Zoom Video Communications (ZM) 27 Feb 232023 Q4 Earnings call transcript

Well. Hello, everyone, and welcome to Zoom's Q4 FY '23 Earnings Release Webinar.

As a reminder, today’s webinar is being recorded.

At now, I will turn things over to Tom McCallum, Head of Investor Relations. Tom, over to you.

Kelcey. you, Thank welcome fourth and earnings webinar video Hello, and to full the quarter 'XX. year for everyone, Zoom's of FY today and Founder CFO, by Yuan; joined Zoom's Kelly CEO, and Steckelberg. I'm Eric Zoom's

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

During These impacts that expected the with statements, predictions materially. These quarterly and only results discussed XX-Q. differ our reports including in we risks to first and are of subject our to could and initiatives statements the macro the this financial market report XXXX, and XX-K statements for full make including product filings and and performance in the may are the today, Form we affect regarding outlook what are our and year financial factors results forward-looking the impacts opportunities, strategies fiscal that from actual financial call, statements growth based SEC, we our go-to-market initiatives, which quarter on our business initiatives. environment, will other annual detail believe trends on regarding Form on position, and business forward-looking aspirations benefits expectations our and such

you turning up Kelcey, over video our queue assumes Eric. the may me And statements that, make quick we no please video. on highlighting any show webinar. obligation before with to the forward-looking technologies Zoom today's let exciting discussion update to a

[Audio/Video Presentation]

you, that's for thank Tom. joining us Wow, everyone today. Thank you amazing. And

into collaboration a So truly evolution in a pivotal platform. full FYXX our was period

largest year, we a expanded deal, we Center’s work new you saw last help innovations to contact hard expand release Zoom becoming leader markets. have a functionality solution. the Since Contact video, portfolio seats, contact and space. which and in our we June, in landed the open the of multiple million X,XXX our contributed Zoom to made product of In early its our features, Zoom QX, seat clear The date, we in transform a launched have launched we center QX bundle, to Phone, As strong exceeded One worked the to integrations. to progress center demonstrating towards last making rapid full-fledged performance success us which X.X

Zoom been want for say XX% by a team so experience customers contributions deepest Agent, to has the painful out This AI not their We way closed of our allows to I Virtual heartfelt with and deliver and Zoom. employees. conversational my weather we will We crucial achieve an It reset and X,XXX experienced believe of which appreciation to currency scrutiny reduce hardworking, learning tough and made extend colleagues. economic long-term to their tremendous decision release chatbot challenges. to intelligent solution few its and the businesses talented the to was to for the Zoom’s without that with FYXX weeks into the fiscal year agility, a for very in gratitude ago, deal online focus ourselves, we we exercise And, us. necessary around them assist contraction, vision. customers QX. transform but our continued terms impact, inward and look greater us environment can headwinds and goodbye

FYXX in and focuses strategic our beyond. discuss me let Now,

they will modalities. glass. a teams redefine experiences help give new we’ll improve of engagement modern everything need for and employee teamwork and And across offering ideation First, that tools single through collaboration through immersive we pane locations

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this reimagine comes intelligent as platform of people potential, unlock unites and and together and us to productivity to that a enables allows dynamic their All collaboration experiences more work.

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development explore in the In addition, and will the together work we data to technology a build joint solutions. of innovative center region

on chosen digitization so partner their has Zoom grateful Aramco that with strategy. to We are

Zoom for one bundle. to who several a and company, has also I’d NASDAQ, to years. our favorite they expanded of One, and been all like customer communications security Zoom thank Zoom’s in Recognizing unified reliability, strong collaboration use, my ease

their Whiteboard Meetings. As of Advanced Phone deploying Zoom NASDAQ expansion, Translation to part Zoom this like capabilities adding and be will and

relationship integrating Zoom leading by want company, expanding thank Phone I also James, their Zoom their us more complete to a Raymond implementation for a to for Meetings with package. financial communications services

employees highly-reliable secure work ultimately system, James and enabling We the work collaborate, world. hybrid provide in excited to are their to thrive to with communicate, a and Raymond

to want Meetings builds A enterprise customer, cloud-first, for thank I with of Networks, for having saw solutions, in also security Plus Zoom Zoom. communications needs, Barracuda upgraded single to value the wall-to-wall Enterprise longstanding One all grade expanding Zoom their which Barracuda a platform QX. and

and chose IQ Zoom also Sales sales Barracuda the Zoom Center addition, experience. Contact to In customer enhance elevate to engagement for

Barracuda Aramco, James, Again, thank Networks, worldwide. you and of NASDAQ, customers Raymond our all

a Directors. warm at Digital for is Hoots let of closing, my to joining Cindy Cindy and currently Chief wealth and experience Chief AstraZeneca. express brings welcome Information And before Officer the me Board our of Officer

