Zoom Video Communications (ZM) 22 Nov 222023 Q3 Earnings call transcript

Over to Tom McCallum, Head of Investor Relations. Tom, over to you.

Thank you, Kelsey. Hello everyone. And welcome to Zoom’s Earnings Video Webinar for the Third Quarter of Fiscal 2023. by Kelly and Steckelberg. today and Eric joined CFO, Zoom’s am Zoom’s CEO, Founder Yuan, I

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

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

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

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

of same unveiled Calendar, navigate hundreds and we partner our At highlighted that enable showcased our their Zoomtopia, to partners of our globally. use and of of us are Zoom customers excited how Zoom flexible world fully first Zoom connect the At adoption event, users expanding to client. the they do products Mail platform who connect we work. many calendar client. workflows it and channel about So hybrid And with which hosted Zoom hosted our like last apps was interrelated email, Zoom more first within the We great. innovations using to all partners, our Events drive new platform other add-on working across the in frictionlessly Zoomtopia developer week, to

and global how, As all to organizations make is effective happens, connection of possible, adapt Zoom connections to remains work when paramount. human where meaningful. kinds and purpose-built

X,XXX ultimately, organization advancing creativity connect features Zoom We on opening and customers, year, people this have platform doors and how their wide the than their other, each launched more collaboration. for the enhancements with and

course, even a as macroeconomic backdrop still Of of and the challenging innovations we our face we environment. customers, celebrate

for by see capabilities. platform We continue go-to-market at communications heightened business, our to an solutions attractive happiness but provides Zoom to remain delivering innovating deal new on FX our cost of Center environments. value in how our do is more Sales our testament like for our strength The and generation customers platform tougher and with proposition economic enable and Contact Zoom productivity. Enterprise focused our that Teams pressure enables and new to Zoom with customers of full less products ownership expanding even revenue and of a to scrutiny resonates the continued drive of total suite IQ growth a

enable own our efficiency, we focusing greater efficiency. As to on customers are also we drive

margins is prudent this IPO, about spending always since commanded so not we for have We been investments, robust a us. major shift our and have judicious with

increasing efficiency an to continue emphasis value expansion, innovation, customer with profitability. platform will balanced and on drive We and

financial and we largest the One customers an buying tech, of are up continued retail, increasingly more, deals pharma. already whole packages. From strong revenue, buying We platform, perspective, media notable customers these greater in industry months spending with wins trailing also value was and What’s XX% thousands customers see than came services, seeing and traction transportation the had to in Zoom in XX with $XXX,XXX year-over-year. which from

On Management Qualtrics me the allows upgraded Enterprise, with the the for tech front, partnership power in their let Experience meaningful category, platform make users full of chat, first whiteboard, One us. recently the with their to expanding Zoom creator team thank offering. more to which and to Zoom leader Meetings, Qualtrics, one and provides them of and the connections phone

easy-to-use broad delighted of integrated are a communications Qualtrics offer and into one set to products platform. We secure

full large all our Our who many publicly-traded Enterprise also by companies private platform. moving Zoom only see implementations sizes, corporations, but value enhancing their segment comprises of UC great towards not in

a Let few you me examples. give

thank I’d added for First they Zoom Zoom. X,XXX XXX privately-owned placing to their to seats demonstrating promise and seats Zoom the their in solution Center integrated for organization employer of Contact professional in saw adopting all, In Phone they teams QX, a like a Vensure Services, Employer modern, interact. trust

Zoom, a Again, of Webinars, Solutions using understood decided and across rapid which employees for Founded Zoom their communication the XXX support order Zoom Meetings, opportunity includes enjoying us G-P also partner add to innovation the critical many number our Center. Zoom Center and is enter Rooms. underrepresented replace ability on Contact Contact Chime me platform their global strategy, Phone Zoom’s improve thank role cloud-based the played one and and communications needs platform. opted I quickly. that to value I’d pace, legacy further Also, for solution experience, to to full our Chat how Employment us a to communities, their with transform products new in to stack, and ultimately the unwavering while and their PBX for growth their speed choosing Chime employment markets corporations. One a expansion also UC want to Contact and with Platform, expanding giving roadmap has to integrated a in mid-sized from give of agility G-P, their Chime into systems Let come. partnership Vensure, the solutions their customers already also will and our for and deliver Center integrated Solutions our Center. the innovation of to to experience all like in with Executing thank quarters Global at G-P organization. Zoom savings Zoom And of with you. Phone, Zoom delivers well with Team Chime solution establishing Solutions G-P, communication focus bringing missing pass customer’s their and high-touch SaaS-based and thank confidence years gaining Zoom as they G-P seeing Solutions that, enhance partnership jobs Zoom Fortune benefits Zoom’s our you After Qualtrics, to Contact piece will for worldwide. Thank Kelly. in over Zoom of customer’s in opportunities it Contact and the companies Center addressed I an

Thank you, Eric.

