Zoom Video Communications (ZM) 21 Aug 232024 Q2 Earnings call transcript

Okay. Hello, everyone, and welcome to Zoom's Q2 FY ’23 Earnings Release Webinar.

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

And now I would like to hand things over to Tom McCallum, Head of Investor Relations. Tom?

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

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

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

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

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

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

to brought AI customers better. to journey. announced in past customers In moment Azure roadmap and few So Fellow. a our career he work aimed us successful welcome joins innovations served months, most our where our before CTO, several who we AI Xuedong Technical market I’d starting, at the and smarter their empowering aggressive like an us CTO an after serve and at XD AI to as joins Dr. Dr. new the at as Microsoft, Huang recently optimal

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a how from One Connection. joining to Director, me Intelligent let provide angle room. hassle AI our We Human Now, share your outside Platform which the and participants multiple and to uses serves which of: we with launched advanced have Zoom of of and Delivering Limitless Scheduler, image organization, the mission in people best scheduling cameras reduce conference

like new We which Zoom asynchronous Clips, also many video launched enables conversations. offerings

more Team a Chat, using global a And two product. brand by Chat, in-meeting a companies, new of one firm F&B the we law Chat fortune Team consulting firm, the Zoom Team and Zoom communications. persistent Meeting connects features Chat XX means feature and on to have text-based which chat Zoom Currently, leading Continuous driven and transient major core as more Zoom of increased like getting One customers are adoption

help streams. we great capabilities a and start to unified and their native WFM look Workforce off transform has manage products and needs, customer communications, July product suite enhancements and Center this Contact new platform. quarter. to experience expand already experience to and about all our per from Our early rolling customers features to adding Management a additional revenue single, surpassed XX customer in streamline customers we launched forward to are XXX is out We agent customer

impressed more product work. across it a out in value culture in have rapidly and rolling building in our it of delivering pillar will distributed of confident integration ultimately to enabling customers We not Workvivo. terms bring be I hybrid our the After workforce, with progressed upon could of strategic the internally, our

and ago, approach live weeks within few -- on office for internally announced a Zoomies which, it to their structured and that twice week. our hybrid Zoom we asking a commuting into work come of hybrid is us a purpose-built Speaking local continue distance for believe is they in need understand customers their customers what to that and our them. enable work deliver We this our works to and to approach are what for to experiencing innovate hybrid not does will what succeed. journeys us

of customer our Now wins. moving some to on

the Chat for with for to QX, their added expand users existing to In the Service. are Government postal we service First, deployment. XX,XXX United States Postal Team excited Zoom Zoom

to Senior the thank unify the their a order Zoom Phone. one Living, A housing QX and And communication operator as Brookdale States. customer Let me cloud product. upgraded in they United Meetings to largest in in all-in on FYXX. later, integrated Zoom senior of the went Brookdale One, needs in also began Zoom under year evaluating they started

Like all-in Let Meetings One me an started Farms. Plus. Enterprise deployment. with ago Zoom Perdue also Zoom thank with fall, years of Last Perdue’s journeys, our customers’ initial many they went

story Zoom ambitious due roadmap. the end Zoom does not Center there. deployment In their However, added to our Phone its Perdue integration existing native QX, with innovation Contact and

quickly issues ability and utilizing correct Center. quality goal Zoom serve including to as thank accuracy use customers ago a AI Agent Contact Meetings little its of over a QX, to agent, their Virtual employees, Zoom better of analytics. also the with the of Zoom intent major and due Valmont to One a added their year they And Zoom ease route to also of Industries. and Phone in and onboard platform with and me customer became Valmont Let came a adopter, understanding,

support delighted are to committed operations. quickly so so Valmont grow to We partnership their our see to are with innovating further and

Dollar platform to employee Workvivo’s general its thank Zoom’s America’s the dialogue, our the group will let Again, individual, for engagement culture. the choosing all to employee XXX,XXX General store, Farms, Brookdale, employees Workvivo General, and and worldwide. employee welcome drive and as employees experience for customers and Finally, levels, USPS, digital me Dollar strong for its with connect are Dollar reinforce General, of at Valmont, roughly expand we heartbeat excited company. rollout to enhance so Perdue district the

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

and Eric, you, everyone. hello, Thank

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

Here are a few milestones.

operating cash $XXX First, flow XX% year-over-year million. to grew

And surpassed Second, quarters. $X.X reached Contact has six billion revenue. customers roughly rate Zoom only annualized Zoom Phone in run excited Center we in that are XXX finally,

grew includes In of end million revenue billion, year-over-year above million $X.XXX foreign was $XX guidance. pressure to high approximately from QX, $XX total result of exchange. the This X% which our

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

in X.X% see churn, continue in improvement monthly of to to FY decreased We average which Online X.X% QX from 'XX.