Chief new Officer, We joins Smita a work so excited who seasoned want Google. career at executive Hashim, to are us her. to welcome I from also Microsoft with Product our and

We with excited her. are to work super also

over with I'll And to Thank you. pass Kelly. that,

and Eric, hello, you, Thank everyone.

me financial our few of and for start FY Let 'XX. for with QX highlights a and 'XX then FY for provide the results and outlook QX the

results delivered We in 'XX. FY solid

Here some highlights. were the of

Our Enterprise business grew XX%.

and billion, in XX%. was free X% XX.X%, primarily This QX, growth constant Our XX% in million a came and up high our non-GAAP was represented a by operating above of revenue strength of result total ago. driven guidance. was revenue from we cash business, revenue, In $X.XXX Enterprise currency. The XX% of year in X% year-over-year up in XX% our flow margin approximately $XX margin which the at and achieved end total year-over-year grew

customers expect higher an We increasingly over Enterprise to time. total revenue comprise of percentage

QX and XX% customers Phone, Rooms with products. other approximately X.X% QX a to product monthly Enterprise year-over-year in contribution FY of grew average increased from growth in Zoom to X.X% number Zoom due and From to The in perspective, slightly coupled as strong churn expected 'XX decreased we seasonality. from had Online of from X.X% XXX,XXX.

net saw in at for more government $XXX,XXX XX% industries in healthy up trailing QX XX% These contributing expansion the FY education, of represent 'XX XX-month customers Enterprise as months from dollar of upmarket healthcare, trailing ended in span growth and we came in quarter a XX and Our more. with as such We QX revenue, customers XX% a diverse XXX%. than the X,XXX rate in year-over-year revenue. customers

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

they expenses Now turning quick a due million and onetime QX, to $XXX compensation tax which of impacts. margins. grant our included neither stock-based deduction A expense sunsetting In supplemental carries GAAP of our dilutive nor note program, the results. on to

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

margin $XXX approximately approximately we million. expense FY non-GAAP 'XX, For to be XX.X%. by Research year-over-year and grew to XX% expect development gross

from percentage our total expense in a of expanding increased As last investments reflecting QX year, portfolio. revenue, R&D product X.X% X.X% to of our in

priority top will for remain innovation ahead, Looking Zoom. a

year-over-year QX marketing year. by XX.X% to revenue, from in This up of and represented total grew XX% $XXX last expense Sales million. of approximately XX.X%

approximately productivity. as in declined we office. and part are to by to year last expense go-to-market greater our better our million achieving back we strategy on or revenue, of our XX% customers X.X% X.X% from focused of optimizing down total in enterprise restructuring, $XX As our of additional support drive G&A QX efficiencies

year. end million, operating QX the earnings investments we operating $X.XX, translates compared actions for to non-GAAP million a XX.X% above Non-GAAP $X.XX $XXX high in last income QX as our of was share in guidance. diluted the to exceeding QX our in as of to guidance This QX. of of XX.X% was per reprioritize end high took margin $XXX Non-GAAP our

QX share share our year-over-year our weighted repurchase million to to X shares count XXX million. by decreased program, has approximately Due average

at guidance extended durations. This customers Turning the as we billion, to revenue up Deferred was is billion. from our saw end $X.X above from the $X.X year-over-year increased balance of the XX% sheet. period and contract commitments

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

of to revenue of We recognize approximately last the to as XX% XX% XX in QX compared expect months RPO as the over total year. next

seasonality reminder, a first As towards our year. the the renewals half of is of annual weighted

due then, to million dollar $XXX zero billion with do had QX be revenue last we quarter in million was year-over-year in vis-a-vis of are QX the QX up $X.X dollar. of cash We We the the strengthening of equivalents cash, down ended FY QX 'XX. We major flow starting XX% securities, late in partially in to the operating quarter year. in deferred from excluding business X% last to $XXX in to expect currencies X% restricted of compared cash. the the cash cash $XXX up flow $XXX million as and approximately to of year. marketable million, Free Since

cash flow was Our Section margins of legislation FY the cash XX.X%, operating R&D and in repealed Because flow XX.X% were respectively. requiring free for we expenses XXX 'XX, capitalization and tax not exceeded this total an Despite QX. cash million end tax range payment, full $XX provided a in of we $X.XXX our additional billion. by incurred year previously payment still high of for the

free flow we billion the expect $X.XX range be FY cash to For of $X.X billion. in to 'XX,

Now turning to guidance.