Let our in me XX% of was ago. guidance. result came strength now currency. grew X% at end by a business, in and growth to year-over-year approximately driven total in turn was up This the which revenue total represented Enterprise quarterly primarily billion, year revenue results XX% up revenue, the from our in above $X X% The quarter’s XX% guidance. and high In of $X.XXX and year-over-year QX, constant million

increasingly time. and new other we Zoom continued QX, product month, an Investor comprise Zoom From to coupled growth in percentage metric, Online this in with X.X% Day contributions we strong perspective, metric X.X% this Churn. products. last revenue improve from FY had to Rooms a higher Average a customers introduced Phone At QX Monthly XXXX In quarter. to Enterprise of and earlier X.X% expect of We total over from

year-over-year that pleased metric are grew XX% returned pre-pandemic this of We number levels. to has approximately to The XXX,XXX. Enterprise customers now

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

grew by APAC, Americas by the a declined war dollar, the Online Russia-Ukraine year-over-year. performance, year-over-year. to X% which of year-over-year. dollar, Our impacted the EMEA X% led which revenue stronger was combined stronger decline and to also impacted XX% continues be

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

development Given Research full this, expense we expect XX%. approximately million. margin to gross grew to approximately be year and by XX% year-over-year our $XXX

This year. Zoom’s and X.X% our needs. R&D revenue, in total of customer’s X.X% of percentage investments expense a on our in from product to last QX increased expanding ongoing portfolio delivering evolving As reflects

XX% XX% to million. consistent exit We revenue, expect XX.X% XX% last up the to long-term expense target. This of of year-over-year QX to the from total in year revenue, approximately with of by represented in year. and of $XXX total grew marketing Sales XX.X% our range

invest sales $XXX year. prioritize Non-GAAP $XXX as of to partner end of for average repurchase QX, with year. channel thoughtfully to continue has million, approximately our the guidance. guidance in This in share was high QX as continue G&A $X.XX, million. to exceeding last XXX total expansion. to XX.X% QX of above diluted last share X.X% QX Due decreased judiciously line We approximately $X.XX translates count X end margin X.X% our of operating revenue, X% in or million to and $XX year-over-year expense the XX.X% was shares capacity investments. million, compared by grew income per to of Non-GAAP weighted non-GAAP operating QX earnings of million share our in our a to program, in high we

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

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

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

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

in such, to million purchased stock, of approximately marketable operating flow cash. in cash in approximately QX we in last $X.X securities, to as QX X% excluding shares. and compared cash have Free QX X% cash, $XXX As restricted equivalents $XXX to representing as own We million, last million, at was with quarter ended to of approximately our year. expect flow cash million billion we grow revenue We compared $XXX million $XXX year. Year-to-date, deferred XX $XXX the quarter million of year-over-year. the had of

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

of depletion outflows the have in year NOLs stock-based lower this high relate flow the to we caused for discussed, increase free larger and of taxes which the our previously starting now the seen deductions expect As QX, cash at to We end decline. $X.XX be billion compensation range stock billion. cash $X our tax from in by to of cash an price

requiring reminder, repealed be XXX this will expenses our a the or deferred year. end by As assumes Section capitalization fiscal the tax of R&D of Congress range that legislation by

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

will XXs, our will the in Specifically, business Online for while year. business our it approximately Enterprise that decline low-to-mid assumes X% the grow

range quarter billion, FY growth approximately of in represent at or of which revenue X% expect constant the would to in year-over-year the fourth $X.XXX midpoint $X.XXX to XXXX, billion the X% currency. be For we

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

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

to million X% of which the or billion, $X.XX full QX is of an growth non-GAAP in decrease X.X% is and non-GAAP revenue our now We to we represents approximately million $XX from be in million year-over-year of X%, our as expect at $XX $X.XX respectively, currency. guidance. income of $X.X which increase the the operating be full billion, billion attributable to to FY to billion the $X.XX year approximately QX For of This now $XX continued which midpoint year range QX. our XX%, approximately previous margin FX expect represents range compared operating to guidance, of in the or a pressure a of XXXX, representing constant in

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

you through our XXX is outlook customers, non-GAAP on remains per to earnings value customer outstanding. growth approximately for balancing community team, partner queue to Zoom profitability ecosystem shares $X.XX, and focused creation Zoom first and on Thank Our share based and our investors. question. innovation, thoughtfully million platform the please Kelsey, our expansion. up $X.XX our

Morgan Stanley. going is And from first Marshall Meta question Thank you, of Kelly. course, [Operator to our Instructions] with come

get Great. for much of the Clearly, business. churn you second improve. on to and are just thinking Thanks. new so that initiatives But business just the stabilization of just guys adds, saw conversion? stabilization guys you on Thanks the sticking sense for the a as question thinking wanted well are quarter. how as about you a the about just of there, kind Maybe with how congrats and statistics Online free-to-pay

Yeah.

types, ago, few like cohorts continued in packages Wendy payment local So first have see well continuing and they we -- at continue XX% at the focused to make we which period really now improvement shared as Analyst and fact conversion. at we’re include all, adding team for And as things XX-month in weeks with on happy beyond sense. that that the look that in to QX. further adding moved the those initiatives of Day looking happen. even we of currencies, improved her really it a really see local are stabilization as churn, that and Those

QX So that next is process, expect on in most stabilize perspective what a Online still is thinking to the we’re forecast, is in year dollar of from case. that before we based talked and all of we recent about and our still had and

you. Thank Great.

