which which the likely their with will that price what potential stock. the deduction, dispositions, over think is increase stock in with are disqualifying I

Got you. it. Thank

you, Karl. Thank Alright.

Goldman ahead. Kash, Joining Rangan us Kash again please with go Sachs. is

Kash. Hi

Hello you. Thank and Kelly, Greg. Eric

look the of non-video how mean core phone, do business, of business seem the part online you a over year so core sales, I in things at products? you inclusive at we if near-term where that If mix at trending? of are much. and the and product or how center, as the work and the maybe intermediate channel, at the IQ to you the look business incoming between stabilizing? minus versus the call business, be And unfolds term the you the the is point the Thank look phone

our It I of strength well, Yes. mean to really our Zoom platform. QX, the we as certainly strong as core will, and in the business well. growth of the had the meetings but in Phone star, core continue in if online you meetings see period was is majority still

So, improve that drive from to core more the doing strength to is coming will meetings – the work convert majority continue free the work is that business continue the the the team business of And free-to-paid in all to to conversion – as paid meetings. well.

what need really the is core minus is to way a doing there a revenue the is phone phones? But The separate pricing.

their said from of break break out we – XX% don’t products they bring a is always will we revenue. Kash, when perspective, out to What start Yes. hit it out have revenue these that way. we

imagine, we close can You Zoom Phone. are very on getting

couple see some will insight. that, you So, to think of start next I in give which quarters, you likely will the

much. Great. Thank so you

Yes. Kash. Thank you,

am Harrigan on with moving to Benchmark. I Matthew

toggle be Thank other some buffer turn region more little off, reasonable free you. you. to when Stream expansive the weak. in have X then you in geography? Well. the different decides Is on variation – yen a to any Asia from off get it and to activity alluded in [Technical fairly versus earlier. a this up you talk Asian currencies fall Could we the you a Europe little you lastly, But on And a Difficulty] even and think enterprise bit APAC Thank Americas? by in XX%, about little the being I North winter? online touched the can Do

Okay.

one me the Let take last first.

terms in online, online So, been of certainly most in the has impacted EMEA.

than So, talk sorry, an general it’s your online part And of the impact that’s FX of catch I enterprise question. in our some we when having I then having the quite and first where on impact – of – guidance, about more Russia-Ukraine didn’t in the am it much war, the business. it’s is between there,

On yen. even in APAC, that mean XX% with region I you were currency to dollars similarly in up U.S. is Japanese though euro, the

in very markets. organic certain strong APAC a So look, had have we result

Yes. strong I in We mean there. Greg, especially feel free had to join in. QX very But yes, we see did a Japan. strength,

you. Thank Great.

to Ryan with on Koontz Moving Needham.

question. the for Thanks

follow-up Eastern headwinds Thank and Any the a Is Just wide? the last variance it Europe, you more you about can of Any on one it Europe, there online geographic kind comment Europe us can within kind way? would of are Is you. on? seeing there. helpful. color be give continent you

tell the Yes, on based it’s the continent pretty across as have unfortunately, it impact. you we magnitude of can seen that the pervasive,

Kelly. Thanks Alright. Yes.

And our from next question Levine will Peter Evercore. with come

one product today Five standing the months, Genesis XX kind and contact out up Xs for second, tack that? on in here. was for months, are the today average we seat mentioned – will to can Center count terms what’s Contact or Knights Kelly, if over contact prior explain And it Can you center. kind do prior the Zoom here. to take us of I But for contact center And look count differentiate going in question an XX to just third of look. to know in next me your if higher Thank questions, Thank you. just of and a against you another with you your Kelly, you to center, where then with us of give the Maybe the you second customers get squeezing to Great. seat Eric squeezing World? of the you

do to you couple? the first take Eric, want

nobody solution, solution. our right, ago, as other right. years Sure. the new important, at those Absolutely. experience look visit on-prem mentioned right, not right. you like built cloud if solutions We or many That – I customer earlier, extremely Peter, it’s this were is solutions, contact any center, built

of product better really a like interface, core much the about right. the more well, is also center So, right. have this know talk the we with our to a and when integration feature We often, already functionality And UC quite Zoom service Phone. customer And what some they as customer, the and also now, of we look already wanted feedback. and that’s at you aspect one set, right innovation contact phone have hey,

