Zoom Video Communications (ZM) 22 May 232024 Q1 Earnings call transcript

Hello, everyone, and welcome to Zoom's Q1 FY '24 Earnings Release Webinar.

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

And now, I will hand things over to Tom McCallum, Head of Investor Relations. Tom, over to you.

Thank you, Kelcey. to fiscal video year welcome first for and of quarter XXXX. everyone, Zoom's webinar earnings the Hello, I’m joined today Yuan, and by Zoom’s Founder CFO, Steckelberg. and Kelly Zoom’s CEO, Eric

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

forward-looking During and from including initiatives. quarter this call, benefits the product market position, macroeconomic expectations aspirations; regarding initiatives, we will the expected of our such for XXXX; regarding make for financial environment, strategy second our first financial year -- and go-to-market business statements, outlook initiatives opportunities, and impacts our trends; growth the fiscal full and and statements business

filings detail Annual on on including may we XX-K webinar. SEC, we discuss in that subject These and to predictions are today’s results, could Report to statements Reports other assumes with Form forward-looking may are and risks our Quarterly no Zoom that statements statements in actual affect Form only on XX-Q. and are and obligation factors believe materially. our forward-looking which financial performance results that today, any differ These our what the we update make based on

me turn let that, over Eric. with discussion And to the

Hey. for us Thank joining today. Tom. you, everyone Thank you,

for received customers feedback trust the investors. which are our strategic quarter, I support, focuses, shared we and grateful you, As last have and to from execute with we that we our on continue the

social is communication Workvivo, ecosystem. our about. intranet closed forming and are into modern central of app a Their hub, acquisition company's the and employee we a we one a solution excited which combines heart digital platform. month, employee Last of super engagement Workvivo

customers, Zoom to the regardless work that knowledge solution workday, all-in-one informed, a workers will of keeps allow employees or feature-rich and throughout offer technology collaboration remote, our into connected Workvivo's frontline hybrid unified in-person, Incorporating us platform and style. engaged,

According The to who are to out. is is and mobile Enterprise X working Workvivo burned feel customers have our times on productive to times team XXX% employees. employers X this less opportunity and culture hard communicative Apps delivering more with capitalize aligned of and happiness workers Today,

engagement. excited forces and Workvivo so bar help are the We raise with and our to join for employee customers communication

towards In elevate solutions in see unique forward and Last our across quarter, vision portfolio. strong AI is to positioning productivity expanded means our we reiterated QX, and highlighted flexible approach nomenclature. and scenarios We Federated permeate AI made AI, we federated, empowering considerable drive our customizable and and responsible. to to outlined generative businesses’ progress our are to vision. that that

refers Empowering team and customer of that to as with as well trust experience. solutions security, their enhance productivity and improve the responsible customer an means control individual on building privacy, emphasis safety. data And

in-beta we to set and Email Enterprise meeting and AI At compose, features Chat support of leveraging ZoomIQ’s Connect, unveiled new summary. generative

they to on brainstorm features new catch long participants chat building also summarize are threads, missed, tardy We what meeting Whiteboard. up in and

systems. Last safety working interpretable, AI an company investment to week, our research steerable build in announced we and and strategic reliable, AI Anthropic,

Zoom’s partnership assistant, Claude, Our with bolsters be Anthropic’s by to Anthropic to AI entire further platform. allowing federated across approach our AI integrated

the customer toward guiding includes into powering relationships to be Zoom portfolio, Management. Zoom plan in-beta level. next Contact Contact our able self-service layering for trustworthy now companies which Agent, Claude Zoom Virtual agents Center Workforce With Claude end-users, and resolutions by We will begin to Engagement Center, take to and

to increased Zoom and like wins. fans Platform customer and field, of for that has MLB long its reviews MLB And leverages Baseball. power create our of to baseball Contact some an to real-time thank engaging strives broader used unique quarter, launching connection by we transparency to enhance introducing the League expanded relationship on into fans our moving the teams. I the partnership Now would first-of-its-kind to and this to Major replay Center Zoom a fans. its and to experience on off technologies teams. By operations deliver and Zoom strengthen

reliability entire I compliance regulatory the next-gen their adding Virginia well as build Center will to would XX,XXX Zoom’s Zoom center, a Tech relationship brought for like by Contact Meetings expanding community. Phone and to to communications than and contact and to deployment. platform thank leverage our meetings, to integrated Zoom phone seats unified Virginia expansion this Tech as university more solution We Zoom serve large responsiveness, across

for its I Zoom Phone Seats Employer and years IQ grown across exciting Center is solutions workforce generation our integrated Vensure well Agent few approximately so QX, plus significantly and businesses. Vensure Virtual M&A. their next Services, our with adding leverage would existing through Zoom thank also their customers see the us invest Zoom sales. footprint seats, XX,XXX past like hiring Phone Contact as Center as products to AI-enabled and expanded has and natively by our which It Zoom Contact In in to AI-powered XXX

Insurance and ownership, to MPM Contact salesforce, Center future total integration roadmap I attractive and the want for vision its customer Manager, Finally, the of deep provider cost with services Australia's for Plan chose My the Disability for experience. leading Program. thank National Zoom