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

expansion in net $XXX,XXX some rate we X,XXX ended of months the quarter came more contributing for Enterprise saw names customers XX-month the XX that with trailing QX than in XXX%. in We Eric customers at highlighted of XX% amazing XX% trailing year-over-year Our represent dollar customers 'XX as upmarket from the and earlier. revenue, These XX% include up QX of revenue. FY in growth

approximately respectively. grew EMEA and while and grew X% APAC have flat a Our regions been APAC year-over-year. X%, X%. all and year-over-year, by X% basis, currency both On quarter-over-quarter Absent declined EMEA impact, Americas would revenue

and gains year. Moving effects. margin expenses, investments, was QX stock-based on associated restructuring from or non-GAAP gross expenses associated improvement which XX.X%, results, in Non-GAAP strategic all of exclude to compensation and losses expense an XX.X% payroll our last tax net in QX taxes, acquisition-related

our data We across are pleased with co-located the as cloud technologies. public gross the to centers optimize margins and existing our emerging both usage of strength and we continue for

to be make For we the full additional margin approximately gross year, XX.X% non-GAAP AI in new we investments expect as technologies.

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

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

priority for investing QX X% in decreased last approximately Looking marketing million. Sales in XX.X% revenue, to Zoom. XX% total expense a year-over-year down year. innovation by from remain represented of and will This ahead, $XXX of top

this Zoomtopia QX incremental the a be held marketing will in quarter. in and will As reminder, investment drive of year

continue to million to from X.X% in experienced or onetime of by revenue, XX% we Non-GAAP and savings declined total by of million, $XXX from of translates our in the QX achieve efficiencies expense QX XX.X% G&A as to XX.X% grew last in a approximately $XXX non-GAAP to X.X% exceeding the XX% guidance million. operating high of last quarter. meaningful improvement year, $XX end down greater of year. This income operating a margin,

Our QX effective was rate tax XX.X%. in

QX end blended guidance $X.XX outstanding. of on above rate. the of This expected approximately the tax QX in average approximate federal earnings than state weighted result diluted per was XXX Non-GAAP year, higher rate U.S. share million our $X.XX and high to remainder the non-GAAP and shares $X.XX of last For the year. our was is diluted

billion, at of Turning line $X.XX to of that high period from approximately we down with the end in end last QX was X% quarter. sheet. of the balance expectations the the year. the last revenue shared Deferred This was

QX, deferred revenue environment. partially For billing interest X% X% to high by on Enterprise down from deals be arising to frequencies driven expect year-over-year, shorter rate we the

our our RPO and $X.X billed X% both increased billion. at Looking unbilled year-over-year contracts, to approximately

as months We the contract expect next durations indicating of FY basis. as the XX% total RPO to over on in to revenue 'XX XX a QX of approximately year-over-year compared recognize lengthening XX%

of the our the seasonality reminder, renewal rest in and peaks a QX As declines throughout year.

year-over-year year-over-year to $XXX quarter. $XXX the the Free Operating settlement Both to the flow $XX results quarter cash XX% million. legal approximately payment discussed in million XX% million. flow we include grew that grew to related cash last cash

cash in securities, cash, respectively. cash. XX.X% operating $X free approximately cash flow the ended Our XX.X%, and and flow with cash quarter were billion excluding and restricted equivalents margins We marketable

our to for the collections, the to free in and we $X.X now profitability outlook in Given FY billion cash of $X.XX cash flow billion. 'XX. expect flow We increasing range are be strength

Turning to guidance.

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

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

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

of also line now the to billion. full be expect profitability our in to raise pleased revenue top 'XX. to We We of for $X.XXX and range $X.XXX the are outlook year billion FY

this or the back to the half constant the in which expect be approximately represents growth midpoint, At neutral X% we X% currency, year-over-year year. of in

for the expectations Online year. of on increased total consistent remainder the with revenue Our reflects tempered guidance view a for Enterprise,

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

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

you our investors and the for support. entire your our to customers, community trust our and Zoom Thank team,

innovations new user as well sharing on San as customer Before will Please Zoom opening in at be about on about Jose our We X expanding more we excited platform, in Zoomtopia and forward Zoomtopia. conference, October It premier Events. for X. and to are Q&A, our up look testimonials. us join person

David, Please queue up our first question.

you, Thank Kelly.