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

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

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

This in QX days versus the all other three quarters. fewer reflects outlook

represents For $X.XXX of year-over-year to constant growth billion X% X% which in in we approximately currency. range 'XX, or at billion, year expect of the be to FY the of midpoint $X.XXX full the revenue

range billion non-GAAP non-GAAP our expect We XX%. the billion, in to of representing operating of be margin operating $X.XXX to approximately income a $X.XXX

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

our non-GAAP market. XXX committed growth Our innovating remain our the outlook to to evolving go-to-market the $X.XX earnings to on is outstanding. to between We and optimizing share Zoom and for million needs of a platform, motions our $X.XX dynamic careful meet profitability. culture dedicated balance approximately shares per is based maintaining

for continued confident will innovation us our positioning We that growth. are our an sustained while even greater investment value enable us to in to provide customers, also

the first up to our employees, our queue question. community you our investors. please customers, Thank Zoom our Kelcey, and

question first from come Fred with Suisse. our And Instructions] Credit Lee [Operator will

other above break from, the full could around a looks if coming guide, margin percentage it's down like those regarding coming was points coming from just question was in which where year wondering items. how in RIF Kelly, efficiencies I operating expense much operating the efficiencies X consensus. versus are you

Yes. you. Thank

the saw remarks, as came reduction. QX, in spend third-party the mentioned results. QX, we all driving prepared we So looking from and across the started in on you as into efficiencies in across This I of the really focusing as moved business course, then

well the and resources customers combination it's and all including business a small so in across we go-to-market And efficient restructuring happening really processes, our a of really focus business there's of where as that commercial on as as be our our enterprise as teams. to looking can

for everything product expecting Got happening it. regard the question you've some to AI talked you're quick about where areas and With impact. Eric. a initial of bit little a And around some generative that's new AI,

would for generative regard be the would investors how AI. of analogy can you of little of you -- greatly us all and A bit with for that So commentary things what kind draw appreciated. around to uptake

Sure.

question about yes, great first AI. that's of a So all,

question reminds I first to XXXX, revolution. sorry my than And Internet -- so excited. of tell XXXX, of revolution. first since excited was stock embrace of your I'm then I that I of and about of right, to you, product me as Silicon excited I'm as when maybe given AI, Internet more That's why sort background. wave can was wave I real-time XXXX, engineering wrong, XXXX, think for I Valley, speaking until maybe collaboration XXXX, AI was today. the moved a

I think ahead have challenge; sort a the AI of a huge every of right? all us, faces same of at also time, time opportunity

of -- the Zoom, Given X.X part AI-first Zoom cut the can think Zoom culture, help right? us journey, our involve strong I of company. AI to sort I may be to innovation think truly right,

called Agent well, background, already Speaking to of empower Like customers. in all great right? So very, reduction, very we I are is AI, And open even very talk features having about all our ML taking we invest are truly where and company AI before our chat as approach. Even our AI may right? Zoom that, we double engineers, specifically hard Zoom like AI. features Sales, about a IQ experience. lot see like we on of lot with a a and of lot solution and on lot benefit down Meeting a other we to recently. noise And Plus with the excited. to customers some talents going AI, down ChatGPT feature Canada companies. and working think leveraged leverage talk even plugged improve talk I'm we actually, that recently, And Smart own and AI. doing a those of things that. already announced a have for a not we everything Summary are to OpenAI augment will going great. GPT-X also triple Virtual here just can is are partner and And very can this Again, about I we AI

And America Funk next Michael Bank with question. has of the

Okay.

Eric. for First you,

Zoom, lot of competitors today, for huge asset trended strategic when specifically cash have that your optionality. don't a is You have balance a

opinion, in cash that is your your improve against the further advantage So deploying capacity? argument to and your what

to So when better to to is money have Kelley, so. managed probably delegate it that it comes to better she

you, Michael. think argument our to continue Thank customer advance any our advance is base. don't cash, technology, against there I deploying to our certainly

that We well. would as be the come culture today coursing that to of technology criteria, very, said, core We as mentioned to X Zoom look I make sure as the together as past, at our I've the very at have looking opportunities. the organizations look we we we course, main kind of for want at. could something providing As that works look sure in are the make constantly And of the we customers we does platform. well

we As you team spent seriously take Eric on And time and the so of building focusing lot whole here. executive know, culture have a that.

all there not least, And that seen assets valuation. couldn't we in then past. just love. but as, has certainly the get We've been We unfortunately, last know. is great And you that of tricky

so that easier easier. we And and see now becoming

that that of team part look a and will tell you busy for for and 'XX. certainly strategy been I is our very us, for FY it his So continuing targets considering we're have to Sanjay

to fiscal issue about million fiscal a 'XX while there RIF. the about And the you, question from next $XXX income, delta with back 'XX. my Kelly, month have an and the to estimated We earlier benefit Is I earlier math that? around operating

going not mentioned, organizations Eric the XX% the We're to was of tell reduction. applied the as U.S. across the pretty across you, the locations well as get the our around specifics U.S. consistently company, I into other some outside will of that and it

the calculating So savings that are. you're what think consideration you as you can take into