Contact end One. also the standardize they our And Zoom to with journey on of platform, Center. decided did the Appreciating value not

you MLB, providers. of We deliver MPM, customers and customer to worldwide. Vensure, so are all Again, clients partner employee their Tech, to and world-class MPM our with a disability experience to Virginia so help happy much thank them and service

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

everyone. hello, and Eric you, Thank

that guidance We in are beat QX. top-line profitability we and our pleased

been XX% after in all waiting days have margin Here and revenue quarter. Phone revenue are moment sequentially; milestones: for our a few the our quarter, Zoom the the non-GAAP three long for Online surpassed was exceeded fewer slightly gross the adjusting our first, second, of in term target; last, up you XX.X% of

in end guidance. $X.XXX year-over-year total This above up was at in billion, approximately currency. and our came the million result of X% $XX constant In revenue QX, X% high

XX% grew year-over-year of XX% represented from year up XX% a and business revenue, Enterprise Our ago. total

As optimization. the and in I quarter in Online from initiatives price benefited increase flow many business buy our as it milestones, quarterly improved the the mentioned including meaningfully

addition, In saw churn X.X%, Online average and monthly QX we decrease in last ‘XX, to FY of X.X% quarter. from X.X%

this expected. We part that are pleased than our stabilizing sooner is of business

customers year-over-year The approximately grew number X% of XXX,XXX. Enterprise to

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

our respectively. APAC we reorganization. some and stronger experience Russia-Ukraine distraction, decline The Despite to reduction expected, prolonging the due dollar. impact headcount was attributable X% decline the X% war, headcount EMEA subsequent X%, the the revenue As the by process, year-over-year, across global distraction stronger attributable reduction and in sales dollar. the did The outsized to was the of announced primarily declined while the and to EMEA and sales primarily in local previously grew due team the Americas to APAC regulations

participating exclude expenses, litigation investments, losses settlements, undistributed all to restructuring to on on and net results, effects. net associated stock-based payroll strategic which expenses, non-GAAP compensation gains attributable earnings securities, expense tax our acquisition-related or Moving and associated taxes,

of margin gross was Non-GAAP an XX.X% QX improvement QX XX.X% from in quarter. and XX.X%, last in year last

optimizing due we We to sequential target are term usage across our pleased and centers. cloud as that we improvement drove co-located have achieved mainly our the public long data

gross non-GAAP new to we ‘XX, be AI investments FY expect reflecting still approximately additional XX.X%, margin For technologies. in

and development $XXX approximately to expense year-over-year Research XX% grew by million.

QX from last in to year, including R&D expanding reflecting our AI, expense and product Zoom a more. in Contact As total of of X.X% percentage our revenue, Center, portfolio increased X.X% investments

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

to This of of and XX% expense XX.X% G&A last X.X% represented grew greater $XXX savings. XX.X% year-over-year Sales back by X.X% and declined $XX up of expense year, of approximately last in to or focused by from million we year. down achieving efficiencies million. QX approximately revenue, X% from revenue, as total in QX office on total marketing

end million. per XX.X% average operating last from last and guidance year. weighted $XXX non-GAAP earnings diluted to operating the above share outstanding. shares non-GAAP in million Non-GAAP our of QX the on of income result QX $X.XX, high approximately diluted XXX guidance than This $X.XX end in QX Non-GAAP our year. expanded improvement XX.X% $XXX of translates was a was of to XX% of an high margin, This exceeding million, higher

quarter. at driven our during period of the end year-over-year billion, guidance billion. renewals This sheet. $X.X the to primarily $X.X Turning seasonal up Deferred was largest our renewal balance by X% is slightly above revenue from and the

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

of compared XX% revenue the approximately FY and RPO over as the in XX% of FY to recognize XX% ‘XX to ‘XX. QX total next of in as QX expect XX We months,

macro The Enterprise recent from percentage shorter deals a in arising RPO primarily sequential in as to increase of RPO durations total current environment. contract in was uncertainty due the

down X% renewal declines on of and account deferred shorter trend the year. Enterprise We QX expect durations recent deals and which X% revenue throughout seasonality, to QX peaks our in to which be year-over-year, into takes the

$XXX cash in and with flow million, quarter cash. cash quarter million last flow compared QX of QX last $XXX Free the in excluding year. was ended equivalents $XXX operating securities, million cash, cash had $X.X the marketable in to billion restricted We compared of million, to approximately as We as in of $XXX year.

billion. flow legal and to for this expected margins revising our net cash and to occur now year, payments occur expect of We operating settlement and respectively. QX. in ‘XX. free outlook XX.X% flow to we were cash the cash and flow largest are Due occur we FY expect Our $X.XX a cash cash in to XX.X%, later ‘XX to free $X.XX the to our FY smallest flow tax be billion forward, going in range In QX,

guidance. turning to Now,

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

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

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

see our out some the on how coming is we to stabilizing, all wanted Online in business As it give one-time additional we playing you quarters. color

FY ‘XX. to our expect and We in Online thereafter QX flat in approximately be be $XXX relatively revenues million

for the to and outlook $X.XXX to are approximately the which X% raise at profitability of be of expect X% now We ‘XX. our FY growth, constant billion, to full year or billion represents We currency. $X.XXX in range pleased midpoint revenues in the top-line year-over-year