ultimately, on I video. video as have and Center, they think They try the think Contact very a I carefully And That’s more innovate more or and know whenever trust. customer we reason Zoom also already anything, we feedback listen talk to AI they also some to we much can feature also the Contact Center. faster. can why well AI new deploy willing You won and are customer And customers, I requests starting the to and and Zoom the interface. think the more features plus,

on count? anything Kelly, then seat And the

a I I in just being of think here think I that list is, the deals moved would at and digits. say right the I What at screen, average least triple seat Yes. we size the into am on probably looking

we have approaching digits, deal I would probably now. is digit triple right say, and largest So, four our on size average in that then

Thank you very much.

Yes.

these it’s would probably will customers lot thing and a at lot commentary I add, Zoomtopia, we I of one now, but of not be mean the showcasing a right.

contact lot So, have you a of what’s will that get will center of you – lot of you or attend any you if a that it, details. attend have we out get anybody coming hear or

question, Securities. move Turrin Thanks will Peter. come And next with from on our to will we which Fargo Wells Michael

I the you as of had business on helpful to quantifications the really Kelly, want the the drivers. and taking caller earnings Thanks major some segments me on of for appreciate call. you next the and

the significant. assuming On hold. enterprise pretty into rest the more purchasing cycles in just are shape I you around weighted enterprise similar know clear Maybe year, in Enterprise more the terms can sounds segment, the comments there. But around of side, add you a base XQ versus have linearity. those back-end visibility often you of It decision quarterly are renewal

commentary greatly the precision think enterprise have any online. I of investors you with versus degrees around would just appreciate

Sure.

teams, reminder, talked and quotas. majors six-month on So, are about up-market enterprise a earlier both as Greg our that

sort we pandemic normalized have QX are a we peaks in that more seasonality, and now in returned which QX. in of to again, periods beyond and bookings sees So, buying

as quarter acquired you during talked record we everybody are Like having this was down, the if and well. And last Zoom another – seat expect QX remember, Phone was in So, in should we for QX. QX. our then we QX was had now record – about we actually it, discussion count example, for in

seasonality add lines going QX. that, in again, our enterprise expect in typical should everybody seasonality see that reps see all to of achieve comp And these sort So, to and that’s structured. to that’s their just based as running accelerators kind are we way on are QX are of we the we the going a

you. Thank

Alright.

We MacWilliams Barclays, have with time go for one Ryan ahead. additional question. please

you, contact Looks Phone Eric, really there. coming where of this meetings so on center. of the rate of from seat for net And of our and Should say work adds? that year. for to enterprise Zoom of acquisition code rest point? your have new Kelly, And you we see just additive interesting, the base the look I that just sense for that just at the do two solved this a then think is right, I think net bulk maturing want growth that about ZIP is Like as we customers, existing is? additions expansion to

Yes.

think as strong Phone. that we Rooms but certainly continued from just well are Zoom I we be not enterprise half Zoom will be strong. momentum for additions Zoom the Phone continue as expect contribution IQ. certainly we seeing, very Zoom I center, will growing mean is to second expect So, Contact

additions of so So, overall don’t of underestimate in then, that international a in still to level that those there we see in continue U.S. level sort to the Like assume the an the outside well. with and the continue yes, growth same to continues see is core basis, maturity internationally, in opportunity meetings here along our we video meetings significant the at to U.S. And continue to basis, or as all don’t platform. grow. of add of especially that grow is will maturity enterprise enterprise the adoption to the on meetings,

Appreciate the color. Thanks.

Alright. Thank you.

ahead it session to you and for Again, Well, to who on back a remarks. closing our turn does little us go everyone conclude stayed Q&A you with thank that or Kelly, I today. late will for today. additional

that Thank for appreciating give the all you. everyone, – so joining much, support us every appreciate today us you really and we Thank you day.

conclude release. participation. everyone today’s of again Thank that thank you for much so your earnings We your you all And the so Enjoy always does rest much, Kelly. day.

quarter. you see next will We

Kelcey. you, Thank

welcome. You’re