We Marshall Stanley. will now Morgan to Meta move on with

just XX 'XX. of you were start with, maybe days to Maybe, for potential fiscal about kind ago talking low were you Great. we mid-single-digit for versus Kelly, where to when

get around of the to trying in some did you online conservatism? given the kind Is business the see is sense online Just the in or a of kind stabilization incremental more of quarter? that business, the that enterprise particularly

don't on I guidance. we visibility, of I weren't planning. know trying still would remember giving help in QX a midst say were specifically I the We that 'XX give, guess, were to FY sort of bit of we I mean, Yes. doing but our I -- little think, right call, the

we about. up decision of that we teams on the team to with the see around that and spoke we that the of all work putting to headwinds So made together do reduction, And guided continue now as what we've continue go-to-market and this with also came all to.

started compared to going of see remember, some year. last impact to QX strengthen and QX -- some in half course, see the year-over-year, the back really going Of challenge, currency is as we're a still to to because dollar we're

the we the of that sure set these there as to see all making teams right expect now, impact just where in -- was we year-over-year get 'XX guidance. as FY well at changes should lined that considered But especially as you looking that everybody up and go-to-market So is. some

Got would it. let kind of maybe, have you and wanted third-party to this you Zoom cases. do then where apps guys the or And Eric, kind have the singular the use in platform of past, departmental industry be

like And some sounded from departure that. was there

there guess kind be Or get additions still of So different of some third-party to of different verticals? these wanted going are it will largely sense kind a I for Zoom of just driven? I be to

question. good think I that's a Yes,

will everything do meaning now. of First we so like trying of given to think should what our are be I developers, want party. think before, we're augment opportunities, why not the own I more to augment And more by strategy, an whatever to something tuning to do we that all, we to don't third done today. I what departure do -- -- lot not right? just depart a a leverage Because doing as it’s doing also new that's

Mark And with Instructions] go we'll move Murphy and to [Operator on we'll JPMorgan. ahead,

value and So you this strategy CPI think your just be added of you've out product. that's come. whether increase so so much the pricing or that you you. amount into on and a could at go perhaps client look prices recording much to When us a activate more have storage, you even and update maybe benefit the we right on would mail to calendar the Could white-boarding, time adjustment the the of perhaps bit

Yes, ahead. Kelly, please go

Sure.

month, you there been -- online that earlier this March believe predates increase. only effective. it's customers the for believe is as for last the was announced it for time believe that not many, that we reflects to the And it that created years increase I years, customers and and said, last the be customers. customers, our announced have a date X, many we many, have We our reflect price will we we -- price for over me monthly a that's annual since last as value, starts few we

all-inclusive year. point that and value full then we the reflects the an considers what our the we with And get that with And feel Enterprise believe this to the time. out is a update came bundle are included And really side, One, last the we on we at pricing all that and way buy of did that up best for to products platform. customers price appropriate of Zoom

But side Zoom One outside Okay. more the Enterprise what announced. nothing than so and nothing material you already on had of planned

Yes. That's right.

question. Piper Fish the Sandler's next James has

on is This Jim Quinton for Fish.

need the adoption products help of Or to In calendar Zoom, team XXXX terms for a and core Center as that e-mail there what reaccelerate this is 'XX. was and QX. to Phone the longer-term emerging really core vision guided of like point, phone reaccelerate are growth products catalysts maturity of strong how quarter especially we look from 'XX the of the we about meetings at in the Contact kind following can and or thinking products levels? the Do

I think -- great question.

opportunity opportunity. growth I on Phone a of Contact will than Center, core particular AI focused new new we IQ given of feel ahead any huge layer, for side Zoom well because down more product, potential grid other think doing the more and to the I really help extremely market like of huge. Zoom phone on both. example, Sales lot Agent not it's and I the part, for very why I us. still we Virtual is us sort of of and a take and and department and road, the products in are is innovation applications, see as service And providers. that, That's the On better more reliable

-- period Sales in we I IQ year, Center launched half second the of last for this as think the the the us, early year, for given transition Contact probably Zoom well.

You can services, a of I interface, most need can get in all-in-one that plus work done, business. will the distributor focus to pipeline, both. We on our I right? that's leave right? new services think, why collaboration Zoom The reason within are us. our new platform, help real think the Although

next Jaluria question. with the has Rishi RBC

think out think bit know which I earlier, deeper just calendaring. features about chat, you I a to I new dive one, if seeing. to little you're have into brought some Mark wanted male but the wanted I of

rates what these are extent love Just hear in but actual Zoom One, seen to of on it's Because who's it. possible, available have you uptake of using right? would anyone terms actively to to features, I the probably

And if terms Because in time those us about really who what modules, from or platform are color think are think would get of you these like communication on in anything a the seeing those additional you help customers that that. using spent engagement, expand retention, ARPU customers some terms expansion your I rates, Enterprise anything ability of to broader platform. like into features