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

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

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

maintain and committed to growth reignite the in to so strong profitability, right look way. we we As are doing

our to achieving recommits pleased recently renewable issued greenhouse our have inventory, gas data Zoom operations XXXX. regarding second report, our XXX% are energy to for We direct additional ESG which and includes by emissions

Our in is also product It It’s reductions, employee core value important embedded as is ever. of care corporate while fosters in emissions how inclusiveness. our supporting giving. as evident our and

from heard You Eric. it

We generative bring quickly AI are modern and the empower extremely of to benefits customers immense innovating our collaboration.

and in by set amazing most the fortunate customers. And be brands the world. We recognized our are trusted to and are we one loved of of diverse

focus and vision: made In structure have our connection. understandably time profitability. but commitment term, have One growth size, the the and very human mission limitless a that to to long-term distraction QX, caused related same delivering our team incentives in refreshed With exemplify decisions some future, the we we platform at short on tough and

our you Thank to investors. our team, entire community, our customers, the Zoom and

our please Kelcey, that, queue With first question. up

Thank you so much, Kelly.

move you All Kash, please. for Marshall the now will And Instructions] We'll unmute [Operator go session. no ahead right. with hearing to Kash if on Kelly Morgan and As go from will ahead come into we us on question move Well, response. come Rangan. our and Q&A and Sachs' first mentioned, Goldman Meta video Stanley. would,

right. All

of some Perfect. upside taking noted of build I of taking think that of down, development the down or investments versus AI of Eric, that of the gross or giving that that was it you Appreciate kind it. ecosystem guess noted when were and I'm you kind got -- quarter I work. going AI investments. mine the I just want leverage but versus I in comes margin you to for saw to kind some that, to make? back how on your wondering, where Thanks. buy to just AI that's you're judging not

Yes. Good question.

at in for as it a right, busy think two the also generative the have have event I recently you and positive team importance of to front AI-based. of well to we the AI largest like we we up just few during Solvvy Internally, of AI acquisitions, AI momentum. looks AI. if right, seem several all because woken look CCaaS, AI the understand years, have on Actually, been – the by particular

we I our think, own have first of AI do all, team.

We well. developed as AI have models internally our own

also Enterprise take approach we We Connect. Essentially, announced very will AI, approach. our up collaboration We to announced open a Open AI. with the the federated

We well and with recently open Anthropic as down going AI embrace are also also road doubled on models partnership available, some our that. maybe we the source to

So really doubled the Again, we top down all, end and we And yes, team taking approach why user we model. centric, like dedicated excited a momentum big truly leverage not. look about why We with partnership, we also, are very from improve of AI this right? some put we we very, on sit really our is AI. That's the which Yes, at their a to are well, customer perspective, API federated First everything as have when experience. our product say, on right? right? customers other can can customers,

Thanks. right. All

Thank you.

And America. of Michael Funk with Bank moving on to

you, Thank guys. Hi. Yes.

Eric, you, if for question could. Another I

an think within detail SKU? platform. own integrating as your then monetize your about more into enhancement do how you about how it platform? Do separate on you AI Some a think And or you as AI more

would a It's I the question. is good about both. say answer

help we sales, monetize [indiscernible] people internally improve remotely, Zoom them product. important, right? reason IQ the When our can extremely to their for or you right? before It's even the take to at And Zoom generative the You IQ models and AI productivity. that example, language work all way the why for sales the how home That's really help announced send large sales momentum, right? back for developed AI We us, right?

Agent of e-mail at compose Management beta, also Workforce product well, them leverage one also have elevate look a chat hand, you all features feature-rich experience. a platform, AI, as Solution time, and -- on and Center Virtual same the and portfolio, every the the features the Zoom to recently collaboration Contact empower AI in meeting message will like almost At those the customer our summary, and the be empowered at on based the So right? to look we and right, we

AI improve Zoom just tremendous because Again, us. I right, full as for monetization a opportunities is the at how engagement same At we AI focus think time, AI. Workvivo, right? Workvivo, communication, opportunity them does example, right, Again, and another example, a to real Zoom with we bring just opportunity us IQ here on of more acquired lot in product experience opportunities, the employee leverage example. as communication that for one to for we of think

Great. Eric. Thank you,

Thank you.

All right.

out Sachs. to So Goldman Kash, let's driving, there go again of out he's I you're so think Kash to going stay with video.

human. bot, out you for just you I'm I'm Thank watching video a appreciate that a turn not on that I much. very my on. know just you I quickly so But Exactly. very safety. will

take. get I'm curious So to your Eric,

going you forward, workflows announcing drill little you to of content generative while I deeper mind, a with if identifying point very the many that them LLMs want software lot right? are to, partnerships scenarios based they companies unique uniquely differentiate companies we're a that and and don't and data process, where productivity bit a at AI also are on So

will So ultimately just strategy. so a in scenario have in AI there's everybody that regard, generative UCaaS a

technology, a forward? how be could take you first source advantage your Zoom? get leg Zoom very start because about Sorry how you've the your for behaviors the much. productivity an the products uniquely qualified the you core these of which work capability that scenarios are enduring of that that so So knowledge more can the I'm you and of user same contained LLMs job company providing in using growth and competitive amazing word productivity base, given was to do unique all is but next did to again, the this vast as chapter base think curious, of when you to Thanks have UCaaS with of core and

questions. Good Yes.