Moving on to JPMorgan. Mark Murphy with

pace maybe have moment. will so innovations higher the others the premium of perhaps enhance very stickiness I much. To wanted could Zoom new Eric, I maybe of to could you collaboration anticipate a drive right, patterns, nice do I you, of very benefit cash you either of Calendar, what performance. rapid rates perhaps and dollar free your product that congrats. plan Mail, the or some the Thank the my or and and is at ask usage Zoom adoption? activity the way extent warranty some Spots -- in thinking your A that engagement of flow am retention

Yeah.

to every had the great at they look the subscribers right? principle. a look all what users, Calendar for Email, those Online, we customer innovations, serve we reason or offer Email, Email great so the which buyers can Calendar question. that focus pro to Online at opportunity, Canada, right? give I the improving that’s why add we use That’s per For innovation. very announced to is Mark, not service, another to our either many Zoomtopia, right? So, potential follow other office area almost we the we and successful all do our certainly all stickiness can at make free to integrated [ph], for free, always Look existing they an features, value the a also paid Look at services because think, do but at can revenue use on Spots in Not features, we help and maybe that Meetings, the sticky. limit for environment. that users, can schedule customers also like, more to the Zoom do those features Look only When

Calendar, will Email, or Center So stickiness more feature also I you agent, mission, your add drive what like Zoom every a coach think, we features for the customers, in lot to IQ, for revenue what feel right, opportunity like, Spots So agent like either and our Contact of drive what your users, sure, like sure, for and and right? value you free that. might potential the and client,

customers from positive those are adopting they very, and very the very features and excited are about excited, very, are and and feedback we enhancements. again, So very new

you. Thank

you, Thank Mark.

Credit Lee the Fred question. has Suisse, next

past of question. little on have Phone the talk Thank taking and on a couple an Phone over adoption adoption was for the us bit give you about right. All macro wondering quarters? as if overall Zoom I you you update my maybe impact could

Yeah.

in to we Phone. So see Zoom continue strength

we last reminder, over crossed announced on the million mark. X that a we As the call seat had

brings We also that us of in category. total over that XX added a QX XX,XXX in purchased customers nine have customers that to seats and

economic So I the in times. think up continued it these shows challenging in even strength, market especially

prospects as the to keep break all, out promising you we’re there when that gets So see it revenue. about it XX% will we excited we continue of we and

little be that will clearly. see able a you then more to So

add a said, phone Zoom and imported to or Meetings or team what our to to be are platform UC used platform, at chat. or product, Fred, webinar on more Zoom at increasingly looking customers Kelly Yeah. more looking

at UC excited the Zoom that experience I of also look moving platform terms in am more a give very will like, opportunities total you and full Now why of the because full, better stack, towards is cost That’s better. our about and are a ownership there. much more customers

Great. Thank you very much.

you. Thank

Now moving with on Wells to Michael Turrin Fargo.

afternoon. question. Appreciate the Thanks. taking Good Hey. you

you Can on have forward used a is the and renewal can general deferred just Thank for there how loaded little you. a growth company through of have are that front-end maybe you thus to calendar the a What seasonality, accustomed the it’s to shift on you walk kind and QX. gradual had you expecting is rolls this bit we’re it seeing. you norm up tidbit that of kind useful currently as profile given just revenue internally into cycles outside anything in visibility just gotten or gear you On do that far? it do you that to cohort as

Yeah.

due right, occurred, the in we as add the that you pandemic. we to front-end customers increase co-term early count, during it stages easy that we’re they the for on has for we if reminder, so have upselling phenomenon. customers had to of of exacerbate, a making seat loaded to So, what actually example, or it’s And QX internally their the due products continued additional customers, when our expand when happened this is practice of significant will,

customers reps. used are as and the our you due this how level largest to works. to quarters quotas we over of QX our we say, now out in QX knows to see But it start being seasonal internally, everybody upmarket it six-month is will it So as time

we into, last We each in of our two the I are guess, cycles. seen coming renewal period and strength third have

So industry, We with which as possible much is are works and aligned of how it’s the know as trying why it’s it of that. the able most reminding color you to just around something accommodate, that we and to give we not we know keep you rest

Appreciate that. Thank you.

Yeah.

And Kash Goldman come will Sachs. from question our Rangan with next

Happy and on you see to you, very question Thanksgiving business. the much. in Eric Thank had advance. Hello. Enterprise Kelly. I Good a

basically tilt can call the business enterprise the on the in will the us -- the of business offset of most think were the the Online strength for waiting Enterprise I weakness where business.

for get am to expansion we wait As curious that, I the rate. take your on

I does how platform. about Eric, came and it prior that but your XXX% the And way Zoom quarters, see this cetera. from think versus us recovering. so. that used just a to much it could broader video play so of overall not quite or at still these you like number competition Meetings, broader net new is into on the rebounding inflect When Zoom customer are in give likes you validate out metrics be adoption in other is the of of And et Teams, some perspective thesis thesis that the we of how for also Enterprise higher platform? Can as to the maybe Thank number the you -- macro much. communication

to Eric, first after I do will metrics Zoom talk then about One talk want that. the you and about

Yeah. Sure. Absolutely.

and question. and move projects, added full many the we forth. chat a right, the started usage webinar, They right? platform, and you phone, customer Meetings so look leverage team is ago. good on One as at a towards years our so So stack that from Kash, So, And Zoom

only we look to you the with case. and when be to offer well. other that’s think content to understand, at assume customers not stack that marketing our Contact have talk everybody One but are not That’s we Zoom that offerings comes full doubling that’s problem our previously the best I Center compressing UC probably service, down and why do awareness, also we is it Zoom, that also as the if also a the was

the of full excited. team a solutions, free. more the moving you client at integrated will much that showing might Zoom if trying that’s is chat full together wow, offerings as costs working a adopting Because are download little platform. on I UC UC we customers the Office of also win UC take It better, Email than towards or different, all stack in customers UC use are stack, more why well, like, we think great Calendar bit many works are to I and vendors. service. has because as is so stack we terms look the But have those are But stack That’s And just or to of as rather our stack want to total SharePoint a deploy consolidate terms and plus a Meeting the that. or stack, but other seamlessly flexible other UC really full Enterprise why this very long or a UC they orders UC their full time. CC in well. customers good customers are Phone excitement and from very about think interest and best, going plus

so Thank Yeah. much, you Eric.

you. Thank

of QX. slightly Kash, Enterprise were in the just I internal comment renewals We our want to And of especially very your forecast for ahead about strong. in very, highlight, actually renewals, remain like terms

overall metrics, to rate dampening the say, are continue just, It’s many for to about have growth we and stabilization we we talked enterprise. of right that it’s see effect So in now, growth waiting company. on because as in -- the having Online The you a expansion really

Thank you, Kelly.