Yes, that's great a question.

all, I we would First more say, developed last year, of than X,XXX features.

will Team is Why that they use to Whiteboard. other I think our and one we -- team features, not right? like after have to improve NASDAQ this Chat, lot lot meeting a And find this phone services invest think us years, They right? solutions. off Having well. a should about a a But feature, remember deployed. product development that, we important good also We their worked really do extremely did also It take we it. want as a consolidate Whiteboard the wall. a read would that, also has hard. customers lot the need I say, thing we for which well, do adoption customers for order of is something may to of example, not many of know said for now features, with also pay we They a in like Again, year. customers like for to the precision finish chat

those let that And but it's use innovations something Chat. mention after much they right? need like better, very again, Zoom to Team value for they very that's huge opportunity. So few Zoom the probably tell that, tested, I adoption, Again, Chat lot that features. the and we found a the IQ not grid right? as Sales Zoom focus there’s like also they the A the all sales has They product scalable focus also to right? know well. that, Team things can of of department, upsell platform, quite from also And a a we -- flexible, doubled Zoom Whiteboard on customer lot solution need you, all on.

So anyway, of on a innovations, we should lot features, focus adoption.

with hear now BTIG. we And will Vanvliet from Matt

guess of around some Contact could few Eric, the seeing you adoption points there? I service replacing Contact Centers? these point, you video or net to where Or key component, a product. extra last or are help lends curious some maybe to details sort where nature it? the Center field the an existing on if be a things driving really share Are is of of whether What's winning the new video of going it's that

Yes, great question.

front, almost So we year, launched So -- right, now. last on we are product anniversary right? one-year it early

of for features are already we early just a customer, works the not agent, -- A -- the the like are Zoom solution, right? last essentially, innovating our won is right? look think for year, today, and at just going the built tested in. for only to everything Center lot I keep Center we well, we -- Contact well. seat This closed We quite few deals internal X,XXX very support helpdesk. contact IT center Contact

quickly. protocol I features more in any think the and very front more adding

huge are doing very team. product think -- we our a I confidence have well. team I for

those which our on-premise need center done and like right? better you, resellers, to or no well. and a scalable customers we contact change deployed, sure news other make matter over job, And we we our sort of learned right? because works with to the third-party center so also buyer know, them contact model have solutions should The right, very should has those Zoom for solution let contact go-to-market think working the on because go center to go-to-market honest right? be all deploy product traditional cloud past is the I a However, right? And we the change side, good XX strategy, market lot, months, different, to

to that I this on focus So part, we need think year.

our question from with next come Tyler Radke And will Citi.

think the guidance you've here. profitability the some was to restructuring. stronger expansion just get your of total low the the scenario reacceleration takes I'm a of decisions on made Eric, pretty in margin and coming consensus relates hard you've about Kelly But kind future growth margins it X%. Obviously, you than a of just for clearly, wondering from revenue year to in talked here you So you're a do where as much expand about to and don't from guiding about about puts and willingness how revenue?

Tyler, long-term -- on you've always is to XX.X% for our gross in And margins. be efficient we said on possible year, right next expect top as our of which we're we focused margin. seen as target being

driving terms our margins, to for. In always really in what we are line for watch investment operating for top we that's is of want opportunities

So we we throughout go-to-market, top line invest we priority. remarks, with we the if first going will to maybe can prepared see balance that But we're year would do in continue and watch opportunities to growth, that profitability. to as programs, make drive opportunities these in our the for that to be channel decisions said anything

we're committed beyond that we the guidance So to today. expanding to think don't we're set, committing I certainly that

to go-to-market As continuing again, as as continuing to well through portfolio. is expand accelerate efficiencies our first product our priority

has Karl Eric, audio question. next the UBS's and Keirstead But only. Kelly he's on

video. ahead. to won't he So you via Karl, go appear

I'm good. Thank you.

Sorry.

to case, In Mizuho. with problem we'll move that. Siti with Panigrahi that on No

taking for my question, Thanks Eric. Kelly and

point. some think you kind I online at year's segment know bottom some to So about growth, this when you're of expecting

now I So online expectation you years, QX. in what's renewal? when our during will is And your enterprise? I Phone. QX, is, renewal few again, segment think to it know are come about versus what last know you this pushing customer

now renewal. right pushing you're products to other what So

when And six we start what with or five -- a mid in to of QX the couple of stabilize year, which see you I'm during are for for decline that quarter-over-quarter So online all to in to we quarters, the to is about your it of it stabilize, to from about? then the probably for we've to consistent When QX they get last like quarters. a seen see renewals next we expect perspective expect are And next dollar been of saying -- kind question last year, look last was the initiatives from the which part expectations at of the starting amount, meaning place. dollar year continue terms sorry, that great. we've this

renewal. about Enterprise and the Also how of the thinking part growth business, you're