the over one call. a be We integration join Tesla you to click and Even always right? you If can great on video, the the anyway. the have a drive just come will audio Tesla, cars, use if with

world, So going I AI AI, AI on first years industry, back right? generative the all, to at all, look just you think, if not two you say, your is my AI of do question, of you what's a god, very important, first given of oh things. back, if start in lot things So

years to investing why own few started for a reason developed developed models. sales already language our understand AI, IQ on internally The we Zoom However, that. back. our large should in we in base was

things is Having as modules important. it Anthropic companies. example. Open is important proprietary right? is, to said these that, really collaboration, how most modeled on data, the important. The for well, there a model, Zoom leverage extremely are comes Facebook fine-tune has two right? communication, When to That your Take AI and and Google those based One Employee, right? thing to

We like team we're let's lot a talk Zoom internal the tune it AI about also the very and Not our model accumulated the just meeting Sales with embrace. every for itself with going to have customers. say, data. right? data. right, only will fine meetings, day, because model sure How for so use It's of, important, We evolve this many call and the to also

given to years’ fine important. I data. take however, to towards differentiated deliver experience model think how our empower our for is may us a the all At It's AI this our help to fine-tune experience we models the probably those If right? effort, have the many AI is right? a data That's customers. you that's tune any us meeting, that's customers. to proprietary model, think to I these let's lot a truly of industry, right, with to than say, have, we unique to that to how example, fine-tune same more for deliver very experience, And you that -- have it. other Look will anybody leverage company, something think -- a unique time, unique greater why reason to AI how our else, past data this at

you Thank Eric. much so

Appreciate it. you. Thank

please continue. sorry, So

to on move We'll Okay. Blakey KeyBanc. with Tom

see detail some needing question. possibly product create Microsoft everyone. debundling are you Hi, to separate There been I competitor for my that collaboration SKU system taking and Zoom's The updated of business into good -- becoming color know with to lately Eric, the has of teams team's Kelly that vision of to component just noting pretty with news terms business with communications guys. is with operating the Thanks for Online is and a -- the the how important yours second large their product. of in guide is large stabilizing, terms the which the implied great. Online enterprises good with half. Kelly's enterprise in for for

Zoom the the of of how an just all, about, the at impact thinking component importance opportunity is understanding wondering, collaboration potential if Thank you. or just there get to your So product? to

made Officer; next seeing hard Sales forward the to to to team the in some of seeing leading focused with for And necessarily our over the Chief great as internally to due and about adjustment don't organization expected, quarters. feel now that and and of to the we're noted, the to distraction decisions think that light that the Wendy I of we get year. is and the you're sales structure we related ready to our come as now As earlier couple talked but them we've we competition looking quarter, execute just we reorganization, especially rest due the the Graham, about online that more

Okay. Thank you.

question Stifel. Lane will Our come with next from Parker

for Yeah, understanding hoping compressed better guys. is quarter? or was that progress the give a to set how factor Kelly, of was of board? impact pretty be more will the taking it year? Is the duration through just we you across I during in -- particular that degree much Thanks could contract questions. How a us what the much any an actually product as

getting updated be is to pretty across is thoughtful But uniformly order direct are taking and about say, the we every new. every of guidance that talked should segment that, it as quarter. business, It's not in time giving deferred [Technical expect the especially was product based just we be Yeah. nature. term to I thing revenue our to to make on, which well It decision, sure the they not which about deployed, we themselves long buying Difficulty] for our -- as reflect in coming decision,

it. color. you. the Appreciate Got Thank

Peter hear now Evercore. will Levine with from We

Hi, Peter.

question. that use adoption Thank center, kind know terms the you Eric, for is and like where across Just most of case one where AI? video, for seeing the phone, you of AI you today. Maybe, curious taking client think about you're you when my you do of of think uplift to seeing envision in contact

many not start fronts, agent we on example, related the the and that to right, going virtual to the lever contact think I a sure, like going portfolio, features. investing, take right? but contracts and the are for we Anthropic center, entire from only are For for

also compose When the or last and AI as also our we year, is, a candidate And send chat bring core right? platform, customers right? meeting lever summary. team generate We right? lever it's we chat. to to also China right? understand We It at the how to prospects, have well. e-mail, extremely either the that to Remember, do information the to an context, and e-mail to kind you relative generate of also you message, help all right, back important, leverage How right, generative right, our message we and is can or email you solution in have also meeting look

minutes a you be like might right? the meeting, meeting. you maybe even areas, later like think of later, you say, the lot joined I XX to

get in You a minutes. really Yeah. Can happened, right? positive what stand you to had summary quick the want over

generate to well. AI have also just as You

cases, every be almost key That's looking at experience. use You right? capabilities. It's we by will how as also think those well. almost empowered that of can kind I are area, lot leverage to why that generate right, to AI of improve a get