Yeah.

Kash. you, Thank

George the next Iwanyc with Oppenheimer has question.

on my for Enterprise you taking update there? all you the the an us Center you and Thank showing. give adoption progress with Can are are that maybe you Contact Hi. seeing question. Eric,

Yeah.

traditional service, a desk seat IT showcase Contact also are well, the customers is And those also, found we Center little together. Meetings. customers cases, the like deploying longer attractions because Center excited. a and started excited use doubling other higher our service But, -- that some to for We with very pipeline internal So, we the do in And with new And solutions, not we takes driver And Contact very, we deploying as however, the leverage a of and big you quickly again, and innovation, pipelines like side, bit Zoom much our for confidence. interaction better our as solutions, total capability UC also think like and a plus, look to product we I full cycle the investment. interesting go-to-market lot our channel customer CC time speed and cloud as it at Center the excited. Contact again, well, business, deploy possible, customer and future yeah, the who the own together, right? ownership revenue consolidate department, those also platform themselves us, Contact would side, particular again, [inaudible] are Center, that’s Contact UC only the much who used own and Center of teams of but experience costs right? again, also plus CC also right, right are very also the And especially we have internal better. And leads gaining in Go-to-market and a are our potential on that. are very And we

you. Thank

you. Thank

with Moving Mizuho. on to Panigrahi Siti

for Thanks you. taking Thank question. my

plans talked also What sales to Enterprise about the does wanted as how you elongation well? seeing, last and of anything kind Just worsened about that pressure, are impact your ask side. macro on pipeline you quarter

It’s FX FX year-over-year saw is of from you now guidance from and losing, $XX in mentioned, just deals. products. my deals some In looking done are scrutiny, growth taking in pushing quarters. they of I They causing $XX the over not Enterprise, as longer that to that’s and haven’t We anywhere that are again, terms pressure just But done. just discussed, losing of reduced certainly additional taking about get strong, renewals coming all things that and deal It’s impact, at longer APAC. them peer not are CFOs going and seen that I seen that excitement longer impact. have the and in potentially it’s to of certainly million, our But not else. as in are get we million think just Europe have the stayed longer, are general of taking of continued we elongation we in that So those

of right, the offer elimination new for rid our especially love. value additional vendors, and be a the is in a really Now great products, our terms continues of news of the all good story servers customers on-prem is, that with that getting consolidation to we that customers story great of

Thank you.

Thank you, Siti.

Auty SVB next the Moffett, question. Sterling has

will in full does Hi, on bump Thanks. following XX% maybe we in understand mean in XX% up bit for of to guidance the Kelly, guys. the low-to-mid a loaded there’s little versus back-end the growth I hockey want or Enterprise quarter that, the of seat that about react quarter. cetera, next based year, that see that stick a a investors and employee And next per pricing? your Zoom of specifically, I all move concern are the layoffs business on that Meetings, a should in think, year lot of are fiscal into really light interested as we trying et to industries per gauge across how

Yeah.

that the we and quarters, last shifting really seen of of didn’t So some we talked we historically more the we since adjusted have the of that more about us is cycle and our case the early end -- for of on natural but and haven’t our seen absolutely QX deals the as we linearity for to quarter more forecast that certainly this -- in pandemic, have well. couple have for taking that

I long their keep in to. there’s concern as license. the And because to that’s renewals, phenomenon employees I in and there’s everybody really our strength working as see, it employers are accustomed a this wants continue while to Zoom continued to have saying, needs about other and that about means layoffs, way supporting right? think, We they Everybody flexible become work, as

for week, need out are phone, for office, Zoom you you Meetings, the for what that X Zoom One. If of day a even license

so think organizations really them. that with is I for And renew compelling to reasons to continue

Understood. Thank you.

you, Thank Sterling. If could… Yeah. I

-- moving Eric. apologies, oh, And

You now. may proceed

and use more right, look That’s right, popular. full parts entire use that’s the those founder businesses, of our free. can UC a more team tractions also before the as personal UC of the after lot stack, for their for getting platform. because is other cases at well, for that Even And also chat why

Our next right, for question start go and video I your hear Michael, to come mute us. please hearing… Michael, ahead will America. off video you with come from Bank us, question. Funk am ask Michael of can if your All

Yeah. Michael.

thing. we with Baird. go and on no to Hearing William, the wouldn’t mind William move much. same you response, Great. doing will And ahead Power so Thank if you

a the this stock-based peak compensation? Kelly, think at this that to stay I buyback taking you expected for and But be in a over how about longer to term time compensation that are expect forward, you just stock to forward the a tied will elevated. more pretty notable perspective Investor going should increase as have get level? expense. there you that frame, what it little kind the about are to and Great. closer that, tie how that on a going I thinking level, should at front, of the about could given top-ups you would Thanks -- talked this know aggressive Probably to more Maybe And investors stock-based how Day been it to question. is be you to for plans great trend? guess how in

employees strategy period vest Supplemental and worry of important they in And the we for and over about that. the Grant that tied them that our believe first, program retaining Grants company the are as keeping the to grant is not Supplemental the underlying of So, terms same having to. really the focused

were them are this few see going are through those you so many in see years four-year as to have years and comp vesting. originally underlying as grants, for grants three level of left going they a stock-based which or are years those two you So shares that are vesting to continue