Our Kelly now Murphy [Operator Mark from we come JPMorgan. mentioned, move will the into session. question As will with Instructions] Q&A

potential going for Kelly, Eric, much for product? Well, But that comment and that's on add-on looks attractive going thank looks Curious, included congrats or gains product? gain. on per of can going option how to like that you on for efficiency And free of the product. revenue maybe of that's comment month touch that, like framework a efficiency bundles. in solid can certain can you very any a so you understand some Scheduler particular the I Zoom to I the and type be you users. clear period just understand of the execution the that and some a it's It if in be $X from out to quarter. on time other work

Yes.

feel to can I the free Kelly, revenue potential. talk the on So side. on tell Clearly, product

are is I look reason Mark, right, right The Zoomies, also how schedule at guess it you probably -- attractive. on. tried why whole the I customers the meeting. indeed out we very think, you're including already you

across Zoom Mark, right? schedule so to next hard, schedule see, want think is calendar Let's meeting is I meaning why I is out and complicated, so company, that's other to the the introduce that I we to Scheduler, are week start-up with How there so about decided some Zoom need right? complicated, a [indiscernible] right? simplify And to also, customers have scheduling there. experience, solutions

schedule simplify And lever the customer can and as click, organization. about also you we really the side meetings of organization, with they [indiscernible] like to actually, already really and with they as that the of Meeting customers the That's used One customer, that. schedule very well pretty trial and why that outside more the opportunity. road. like down would experience. be decided it's Phone, to Team the one any we a because already doing a your and for part platform way meeting to Zoom have And We're somewhere they Chat, Zoom from The excited well already build free other

Yeah.

the a is make in the make, think point grow time, enterprise its terms and spend day. price product platform Mark, certainly. contribution, think continue that overall over of especially we to will you it does also, and spread very where But I our it’s live at what as your much be more customers you that to it how continues retentive and larger attractive

you much. so Thank

Thank that. you, Mark. Thank Hopefully it. you try Appreciate you.

Okay.

Morgan Our question Stanley. next with from comes Meta Marshall

can't we you. Meta, hear

mute. I'm Because on

I came the So just, was of from the questions that in upside Enterprise. of had that kind what the one seeing terms of environment? I you're know your

that the quarter? during of better result of Just there quarter, how the came more get as And kind deals a changes environment just upsells just were if in of changed of any kind getting kind during shorter closing wanted upside a Thanks. or order? whether of to sense the

you, Thank Yeah. Meta.

say would the I terms consistent. of So pretty QX has in been versus environment QX,

a from We for adding of they diligence. take perspective. from that momentum in moving about are Phone Meetings either sales platform lengthen say, cycles them customers One, in talked vision finding out of making very Eric but customers take lot really doing due think considering only what's momentum really existing I that attractive, you’ve There are continue around, also as about customers can well. obviously, still, coming that or seeing Zoom that not into originally And excited and heard our advantage of Center were that see I Zoom really an their would as customers One sure the the Zoom Zoom we Phone. there customers full AI and the But we're to on Contact

Thanks. Great.

next. David,

David, next? who is

Apologies.

from Our Goldman next Rangan Sachs. question comes from Kash

Kash. Hi,

I'm It on seeing Enterprise with to business. curious the your looks is cetera. like get business respect thoughts to Online stability attrition, et the

the So the identified it's contracts, part raise about of of we're stabilize it, side revenue have I levels? means talked also, what that and the pricing about that you And prices. attrition Zoom? a inflation customers is the shorter-term that power still that Like substantial flip you you help and while worried anything guess just on at could could doing

Thank how leverage have we much. you much that. wondering so So at

Yeah.

improvement were seeing historic or pleased the we're rates terms churn in really are the really Online in So of They segment, the [indiscernible] lows. we continued rates. with the that at

volatility, innovate, And so that's we're with really just ongoing little that great that to see. And business. when for the year, we interim of of saw the team we more the continue really of segment progress rest sort the indicated but that's expectations the in what pleased to and seeing in a tempered

potentially very is our or, given we looking mechanism their the expand portfolio, considering, pricing to them today seeing opportunity Eric, say, the chime And we're value mean, common discussion for price platform Zoom in then moving the to a that -- it of potentially I and should have movement customers Zoom seeing to well? in of upsell with opportunities terms One for I they're the that with But as potentially feel our there renewal is at a increase a Meetings an in. certainly, power free renewals, up from for customers to continue comes when usage

Thank you.