AI. also Open announced an great is Enterprise the collaboration companies, lung to small that's a every revisit a like and take ways to leveraging understand only -- have Are AI. almost approach our federated the the feature why, You By bigger something any not a the with monetize. internally, any of are team. approach work and features? fine should language lot how to companies We AI, own AI we just for large company you empower there we understand their also have for AI, have that those there ways This at we example. are said also three companies model, take them tune with So That's It's as earlier, right? to Connect, I right? why large data and It way, holistic we things, models. companies, also do your other not

Thank you.

you. Thank

moving Rishi to Jaluria with I'm RBC. on

Eric, questions. you taking the want to my train for for little stay on bit. All so AI Thank right. much a I Wonderful.

internally. top use and because signals, great that's some there's And like to discussed opportunity. the being a like about ask AI for to of adding the about solutions real-time videos sure AI of around talked tools obviously like opportunity verticalize things doing some feels and want cases feels to I interviews video start it You've you for maybe potential a one distribution, have huge giving on example? I'm big

thinking monetization prop of more make that are bit to the out straight direct that how verticalize? you And box? you. that very is So little a opportunity because maybe to can understand easy want the about maybe Thank is value I something just

so I another comes One a are ChatGPT But to at right? industry, anyway, By right? supported Contact question. the department, use Zoom answer things. great There IQ another the vertical part. one case level, opportunity. I vertical, on. specifically I open You two is for sales departmental AI sales ask or is look a targeted iOS it for Sales When Open a way, the That's question. should download are to you say, app, mobile would right Center our is

You're opportunity. so every opportunity. is road marketing, That leverage right? build That's differentiated one department use right, HR right? almost to all down department, the to the solution, in they How AI a Zoom,

Another data, This fine Take example. care, by with is for right? opportunity right? one on together with one telemedicine, And example. right, proprietary tune customers, right, far right? Zoom leverage really that, to about this the and health vertical AI is and industry. also How working those number model, the

Another as right? how law are is use those also also lot to firms a of to And the example another using is Zoom lever opportunity. empower cases well, AI truly

as opportunity truly think I AI I brings said us. tremendous to earlier,

So that. years. area for already The this news, invested heavily we're in leverage we got few to good a

much. Awesome. Thank you so

Thank you.

And our next question Catharine comes Rosenblatt from Trebnick with Securities.

I got lot two a of In years, All happened. it. Thank right. the you. has last changes

office. First, now to people the everybody worked back are from home and going

of the where everybody So terms marketing, has and when some of Room in areas changed was thinking of that you want equal viewing. your Zoom Room actually any opportunities your then in to you're Zoom looking at be your products. I

that anything? So different has that? changed anything seen from Have you

news Good questions. anymore. AI about is Good question a not

So you're right. so

use look I a work, usage, reserve right, account, video the the a try right? right? more, you But think, and the less. to customers, however, how every a as consumer-centric to during desk, going COVID, to think support to are those When the just that more features, to not work. basic I consumer think content hybrid support support and remote only all like I hybrid work, Zoom enterprise with COVID, they leverage if right, at you family, have you cases, of a account right? Almost company After less usage, lot

to Workvivo have Zoom kind also work, of Not right? A big make comp not sometimes During square, right? right? a or only is the those the everyone sitting But you, record we and exciting call use enabling to to join experiences to I comp hybrid to the a just of important, are the lot right? equally, work, So when meeting How employees want room, hybrid right? quite room, sure they you as Square, we're from even and are who you right, see Even meetings. remote phone a upon the reason in can't people, as is very worker those customers, right? often, example, announce as features So the extremely a the well. Quite square built that's right? chat, e-mail you can news distribute video how why sometimes well

the the to right? use a reason going stay. cases, think work lot new I is That's of hybrid why

comfortable How feature, that. (ph), right? to down a view smart the gallery have Customers we on example, double that. Take like for

reason working are we are how However, have hybrid to I in That's work. on conference embrace do supporting huge room, to a right? cases, work. some cameras, customers you why three That's still way that? the down another support

this it is anywhere, the work. think of does work I you much become office opportunity fashion. home. employees us, wanted, kind It's hard in a the a support But a hybrid even if employees back huge work Even days talked hybrid sometimes to more. reason sort to these hybrid bring to role to everyone many play to That's it's can to CEOs. want right, hard work. you kind of I convince for bigger back with another however, week. embrace to Zoom of why employees force why Everyone let especially us, the the That's five have

you. Thank right. All

you. Thank

question. And next William the Blair's has Matt Stotler

you Thank the taking Maybe the on just Yeah. side. center contact one question. for

time, adoption the that needed seeing keys We'll on you're update. innovate update to what the contact for going adoption then the still are continue a to that on obviously the you go-to-market product last There But deep an was further overall Contact suite? forward? on was And some front honing got So on front. what product front, think you of get Center center. just driving we

want Kelly, do you take it? to

Yeah.

our same contact addition took we center team. the Brown. Scott focusing So He great a Zoom we from go-to-market a to perspective way And in Phone. now that is is are our leader

are We hiring.