With the see impact additional or will less stock, stabilizes grants. need the then that from once stock you for less

we not in are year’s another to until we that and hoping see are additional But are that we we worth, have that might probably at So past Grant get same that some more. going you Supplemental place level.

million XX $XXX you as shares. purchased In million, heard, or terms we of the so repurchase,

we evaluate want Board of with a bit we ask completed whether authorization. or have we little we and that room to for that, have will not the So once

We haven’t that yet. done

Thank you.

now William Blair. Stotler with will hear we And from Matt

you maybe commentary some to compares gave that just of the Hi, of segment question. revenue It be ago. color, there. as mix Enterprise couple context business figures updated implication would for of Maybe more long-term to is on the the shift, business, the and some continues in that Thank the the margin the weeks profile of the one business. economics specifically taking us get you great to it there on Online the as a what

Yeah.

a before, our untouched from organization. is we talked organization. as person our that business largely, minimal Online margin to have There to So completely, there by are some any this executives account not sales but But compared questions. largely about a answer Enterprise higher business Online it’s are sales it’s

consideration have long-term took as have of -- a modeling work and done we margins laid we like taken into certainly that our lot that looks So we that we you a Day the out underlying on shift the the at could businesses. as shared mix for and several Enterprise think the we we how between Online, sorry, next look years and Online we forward with Analyst what

Got it. you. Thank

Yeah.

Barclays. MacWilliams Ryan my Ryan on apologies, Moving with Macmilly, to

Ryan. Hi,

Thanks so me? Matt’s Follow can on much. Kelly, you hey. hear question. up

Yeah. Hi.

perfect. Yeah. Probably all

inflection right as Thanks. we Online Zoom customer’s this from You seeing previously churn levels, at noted upselling next inflection a segment. potential With in existing but and impact pre-pandemic business around this potential also now Enterprise on are declines sequentially early-to-mid is any the segment? business revenue still Any in updates there to Online year.

yeah, a dollar which customer of to is out seeing. the Enterprise, they are they forecast next the into Enterprise. We it’s eventually we bigger current the that love great, it’s which from way our I business it see, still means does -- churn, happen are but like because in that in it expanding moving becoming are Online looks are that not on customers a a we We year, upsell the about based and right, but company perspective And and of yes. into to Online is expect of overall, There So, terms is talking that that are of QX stabilization then, answer mean,

it. Got

on Stifel. with am to moving Lane Parker I

help ago. The about been be Enterprise that customers or Zoom with onto the customers of I for seeing question. the are organizations? you a them launched, a more understand better? well? for One across two, Kelly, to bit me Thanks One size of Zoom that One have since thinking then skewing months for Zoom Yeah. cohort up signed Thanks. you hi. referenced Can decent migrated thousands of as it also all a taking you it have are big And tend profile spread net those five about different new that are customers packaging or going little seeing customers is believe, majority you existing pretty new

Zoom love So, about just… One. talk Eric, to second you talk about want for a Do it know you I to

Yes. Sure. Exactly.

are towards right? we do they at talking, at of customers, what I they we launched I -- think almost Zoom they segment value. test see all, look you way Zoom also moved Enterprise, standing see think months And to why markets our and you the several But that from the see that the we market device those every first I Parker, see that’s look all SMB, any all from are One, ago, think, that’s minimum-sized, and exactly we package, so the out anticipated. truly not SMB the One value,

QX business. are One that, the that so add We key about Zoom upselling really they well to balanced you, are to mix as wins a We in that pretty products are as saw happy of the Thank in in would seeing the I customers Eric. that just that traction as we portfolio, adding both that, are aspects of new, new customer were

Understood. again. Thanks

Thank you.

FBN from will We hear Seyrafi now Security. Shebly with

very Yes. Thank you much.

and and to XX% been is rate RPO over down model. a deferred your you you QX billings with by compared for model your grew quarters, you decline year-to-year, noticed So visibility have also your never several CRPO year-to-year with impressive. to expansion a But declining I’d and like really X% guidance you your in my in in has my current had past from revenue billings is getting had think X% I three percentage to the your which XX% what grow hear ago. months decline say, that to,

months ago visibility and talk few this Thanks. when So have see a few about stabilize? it you might just quarters you Is right you the think or versus years? now three a is it

Yeah.

customers overall the believe in we XX same an $XX we In really the along our of beyond general, well hasn’t you They about million the are in improvement of months shifted RPO to the attributable current contracts. RPO concentrated majority of related ability it -- say Meaning, said multiyear really with that consider direct is as as the reduced, to more side stable. the that That’s is can’t the benefits kind our Online would more which of way. that annual or we in business, Enterprise churn, is business Online course, the to the the sales our then and I having you from by and The to operate the FX. Enterprise Enterprise forecast our business are business our -- have of in would helpful why you So of you we pressure in and is or decline the our continuing we have is to the other that long-term the the way organization terms and We has direct changed. and business. I are out seeing see to the but say, to largely economics which managed shift terms Enterprise, FX, in heard of difficult predict, than of percentage. impact are which as that Online state Online business that right? is that, and So guidance now have that, that be

then I reasons so loaded is business. so the front-end due the for again, that seeing there’s the in where as and over deferred much and just QX in the that’s that sorry, billing, -- the same, And happen to is all QX decline gets upswing years, our well. think The nature coming different year, the the about. in to talking in the those see remember, amortized upswing we are front-end are different billings, of And visibility then then the lower renewals you components you renewals are of is so going some really have front-end down deferred the you the deferred’s at

the up filling are are that renewals bucket much the much, So smaller.

those. all for factors -- you and of it’s So mentioned many different there’s reasons

Yeah. Thank you.