Yeah.

like customers ease view not best power kind Zoom use of employ in That’s of give quickly, do the case, And really one Just price, right? of the Zoom and they the of experience right? service to the really experience Otherwise, terms number wanted why most a with service. of priority, businesses, and of pricing the and probably customer they appreciated we talked still the a value has quality most on platform. not they that’s as

so Thanks much.

Kash. you, Appreciate. Thank

You bet.

of comes next Our Bank America. question from with Michael Funk

Yeah. question the Hi. you Thank today. taking for

So congratulations well. good adds there momentum and on logo Phone new additions, the as

it the additions metrics, up of wondering, sequentially. during Enterprise sequentially. also Kelly, to churn with Just quarter. decelerate India Online has the some happen mean, sequentially. slowed I what decelerated other customer did

which thinking metrics or turn? going into first? revenue in those much we've And have visibility about how do growth that to for, So is the hoping you of expecting been acceleration turn

Yeah.

of So things. couple a

you me of specifically. that the Let metrics a just couple called comment on out

First all, of Online metric. term the

we As be QX expect to QX higher QX and and reminder, than a seasonally QX.

it it down was of QX, So holiday. up because winter over over was while and QX, that's summer and

think to we the to I focus improve really So going number a X.X continuing opportunities And is to continue that. great and number. on are

Enterprise, the focusing really some on as we've earlier. of of terms about In talked the we're approach

in customers, is the also see more expand drivers starts one necessarily drive to to in key to in new metric expansion result Zoom customer One platform. our the doesn't you that use going Phone That is Certainly, customers as of terms could the Enterprise Zoom expanding the of of of that the but success that in customers $XXX,XXX.

great metrics One more those the of that think get And becomes you then, see I to in course, are as in Phones Center. front well. watch So as should indicators you'll Contact our Enterprise continues that in team center, as as to and AI

just just then, that is that number? exit the of NDRR improve year, quickly (ph) we for that the improve so So Enterprise off as should expectations XXX should

half 'XX. You into early start more bit of potentially year, down yet, a then XX-month it may the remember, little to It trailing but but of at it's might number. come inflect the a FY back be

Okay. you, Kelly. Thank Eric. Thank you,

you. Thank

Our next comes James from Piper question Fish Sandler. from

gross And questions. seen a seeing showing to there the we Eric, Is that of you you what Kelly, optimizations the gives further any just and to on or degradation sequentially. isn't on you've this points a the couple seems just or of pace it's or investment a side general? a the for for way causing confidence can it what drop margins conservatism say level of and talk you the that your guide recently? like are linearity Thanks other similar I more seats behind higher guys. Eric, AI, Hey, in guess coin? slowdown get about price to

first address wanted you Kelly, one? to the

I that seen the to talk terms there logo that sales and in And seats, we've retention. of a opportunity they've that showing if customers and and for before is, think great how reps get So Phone our they them. in replace of opportunity a really we the base, taking done to our Zoom about what with about optimization can save product in them of customers because another have dislocation a are ROI job an then like drive they've employee the upsell to had talked overall we great even their such them revenue motion and

sales successful has our been And that. incredibly team at

want what still quarter, lots And margin, we gross though of momentum so would say, to seats that there's on that's and guided to highlight, of bit little upsells only we're we're period. we I renewal of we XX.X of XX.X. a had just seeing, terms in -- in there, And seeing even only I shifting, those at this

basis it's even degradation. of XXX points not So

reasons why what So investing in. we're Eric that the can talk and is about and

very, AI, strong. more Summary. us, features Many Meeting why term. today, Again, platform, rely becoming the Zoom our Gross of -- term, terms margin very more customers told all short in like they it's Yeah. to is just reason The impact, comes long of it a like not on and when the it's important.