We give have additional were to sale account there board it's a of some to contact to Contact but already, opportunity versed them become an in, sell more and team eventually over and to how who on be all in as we overlay act hiring as Center. support the center will go technical time, specialists, executives the

approved as I we've in So we're today. process of that reps. said, And the more

there. investment the making about excited we're So

it. Got

you. Thank

Power William to Baird. on with Moving

I for what segment of for some maybe the to this is the both Yeah. increases confidence question Thanks. you're you broader a churn parts really seeing kind to and online, that of play Any to thinking as going stabilizing. look price forward framework top great Online. ask see with of to you're the funnel out Great. how what color It's here? those two that. both to fronts that for early stabilize about And and Maybe on just tied want that? respect on you guidance gives

Yeah.

price when we've -- the seen we've that. positive and we into came modeling The increase. in the it, seen to were we to response reaction retention So actually year very a rates better-than-expected

So that's been really great.

types but additional and currencies, of being added, continues a lot -- road positive very online past, flow, we've additional then a has around be there's it and of payment payment map on initiatives as worked offerings. he's the things And response. well additional work whole other done talked to are that including a about buy like when the As seen also which in

those the top-of-the-funnel you're referring are So to. items all

when great -- a to they've retention then to about also people flow also and flow feel them. is through, come cancellation we contributing of the the people rates, And when improved lot which done the work

they've to yeah, Now said, quarters we in we now in and back customers again QX. go product. QX QX, as now X.X% be they again periods seasonally the the our X.X% X.X% expect as higher to or in come holidays maybe were we flexibility it QX and born in due to and QX to those and and the been, give X.X% X.X% need And was -- we

we churn very down and seen in coming QX. exactly it we're behavior with, expected the as pleased expect back we've the So

foreseeable us gives to be that confidence for going that range the within that it's future. So

a the other And By paid yeah, to services something the I and a for well. even more right? that way, the to us right? more already upsell with new take Zoom, opportunities like Customers, help just for like think package, right? Online what lot announced similar, target as upsell us said, go add quickly customers for right? segment Zoom on also Kelly part to it new [indiscernible] add can some more for It's So online of of I'd deploy services we we service, right? Schedule, the example, segment. opportunities as the

to Panigrahi on moving And William. Thanks, Mizuho. Siti with

Do see this that you think into of -- taking more you question. bit Workvivo or near that long-term to there little is vertical into what acquisition. can opportunity elaborate you you traction some -- that for my there? give a just And in want particular Thanks we in Could do in some where Eric, segment something or a see revenue sort I sort of when you can can from dig base of their opportunity is more you that? this see some terms of, technology of that cross-sell term?

Yes. question. Good

look you unified or all, of department e-mail, to also to chat, often, right? platform, find, leave facing message one is I to we video the it us the public to you share in for a want and all maybe also right? today I like mention platform. the Customers a right? and communication send can right? offer All So right? message We to we hard of essentially think room our first a platform, right? employee to base scalable all as Customers message, are entire collaboration of those well, want really right? Quite wanted either kind not a those of see channels, accounting, customer news, problems kind bar it's to collaboration at of really if I send

think of make term, lots generate there it why help will say, think day Are also to the we also data, cases, missing of only run, engaged long How platform, we better run, portfolio, lot the have help can right? we right? these to kind the in put share reason ways on meaningful, our key right right? right, you would is All really those and our use I certainly is data, any employee, what Workvivo the will to you and play those sure. you the because lever right? collaborating more. us that's employees, right, I can but bigger are engage of a why are product the is for right? and role relevant AI, right? more That's AI, long element very, It's not communication-related a -- It's us of do for a in entire other we use how with data, Every sure Workvivo because short

Great. Thank you.

Thank you.

Next question will with come from Iwanyc Oppenheimer. George

question. for from as stabilization couple your on Can on an my a the expectations side us maybe out on look enterprise give sense the expansion you seen next are over quarters? rate what Kelly, you've Thank building you you online of taking of side. the the

Yeah. expansion But metric. don't trailing the rate. We guide specifically reminder, a a as XX-month around it is

online to can possibly it's that you where enterprise has reaccelerate as opportunity it that rate at more reaccelerating to slightly to growth and we year net the we expect back of half dollar is going the and gold as rate expansion that. behind and down given look is the XXX% until starts to So come trail revenue get direct this start to at the that

Thank you.

Wolfe Zukin the have next will Research’s' question. Alex

you Hey, me, okay. guys. hear Can

Hi, Alex.

overall making plan the last contemplated enterprise making rate simple I mid-XXs revenue in just of two-parter. guidance a from I second being That's diesel of So or the is And just the the it you the how think experience? the second I to much think the kind half One part than guess a growth we decel to X% over implied. of generative a year rather of a rate AI in is than it all do contemplated from functionality quarter an first of I'll thought. perspective, larger try product monetize

do growth like a later it And new stock? to decel? is oomph lot it are is of regard recognition? that where driven upsell? a that's So an -- that's how how for rate it that the how it in do but valuation Like products what we cross-sell? it revenue obviously, reaccelerate you because it launching? coming like do Is rate Is Is seems from that you get double-digit the is back of