Yes.

opportunity the is And think talk for platform and which an our features platform. enterprise guided, Enterprise strong opportunity then, the to to a is our there to always customers we So we customers bundle, opportunity renewals prospects to Zoom a our were not, be around expect right? help QX. in great to of full through One, renewal the There's renewals as the natural going they're as do And course, we of that period. understand customers

be is going previous and against of But for have experienced we some there. there already going to some QX. unfortunately, year quarter that impact However, we've comps that QX one through the that be headwinds currency more to there's impact

And Sterling the with has SVB next MoffetNathanson Auty question.

we'd to just just that year, the we're on clarify meant last fiscal on correct? fiscal maybe that turn Kelly, online gave, you that answer, see you answer QX that this in now 'XX of QX,

yes. year, this Yes, fiscal

FY' For XX.

want didn't just so. make think I people to sure fiscal 'XX

Not FY Sterling. 'XX. Thank No. you,

welcome. You’re

enterprise year So and in the what of side terms and at and other expecting qualitative least into for you're and retention expect the expectation maybe what net What's revenue commentary the of you it to go customers on customers. questions, around I some of from from take full around into new contribution the renewals dive enterprise. built want to

happen So to deliver that what needs enterprise side? for to the

renewals we last So past over of months, expect last them -- the contraction what the renewals continue organizations at have same some And about and is rate. to reductions. XX around in year, world expect talked we that seats as we've are the mentioned we consider seen in -- we kind the experiencing the

side, the on But ownership, of that. to of to the on lot expansion through really total them cost opportunity our includes with customers portfolio. total value of a which working the bring our So other

especially So saw, resonating economy. really, this you in very well, Phone as really

small, doubled while from absolute the dollar doubled an Contact it QX still small perspective, QX. center ARR contact for And from it's Center, to

kind So and small of 'XX Zoom in that again, terms that comment. center, Sales expect but really trajectory mean in all but accelerating to FY is of dollar do see contribution, of of exciting contribution as a contact And of relative a its that similar terms growth. to FY that in well, overall we contribute but then, really 'XX, for own. And course, continue to it into which through IQ dollars, small this coming there's then on I perspective its year, start from accelerate in -- to

with Stotler from hear Blair. Matt We'll now William now

Maybe just a on one follow-up -- on Zoom One.

terms early are color And quarters in portion specific that customer the the products? out and adopting whether would historically. helpful. some meetings with there seeing couple mentioned love those size, early color strength that get bundle be that rolling of that of the paths there, I what for of relatively would both going then some days, like they're other product core are to adopters, on buying departments a you've You customers seen versus obviously, maybe the of characteristics new you're Any in Zoom Zoom One to right,

are new and Phone. includes it the Meetings, really is And and Zoom it's One Chat it's also just One what's think that as bundle, interesting amazing well includes as buying that I reminder, customers Team Whiteboard. customers a are existing about upgrading. Zoom Zoom but It Zoom not

full see So effects customers embracing really of the to starting the platform.

customer We is long-standing on that standardized Chat, now super to has we're Team XX and which excited to ours One moved on see. the have Fortune that bundle of customer Zoom a Zoom a

bring So you to it terms but teams broke starting that's I QX, are selling. the our of want really percentage that when example to sales platform don't the what -- are how out take starts how them. Eric? customers of Anything we in to the value happen to to full of the know QX it is exposed really And can the these lead exactly of add, in enterprise

that's great. No,

Moving on Rangan to with Kash Sachs. Goldman

the seems and we should the start of the the vis-a-vis wanted what Good reconcile to growth how to be Kelly. to mirror going Eric guidance pretty close of anniversary understand I to attrition forward should see we SMB then really effect guys, to just and you anniversary the time, guidance might what and seeing happened of what but the real help a relative this business, a have incrementally be enterprise by acceleration so-called conservative. understand the should And level, higher at just effect still be to to seems us we this quite business.

Sure.

remember, So higher. The of higher online it it the was what because those stabilize expecting one we the 'XX, Kash, still FY in a to are from down. portion as dollar in while happened is year, perspective to much came amounts year-over-year earlier down of is it thing were dollar quarters during the much that where business

tamping impact have the still the of the business. the unfortunate of online down business we growth So segment of the Enterprise

seeing there. so And you're that's what reflected

as is back And that internal stabilization of year reacceleration half the said will 'XX. to help we to year what FY always into so of next the our see today. this occurs And we've we forward really that's sort models year, which look this in

Got take it you fiscal effect Curious, be will the positive. why the of it until help it. year Kelly, why see Can now? us understand takes timing to -- another 'XX net from does the effect

of first combination, the year-over-year. there's down is Well, still Online all.