Yeah.

Peter will Evercore. come Levine question next Our with from

Great. Thank you my for question. taking

just toggle back those customers those of many replacing you you force -- share pushing were your on new PBX your cloud these of follow-up, then, are more And net decisions, Thank are Kelly, back-to-base able some you legacy then being to X,XXX, and are a of given I opportunities. to XX,XXX you kind on can think you. sales said I X customers just Zoom launch of how or focused think going another phone replacements in maybe and share or provider?

Yeah.

in all, the existing existing remember, is of selling -- Phone our first into selling So, for installed strategy Zoom base.

And just Zoom the phone, on am So about that, full there’s I has as of a think were Eric would I the don’t say, of not existing that to X, split to sure majority know not the expanding customers. actually beyond, between expanding platform. but those I but a focus those right, I talked company

Contact Zoom So that’s it’s we what it’s on One, really Zoom teams for our Sales. Center, have focusing IQ It’s now.

Now within the it’s platform, that Email and about thinking including Zoom really and Calendar and complete Chat organization. adoption

really of all reasons, So the by ownership to see have they that that of been of organization. total the that’s those our of becoming the combined focus in sales cost it -- talking for for savings, reasons the for about organizations having retention, vendors, reduce Enterprise that we terms all flexibility cost

from next question our with Bank. Deutsche Matthew And Niknam come will

broader value have Hey. maybe you the customers are room where more strengthen Thank to you in about are see I you potential Thanks. and areas with the ask, you thinking for there wondering, platform. just the that mentioned compression how to greater am the are I opportunities? taking wanted platform the we market inorganic valuations, out from seen specific seeking question.

want and they you see. the value do about the Eric, talk So, platform to

Sure. Yeah. Absolutely.

And it. One board our reason Zoom Email deploy a communicate scaled you customers, is make if there, team at right, integrated use a teammates who fully look They added now call, Zoom and you customers, you same for our really client, same right? can we interface, phone chat, why those when and the platform, meeting, think I together. the white with have The Calendar right? like

seamless whole and business more And platform one used I to the value they experience realize customer, business lot. no the That you solutions to the other deploying One Zoom more to see a customers, partners many we out on the more always Zoom think cloud that’s that’s than matter not full reach which reach and at platform, be is the they customers deploy, just UC other we update. value stack. to look solutions, plus, us more if and deploy of for full entire cloud solutions end we other example, why out rather they

One built why that’s Zoom Now yeah, And and they upon down will to platform Spot, yeah, announced I double our more and story. say, good see We reach our more us. arecently value and be like, out focus to the that’s We platform. the innovations Zoom

of terms in inorganic opportunities… And just

Yeah.

on if elaborate can you … that?

Sure. Yeah.

both to look every our the what day potentially technology, course, yes, impact to are and is certainly on compression on We have always what We would bar the to balance, talent value customers, and state a it or evaluation not is here opportunities, bring at of right? us. and for high of lost then, continue of trying What culture our bring it and the we technology the So Zoom. at would course, the

doesn’t to to We all are continue difficult, So would standards. that judge, that it’s look very but find to Eric is stopping date mean and every. meets of we hard those I say, opportunities something that been really for a

the of number full terms experience. customer, the I in like in our experience they that thing mentioned, platform Also, one our

biggest That’s sure you make those to opportunity. companies How the we want at years But right? like on other experience, provider, Let’s you branded now everything. new platform, many the you all the inorganic say, UC look acquired might not technology at we we a we if that’s the did consistent to if about easy. to Solvvy, focus Again, service, have already look greater why an ago. just think service look at the tend

more Now right? and just we on We there, high a focus confidence -- the getting side, so. We have are traction more And we are like go-to-market are

you. Thank

Thank you.

Zukin Alex to Wolfe on with Research. Moving

guys. Hey,

Just XX% a maybe next looking bit guide to kind for the one a the it’s revenue full bit forward about I have quarter that of But point, question if I the hard. Enterprise Shebly’s and implicit forward, it’s at -- that year. for low look metrics is the XXs maintain the

decel digits, look further and we forward next tougher. some for kind environment, thinking the recession of about the a worsening what’s with growing single like what assuming a the go Zoom. playbook growth does -- it macro getting this second, of stabilization year assuming in low-to-mid are the going normalization you like, If the year, is to Online With how business or OpEx XX% be nearly

some the seen the what’s plan the to here We efficiency employees, with and to you business, with maybe Eric? will, what’s plan respect companies you both for steps pretty -- dialing of up, recession meaningful respect take the some if have

Yeah.