I'll Kelly, the the take one. So address you first second one,

of think generative monetize terms I how AI. in to

based of live reason we have new and right, we to They not for monetize. One. a first AI lot all the we And Sales take meeting And for also IQ popularity, Zoom I the feature. reason the -- customers, a on good you right? feature, -- AI, And think example, monetize. can is that's AI features, It they That Zoom deploys generative before is the those did do right? for to the target general behind enterprise to all, Zoom sales of deploy have for see feature, get right, for may seeing paid deportment. a three, transmission service some so right? not not technology features, deploy features, customers, to summary, even also, take that's also For Zoom a paywall, right? right, customers, One, a the those features, another That's those SMB if for us example, why free

yes. ways I to monetize, think there's multiple

feel And in only want haven't outlook, to had reps in reduction, or We leader mentioned, center reorganization. I team And there a And sales really as we to in which QX we invest the to where impact of from the we've structure then in expected terms was sales I also as distraction earlier, of the enterprise adding but Europe, also, we example. continue the we recently we not good for contact hired organization mentioned committed the the to and prioritizing as more now. just about are before. the

to have for positioned very the really to -- So us for us. them support to sell, about exactly year. there sales of behind to be that's excited an join the and we're all And see us them And amazing platform these now to -- bring to we execute the that. Frederic looking have rest put of them talked execute. to all them we to we're team to do And they rallying well

Thank Perfect. you, guys.

you. Thank

And Michael with Turrin moving Fargo. Wells on to

in on despite to billings Kelly, the ahead Good points percentage little few Thanks. see for a everyone. revenue bit what you a you duration guiding of some side, came quarter last impact. there. from Hey, deferred were

renewal help help us period, heavier you've as So sales I'm or just seasonality else now duration way anything quantify mentioned the some think wondering, any the can you impacts but those passed either there's transition guide? out QX if provide on to QX And us maybe through there. can impacts still you

the guide help you. Thank different what's levels. through just from us Just a in think contemplated few

Yeah.

think billing on I the So impact. duration

also it's watching indicative on We being think of in macro in for moving and commit we've the terms think And Phone, are Contact back of environment long-term expect are having RPO. we and thoughtful I it's I more all and especially going impact towards continue don't Zoom before, of that's seen said the to this the just heard products those it this But As term. longer today. to impact to we bundles, then. you then customers we've just be earlier, a that as some customers and that about seen impact. One, uncertainty And come also Zoom the deferred Centers

and So of see start team, those being enterprise pipeline impact I in duration our think more that, more the sold you continue again. to by will as that to and expand

expected. stabilized has between little And than and balance bit the then that thrilled in a enterprise we're enterprise we of terms online, earlier

of of the about you in work our the time. guidance will, days already team pipeline you the all the the is -- online contemplates we year. days of and it initiatives the sales a at all And talked for the the bit month at when why tricky on. And things it's the that's same Given the because in the then, if course, terms the working quarter, that the look of we more view rest little a direct gave of restabilization,

you. Thank

Barclays the with MacWilliams Ryan And has next question.

guys. Appreciate Great. congrats And reaching sales. of Phone it, XX% on Zoom

So an Enterprise run. the far, churn so boring standpoint? but back that pretty enterprise are Thanks. the reaching so the I macro questions amazing a any just the differences after quite million question. changes phone all segment? in thinking like to impact at sales, I'll just from X seen that enterprise of only metric years, I guess ask any came macro on few love segment versus Look, have seeing the you And renewal logo you side, Online maybe Kelly, the this

No.

that exactly was renewals, QX the renewals so great in we've quarter, seasonal of highest that and know, where quarter in our for the be strength about, the of then -- expected the did we increasing really them great. a And the it's for seen to So terms increase enterprise where were is reminder, the our is in to annual as when And this Online, range funnel. didn't the you the see. we've plans, also is as price which we I of already continued increase, the plan. talked to just price We've see strength due annual top think we to

So get greater. in and for Zoom amazing but of of value for is committing that it much us just because discounts the the long they amazing shows lifetime that that's value so those to customers see they customers to course, the committing term, the annual

color. the you. Thanks Thank for

Patrick, response... All Patrick Walravens I'm not right. us? next for Securities out with do JMP video Hearing your sure has the question. you to start there, he's off and want no come mute

talk turn you and can Difficulty] a part to come video is see off appealing little and to you Eric, bit us what that of the why? investors? to can sort of mute. [Technical I'll I'm going off about the

have so skip audio cutting you doesn't might for try we one but us. again, try unfortunately, sorry, out improve, Patrick, more Will And it your time? you to please. if is

more what bit come believe and a little talk just they it? you about with can Anthropic Eric,

Sure.

I Anthropic. heard

Yeah.

that's Again, an the federated our why this think no we our federal to is technology. and partnership, happened And right? look to the to look they right? our to team. because why the invested empower another brainer partnership, also them. internally our a in right, center approach, right? you download further round are a our them solidify middle pretty Anthropic this using is financing, so further And why great contact right, partnership. AI, right, And portfolio. much solidify applied reason greater think Again, AI AI offering, of great we I team, that's at think us, how be And in of that discussed important contact in for great and to That's we landscape, not entire when invest approach partner, this I double I at is will we and product the a center, given down to yeah, on that very is