not to And start to the it's half second I trajectory. until the was stabilization to online Phone down how the these and its and are the are of is while believe, indicators, IQ from really And for the but to in you year. the see expected year back that -- growth Center very where so comparables positive right, year-over-year newer in now Zoom Contact and early But Zoom going you're think which Zoom half still seen remember so stabilizing, dollars X, are -- contributing. on see even still you about still all talked part of they're the year-over-year of about of of Sales. until Phone, this back life, One their that's how other turn Zoom Zoom And great, coming they're is Phone, strength we've we've where then all Zoom about though if products doing

a contributing. ahead little and get got to just we've those time maturing So products really

Weed. here Peter We'll from Bernstein's now

stabilization to think reinforce when top the coming an was ago that guide up conservative perhaps, upcoming you've guess, downside the gets even better than business anticipating quarter that of conversation, all a reasonably more things. year as what opportunity take of a like to earlier only us been hopefully, when with perhaps in of what start increases a see of has this me about we're case from in things the product And which bad, you've everything here? that fact that a some to there. into follow some go of on I'll this this types bit what's the Help some Maybe out on chatted do revenue start do business, understand we lift the year-over-year, in to you've would Or we of why year be we account X% line, the of this might be. little of appears that these I on online may the this the even and kind is one, shipping than year about that that smaller pricing

impact So didn't rev three of compared which fewer as which the remember, real for as we currency, rec days last QX, is there have impact year. definite days, of well of the fewer to being three impact has as

in sell gotten And to the impact every ours. definitely 'XX. and team than I saying, can a this how year I the Enterprise, year more exactly be is to including to year-over-year invited to CFO that imagine we sales the continue in QX sort the to have of was having of is that deal is because you then with see lapping at sales So visible CFO that we're elongated to speak going And scrutiny, FY CFO sales kickoffs fellow this learn because experience of is having. the cycles,

they're longer is And so it very just their thoughtful very, means a and about being little bit taking everybody purchases.

of set we And was into so consideration year guidance. taken all full that as our

those this year. half I of things second of many are in guess, stuff, the guess I

that conservatism thing new. you the like kind really that reason, this so just in on year impacting? stuff brand much that it's already the really which things would there they're increases some don't that on And be going you've are is bundle, Zoom to be price created react down hope are to do been are down of kind which so the for this business? seeing can't have some know is say really addressing to are a to this another any legs unless how going just relative additional you're to I how are we You leg anticipating of better been to going not how people this long really think we standard than. of putting floor One and out purchasing of forward, we people is well kind carrying Or

cost there's is I very state year. the cautious ownership of we value a us comes definitely visibility at being customers, until And that there everybody going we our this think incredibly as bring it question when economy. are to this. where the expect well we're of not think of our to to could positioned investments, come we while total and we the impact with that through the better least of rest is And and a about or potential recession through the to

Taz next Koujalgi question. the Wedbush with has

and sizes? that deal somebody One, to Meetings say Let's the get the has Eric, in what still spoke Eric. in when for seeing from you're one kind Zoom the quarter. deal that, pretty uplift when early. you about One in I One you there? today is Zoom understand difficult but it's value a the questions, is the the And Zoom Zoom Meetings, Two uptick what you traction customer Zoom were sell of

great it is from a do a And opportunities, our not cool they like Whiteboard right? lot other It and SMB of -- use customers, comes upmarket Normally Yes. question. features. some

They not they opportunity. and especially enterprise Center, right? right? trust the uncertainty time upsell they’re services example. and Zoom is a would into to When They more challenged already Whiteboard. what Team customers, like deploy for economic Chat, a most tool This leverage provided with right, those great then upmarket can and Because at better and for doing features they're know services customer, the As a perspective. from an And total brand. innovating. to know for our window platform, reduction, customers, given Zoom also my great cost more consolidate, are one why and Enterprise they Contact other the Sales, they we trying example, will you toggle service look product, commercial is Zoom IQ more understand be Whiteboard kind than our of of This they others, those know

in do what had getting so I you've So guess, from factor deals uptick the uptick seen that using you customer? far, as guess, What deal see what's I early in, I the, you're the How the Meetings dollars to when Zoom value? an from -- using that the somebody is the is goes or One? much Zoom the upsell just some typically, uplift you've guess,

to is It see, amount. that us what have just we on we out, which more the I The really than not is it remember that would -- they I depends that exactly customer. uplift is the important retention it's can't remember in as really thing the though, point more that the customers dollar have showed rates retention I Day, when chart at product more -- like Analyst deployed. than that one XX% improved It's

Chat And so more to lot Zoom the a there, having much Phone brings Zoom including intensive value of one us. us is really that the in platform value broader like a of and

it. just free margins. Got follow-up, margins, And U.S. last operating one reversed higher flow Typically, having than year. see customers cash companies -- we Kelly.