We are terms of in all, -- not are caveat So -- on giving this XXXX guidance just may first FY assessment I think we your be We that giving call. not

being are very, It’s we And the year, of about a are it. are growth topline line are working you We that call. thinking FY very do that is have noted, kind our We prioritization would about perspective, of are internally. now. prioritized things as we and is, But of thinking and plan, we investments. kind about on And the this as an QX the lot right right at from the in in thinking obviously how our then the ensuring hired assessment that it about say are very We it way in of operating your have margin expenses will terms they you are we thoughtful on way We how with so XXXX being about I focused thoughtful right grown

top and that. have in to well I that’s areas priorities needs, sure resources we making what that the as I say. expansion. guess our would Those committed really that the We are continuing have on go-to-market innovation customer’s for as we are right meeting and

Yeah.

Alex, much I So, position. a think, We are better

potential a cash Kelly had, year. we like You profitability and the we had this as at look mentioned, the teams improvements of productivity plus lot efficiency and flow

productivity. right? short-term recession, any That’s I either and think, confident that they very to we are short think storm, drive productivity the think weather yeah, I going And full or next I long-term efficiency to reach why can feel or long and or for year. we yeah,

And I have the on you issue side, billion balance the to at I buyback as goes the stock. on Kelly, $X just stock to as a about you If if the long cadence shares guess look sheet maybe are one as follow-up. in other cash side, buy given the talking back on down, having

So given -- I because particularly a how we do the share lot about buyback. get dilution, of supplemental questions

next about going you So at the are over years, that to least three on leverage year, two that front, cash what’s the way right years, to how -- think next balance? over how the ex-M&A,

Yeah.

just shares. have So we currently about to program from have want our talked dilution those. able we done example. supplemental we good think to based being on for We the a of have be had repurchase place, the about that M&A very -- in job offset We share thoughtful the cash we

for the FY dilution, cash as on managing especially opportunity are as as We earnings XXXX that on our so and opportunities. our And plan, well M&A balancing focusing

forward for and that’s to today. are really So FY say we XXXX all as of considered being those we have what look

QX more the back We to we for call. come have about when talk will

guys. Thank Perfect. you

Yeah.

with will Company. Needham hear & We now from Ryan Koontz

can question. think quantitative, other not product revenue side? XX stacks expanded they meaningful and unpack meeting Thanks. look in to that Thanks different if an versus where across you give the how license Enterprise of products idea the categories, can Can months the on the at become look next kind phone us in that you about strength for any Enterprise and growth up like as

Yeah.

Rooms progress really happy seen in with Phones One, the and the Zoom with QX. Zoom strength in So we Zoom have with

stages. it’s they Koontz, see Center are progress We there a just potential early. That from -- and excitement, so in early are but and We Ryan Contact certainly seeing also

in in of seeing contributing So it’s growth of are expansion terms at the but what overall those dollar to are products. we in quarter-over-quarter they amount, minimal point, terms this

So that’s really exciting see. to

Thanks, Got it. Kelly. Thanks.

from come with will question Catherine Trebnick next our MKM. And

question. taking for it. me you Appreciate my Thank --

One of mine program. is on your partner

a new that you on concentrate He said interviewed he more he to he’s any last one to Could in revenue magazines to some the going to to brought and specify of partner areas CRM get the just You the can revenue? executive wants ideas that drive just of implement. you channel address July. XX% particular and has through

So, think, of were our Todd, with I At a Zoomtopia, he who there. ago, over Catherine connect quarters referring hosted partner us, is first yeah, he’s partners joined Todd, great. couple to XXX

think, opportunities, to So I that there see. international one the exciting of opportunity of while was lots of expansion. And is super areas biggest are partner

nascent it’s but the last relatively job of agents We U.S., building have over up in still the done U.S. master a carriers the years and good few outside here

So that big focus will sure. be a area for of

Thank right. All you.

Yeah.

James And Fish ahead Piper go with Please with question. your Sandler.

years, are you have few the question. at Thanks. experience might on been understand of have the capacity, expanding improvements I we couple been of the Enterprise how also versus to stability advantage easier but Is support like an cycle way terms margin did last with talking about there fully underneath looking Meetings productivity a to are reps over the reps that is Thanks especially. productive of the sales of really the had last balance Hi. in for years. Most any to as asked, ask to sales much especially these investment your How want of actually this guys point?

Yeah.

of And and terms about last you were -- as constantly many in help to reps, XXXX, opportunities have looking few So we be making look make lot our talking years we them FY fewer a will just hires. we are more forward at to the we over productive. we as hired

overlay for So have the we to places how we reps, do teams the them. enable looking support the how do make sure We right really in we that are

that’s everybody aligned that’s reminder, -- that possible. important Contact Center of and customers is way specialists really are on sure we selling and a Phone serving aspect making in that have As a the best our

So that big focus. a is

really that, Enterprise think Tomb, especially We lot he’s FY also last background another that well. That’s comp Greg a that’s up all President, have you are of We We met -- is. sure a his experience, and for moving XXXX his aligned. taking been so And quarter where stack, then as look are about making time us at a the in new that that spending our and helping plans focusing on thing as

James, another point just Zoom add And take some that productivity, the when said to to efficiency, especially also quickly. manage team’s drive to added what value Sales on product big to reps productivity, IQ Kelly their work right, certainly right, remotely, that actions, how and right, for drive our

sell will IQ of opportunity to future to also Sales a will Zoom for on literally of IQ and I have think will more us fully productivity value Not we Sales, for deploy every we productivity. That’s sales do this more Sales. for end and Zoom we rep right? be our a IQ drive areas month, for Zoom trained by only lot for create

Helpful. guys. Thanks,

Thank you.