Bank. Thanks, on Niknam Matthew Patrick. We'll go with Deutsche to ahead and move

question. Thanks the Hey. taking for

Just cash on Kelly. for flow two quick ones maybe

two this accounts And much Thanks. a then it's you cash this if drag in years, wondering $XX let just quarter, of legal there anticipate terms First, when last terms million been can should the changed about about we and receivable secondly, us what in only maybe settlement, know $XX collections? of million, that? of better, quantify

Yeah.

exactly That's QX, not why then, completed full point just in we Matthew, it when the into collections. to we could could in that settlement, That's we're visibility be the the first for be of you of said payment. it's wanted year, updating clear terms And terms will of in that. about also it be in why give In QX. we terms -- your

there's mostly of think seeing especially just continued in honestly, the and also, paid improvement DSOs I team our annual, that when ongoing online around our collections via that, part is card. as more is and online, we've credit online, we're seen that the is

an So about the DSOs are help? on that terms online DSOs in of growing that's improvement as our because three Does that is usually days.

if could that settlement, you And legal how just is? much the quantify

previous difference It's amount of between the the our guidance. exactly

anticipated way, me outlook than change potential net no cash Let this it other was to the there other say settlement. legal our flow

right. Thank All you.

Yeah.

with Seyrafi Shebly the next Securities FBN has question.

Yeah. Thank you very much.

It something past. growth was only half. the rate X% and QX decelerate guiding in X% X% for to implicitly like the back in you're enterprise in your to So to maybe double-digits

zero cetera. the looks enterprise next So growth. this with or is growth or So that or is growth single-digit year is After stabilizing And Online rate? it growth growth after a business changes have this double-digits Is business. negative a business QX, single-digit the a lot low in rate for is sales afterwards enterprise you few this online business it looking year, like like do I means the upper know related, upper quarters, it an versus force, of target as just double-digit year you well? I'm growth et growth also

direct for and that for and both ways online in investments the are on we to the business. do are today making that the All investing focused future growing the top line

platform. right It's but like our focusing guidance, So the And about earlier, center, what we've a about in given of reacceleration early marketing go-to-market we reacceleration and continue on haven't It's talked in terms And on to of the investing exit adding leader really that's up 'XX as in in the way. exit see that 'XX, teams expanding anticipate before, Europe, obviously innovation. we've focusing FY we FY FY 'XX. year. of year is, to goal the having but and talked growth to the starting so the lining everything we FY 'XX as we're into contact

enterprise? the And

Across -- potentially...

it enterprise not rate, is you're growth guiding, the targeting single I'm upper just targeting? it, just way or the low digits double-digit saying

Yeah, prepared I'm early. especially to year. We'll about that great get to not be specific, this going more talk that this later

Okay. you. Thank

Keirstead And on with Karl move we'll UBS. to

Hey, Okay. Kelly. Great.

growth the as to that the growth. trade-off bit invest acceleration about driving Just to to follow potential like there's being next for on talked about And margin innovation year. huge shift you conversation that on, little earlier Thank you. at a next should year. And I'm you priority, to drive a seems this signal intending ask me wondering could on call all you're impact peak. then year? margins, guidance that XXs, of a I sort everybody to the your if consider did Workvivo for XX% high clarification, if a

you, Thank Yes. Karl.

And to us investment So do opportunities that target lower the as the operating past, is opportunity we've as in is, see lower, give where for our reminder, operating so. margin said we quick to we much are today. than as long-term a

growth But on we've period opportunities, we time the margins take drive balancing of our had market continue focused focused down. everything to we and to really that see on growth, where bring we've can are been We doing we could line top as profitability. absolutely share. with In slower

again, of of at margins So and both peak profitability always about the and probably being growth we're yes, I where we're thoughtful our are. But think very balancing those.

the bottom Workvivo really, I really and terms would in we're minimal today. but given team, they're impact about of both the the and them line top bringing on family, line say, they're the amazing, then excited into having And

you. Thank Okay.

Yes.

for Sterling one We from with will additional Nathanson. which Auty Moffett have time question, come

Great. Hopefully, holds connection my guys. Thanks, up.

enterprise. Just on back the wondering

the for of enterprise stabilization. disruption consensus. having below Given analysts Did line quarter well million or the the Difficulty] business bigger the It -- on year? revenue on enterprises have online rest the implies wrong the Street $XX a impact [Technical or just a we the was model the mix something is

I there's two think things.

to more we've all, of been indicating quickly much first think than or online you. had than seen of we I stabilize anticipated all we

the little everything we can to the probably bit think as was the some changes to I and but up year anticipated across not focus The then on So in and overall you was at doing direct a distraction is that it of and I doing sales year. a the as minimis, organization. a reduction be de not comp And was anticipated It our incentives -- right? also I said, for to the said, only different supporting even -- plans. we shaving reorganization mix we're we're than beginning

And can so momentum we all do looking we're them support and us everything to all and very we're happy now, regain behind there. to that forward that's

you. good. Sounds Thank

Yeah.

conclude our does this again, question-and-answer And session.

So additional I'll closing for pass remarks. you, any to or back it Eric,

I you, all all Cheers. all your you Really as our thank for thank Well, in and your meeting. support, next you time. appreciate appreciate it.

Bye everyone.

And does thank again, earnings conclude you your Kelly. We today's participation. this for all release. Sorry,

we So quarter. see your go you summer, enjoy and next will