from guide a the think margin. free points a from comp. point I operating that in your taxes Or by again, as at there lower and about Is -- you reverse cash see believe, I -- we stock-based that permanent. that margin, had would cash implies Does the X flow more of future? drag do

force but normalized be normal disruptive a it are a more perspective. from what which cash tax cash payer likely now between here we of as very now, last slightly two I to, think relationship year those for that a tax a is see we're you're back on getting more we're Given was to to eternity under,

Matthew with Harrigan Benchmark. to on Moving

out to I'm queue. the take the sorry, message. I send tried of I myself

No all. on in ahead go problem case All move with Power we'll Baird. that at Well, and Thanks, William right. to Matthew.

Zoom want lot did of have quarter. Phone. answered, like but been strong about questions I a particularly A Great. my to looked ask It

adoption? acceleration probably a be it'd revenue what is there color nice any trends? think One become helping. Zoom component? push on seems to you're And to I just be around to XX% get perspective in provide able great pricing does And Phone any this But a the other around Zoom when

Eric become especially it's XXX% in in we to and the XX%, standardize In back market as point this around, disruptive to vendor get price it's opportunity in when by economy very, going X still and terms be very those also all the early on excited 'XX We well there's FY attractive. this opportunities to had lot as looking of servers product. very a September just gained economy, year-over-year because -- the -- of year a that of growth it's and a are lot rid this we And there mentioned, in to about even is be on-prem to available. the companies way as have, for it's you very momentum. of value proving sometime in And getting

it's know don't adds. QX remind peak expect I and going in really just continue. to to quarters tend to QX -- be to that Phone expect we So our terms of everybody, Zoom

an to had we amazing bar. in QX, new while additions So the of number that I expect don't necessarily be

to expect We still but right. QX, but to the very to up be and seasonally the down in be continues excited, momentum

Walravens Patrick the Securities' JMP has next question.

Eric. Great. for fun I really have a question

XXXX, in in also Eric, So in invested deal guys you [Monday]. X:XX:XX], their you before [indiscernible invested

And feel do two how you work VET So feel you technology? how collaborative the do spaces today? about about feel about you management. those How do

ChatGPT, your better. to So should the it’s given questions, I let this it the is Phone launch maybe question, answer

right? Because in they’re in also also a them monday.com as well. integrate they fun reason like Europe, with I deploy invest and answer. interesting, I you Zoom service, anyway, the also also us a they So -- I lot think would our especially might right, -- give to customers the of customers, why Well,

customer partner working Webinars See, together, to And far in our I lot right, as I I streamlined and like and right? why see COVID, them, not with are deployed make why the and And a we invest right, events, as to Zoom for think receiving, of We leadership, our right? Events. also like during sure those more one also know. -- right, the especially right? a more components more them, them. reason events with it's We’re we your a help for management. Zoom That's in-person invest to some why hybrid events, I integrate platform, to pure right, that's solidify technology have customers further example, opportunity we from other in think perspective, to

think work, well. do we we support I company in think That's invested given now why hybrid more another they will a them. reason it's I

much pretty much answer the ChatGPT, can pretty my I that's maybe So that's fun but as as do. not

for time question from will one Ryan Barclays. with that have do additional We come MacWilliams

you same is of the But in question question. thinking kind how amount you spirit this of quarter? Pat's filled Kelly, My share about remaining let's I like guess, your repurchase are authorization the a new acquisitions already at you authorization potentially today? where Or a looking are look a generally M&A, have would And at solutions? terms Zoom competing for in product adjacent you of buyback.

other buying has M&A, technology in look a of we also at But to by for you've at there development, the us areas very might of looking at the terms been which both. and acquisition, terms for We've Center in seen those. accelerant that to great those our look as successful space past be in the that sense us. tuck-ins In accelerate been Contact continue with Saudi makes leaders

place strategy. the indicated, we to at continuing today. about And every capital authorization talk And of our have of the allocation our you is to Board do list. not, course, as -- We look we're we in quarter, So at both. M&A a buyback top

as to again, in growth the line we making -- possible do will for to earlier, #X to and arise. opportunities our for we And our look the I if continue our deploy best have flexibility top capital focus is way now, said right opportunities We that investors. reaccelerating that sure

at requesting why, And for for that's moment, least hold authorization we've so on an a decided the to buyback.

that it you, conclude to back everyone, for ahead comments. any today. Eric, additional or I'll and go again, our for does pass Q&A closing And

Thank you Thank you our time, all. to I'm care. all. really pleased you. love Take

Bye, everybody.

today's everyone, release. again, conclude And earnings you. Thank this does

we Until your As participation, all forward and the day. enjoy to take rest look we always, again summer. seeing then, and care spring in the of you your for you and thank