James. Thanks,

Matthew on to BTIG. VanVliet Moving with

individual an as maybe of for licenses? sort not having much, that Zoom Zoom a that’s workers modality having have of taking guess you and Good layoffs, they when lever much a next paying And going and we being are you and that curious come feel room Hi. risk the how guess, to Thanks. like of been sort companies of for the to a return in. we want number Rooms highlighted mixed I companies afternoon. Yeah. a that conference growth a still remote undertake uptick I over for macro see really seen how Thanks the office that under are to of has several my spend as might additive quarters do already and of question. slower

Yeah.

go away. continue to think our customers very in we ensure so all will right? right as in you the hybrid think I long to conference have of what have licenses to to to as we and similar need become this provide it’s think see we experience workforce, -- Meeting happens still what accustomed on the a aspect technology like ensure going have that inclusive that see to to I your But you you that Zoom we to I to work Other yet innovations room. don’t listen mean happens, that. it’s commercial with customers, real it’s estate. I come

a just how state you of hybrid what that in seeing However, that work sort those Zoom our of of Rooms are and can’t stress workforce, environment. and some are I -- the is. I they the in well really as importance importance as a that’s I hybrid enough important of tell can’t customers

Thank Great. you.

are also, used be used at to conference you look the like another just it right, internal, room, And right, for so the thing most Matt, quickly, internal of cost. usage

And us. companies Less employees you another that’s our Zoom, have experience, sure ahead off but why think want the the of do, And customers and Now reason that’s might right, right? the see the look to customer best the why we because those customers the what employees. of who to not at you taxes, what? the thing customer opportunity right, lot more Zoom and number like partner, difference, conference Rooms, the Then That’s with you to the A customer and double great for case. partners, Guess of one laying are still partners, leveraging reduce down I talk When about right? even right? talk rooms. right? can that’s otherwise, make Zoom,

Thank you.

to with Tyler move Radke on And we Citi. will

outlook. what seeing expecting last Kelly, churn Is macro guide unpack Enterprise what Just on Hey. you of are you non-FX are a maybe you the implied factor of I But bit what understand something relative side? net guide, was currency us QX a the worse Thanks on SMB is are or terms quarter, just to you for getting the terms help in was it a incorporating weaker side the QX. or of adds in QX understand kind of can the that question. perspective? lower from for assuming in there taking my

Yeah.

bit we dramatic changes that, are just Online with that going forecasting of little report the would segment but mean pretty this as seeing say, then we not biggest you of the likely to and in line going change Online end it, to sorry, at bounce And segment, to deals churn that’s around segment, for continued now quarter-to-quarter the any the in say that the is there. Enterprise the QX. are the QX, I would -- I expect to in We quarter. back in business mean, I being So visible is the it’s push to a we be much I be number all

deals that linearity we end, course, the Enterprise what quarter. the of -- a so of much segment as in end that of contributing our more the really And to, to balanced and revenue over to few traditional these and We really, back more that less is back much quarter had years, in deals linearity last are back leads seeing the going are

but QX the having consistent year of and have of XXst then two XXst with are what close, the than ago. saw close more we of a in like periods in expecting seen have we January kind the benefit Now the we linearity we what December

you. Thank

Yeah.

time with UBS. Keirstead additional one And Karl we have from question for

Karl. Hi,

XQ we the number that fitting you momentum. Hey, for But, and me in your obviously, plus about number. in. proxy X% perceived full XX poor am year, a billings the just the Kelly. -- momentum. a for I’d utility business Thanks guessing decent of proxy love Great. for I argue minus as ask look Zoom’s that’s to Traditionally, would that for at you

because some you about maybe X% think So on negative there’s that a XX% can little that I consternation bit, billings? and opine

this said I Karl. earlier. you, have Thank should

contracts. Because business especially never of good we monthly to billings don’t the indicator a we on don’t are, are they because customers that we reminder, percentage as the a for think guide of have, segment So that in are us. that of the large our Online

don’t for a they And use. doesn’t us bill why so to -- isn’t show because that’s it really number so proxy they they and good and in you monthly, that pay it up

there invoicing there a change customers DR that that DR Okay. well? to as are flexible margin else terms any is to number. payment skewing anything more or maybe Is maybe And follow-up, impacting that’s terms on as the Kelly,

Nothing significant.

Okay.

It’s revenue about about talking the really -- are you more specifically… timing deferred the

Yeah.

about… Really

Yeah.

bill billings renewals. Remember, so a -- can’t they and see in factors. the an everybody. in are are and lot of the deferred uptick that just two in over collections. you then the it’s and And amortizes time billings seasonality that the the smaller. … then that QX for fact to enough going stress then I and It’s QX

amortized lot lowest We the double the so this right? deferred in have lightest a QX, have picked refill are up bucket. and was the in period you the are Now down QX that you of that So impact, period to at billings

long to, but bookings happening phenomenon and I as So is about talked come, this it’s going going going see a to to are of that We see in we years to to to our time. time, a going that’s until. look, more more for be Over take start

Yeah. Makes sense. Thank you.

Okay. Thanks Thanks everybody. a lot, Karl.

conclude today. ahead our turn Q&A remarks. does again over additional or session and closing will back to things Eric And for that go I any for

Thank you.

every of Thank greater employees, partner and you customer, investors, all, support. for for work. great every First you thank Zoom

See our wonderful a Thank season. you. holiday have meeting. in QX all you you You Thank again.

We safe conclude rest And this we participation. may quarter. the to happy all our next for Eric. see season. Enjoy your Thank and a yours, have you today’s you, so And your thank day earnings release. much and holiday again, family you does from of Good-bye. you again will