team, invest The are productivity some years more. How can improve news right? AI Someone to efficiency, rock, of we Dr. and will down a confidence And lot needed invested and to well, We feature further good investment, the three to hired high already to right? right? we ready. and leverage ago, already why is invested how have those But GPUs on customer manually, double of and meeting we features a For also right? right? that's a the the as sure, AI have our two XD a in take that

the the AI gave a case, very that's features productivity, features, who innovations. those care like same we add have And how And to some differentiated, how not right? customer terms lever And Zoom innovation down because AI for in and a the of look us but of price. more. services is technology. a brand at monetize AI about not like can free at to the more way only due all, and time, we federated customer value approach. you also strategy more lot where we the new improve revenue brand AI goal incremental the deliver way to right? also to We to some other to others, right, AI services we services At about also look is innovate, so-called the That's That's not customer of our That's AI Again, already some the very than a investing help AI it innovations also keep us, to road. First important, then like to the why are new more going build services our lever customer your value expected. for and right? really

for So Zoomtopia. the stay tuned

Thanks, Kelly. Eric. Thanks,

you. Thank

from Our question comes next VanVliet, Matthew BTIG.

desk-type bit more Contact seeing Good volume then help kind Thanks customer-facing are deployments a or and dig sort of the Can you of situations the are seeing the little with in of most internal afternoon. you in wanted question. that, help you're And seeing trends in success sort more higher Or most what as you I seeing the taking Center. of on you're situations? to us for within Phone? the sort well? Meetings

a Yeah, Matt. question. It's great

internal Zoom recognition, the still likely would Center why customers, some they deploy also existing and with Contact all as case Contact example. are all, Center well about the our will new I support And year take time. Zoom the of very all can own IT often Phone you, right? team But take very Phone those right, -- hyperdesk, right, right? quite tell quarter. since deployment. a First for works well, the Because sure That's a integrations brand already ago, a We deployed loss integration hyperdesk on like of for innovations Zoom innovations It and customers, a extremely Zoom every use our it they happy

a Phone, Contact At same have like have Center Center. also Zoom They a have no Zoom we some customers a don't time, they Meetings. Contact the

higher I Phone and given think I did Contact Zoom something Zoom value the confidence for the also when customer more I only what but think a Center, speed SMB not we of think more Zoom have and we similar of to innovation, realize right? realize, as Contact – on why When value our started out a existing pass customer to there's not wow, or that's we Contact well, Center as So Center huge grow and further well, Zoom try our tested the for a right? business.

Great. Thank you.

you. Thank

question Our comes Koontz Needham with next Ryan from

kind Hi. Thanks displacement accounts. or for about primarily growth the seeing ask to the vendors healthy in that still that the wins, question. legacy And anything are I up wanted greenfield-type wins? we're here market Is $XXX,XXX we're of of seeing logo kind these share wins? competitive these the Thanks. expand effective you're big other using you to about playbook there can of

Yeah.

the do I greenfield, opportunity meets points bundle, great think to Customers One. needs. to existing which buy Center. Contact that, really their a value, seeing of of success And the Ryan, some to the We the like highlighted opportunity. customers Meetings see that previously Eric to continue all we're with ongoing especially ability see just it's especially Zoom seeing

to which that Meetings a customers they're it's lot a have amazing. is customers as way in that upgrading are the coming also, we then well. are door And Sometimes that still Phone now, of

up that customers over time. to a at that in level it's of customers combination that both as that come well grow So new level as

Any market? the Got pricing general environment it. in changes

QX to really changes. were there No, significant won't QX, from especially

lots other still there's changes in think scrutiny the environment. real mentioned, no of I yields, around As the but

Thank helpful. Real it. Got you.

Mizuho. Our next from question Siti Panigrahi with comes

That like legacy to And are All my building right. for starting yourself move just that's a on you slate, from -- Center a here question Thanks considering still to opportunity My taking question. XX% is clean cloud. again. huge Contact in-house.

we this So the among the of about how And I last right are cloud what Is in should vendors mean, few you Center in Contact other seen years? Center like Phone Contact now Kelly, should growth? leg trying you adoption be space. Eric, this next differentiate, have to think

Yeah.

right? not AI the So part speaking Contact well. is a new invested ground components, and AI built of at seamless Center service well. with some video may high we that long the AI time, That's a be modern and of all, so first forth, the up, a other And same vendors as there in integration is for of confidence, the also differentiation, on we have products performance, right? from architecture we other time, the quality This right? the as all why so and and And also, and like long, right? as architecture

as I sure Zoom, think are When they make do fast, targeted have had Enterprise and platform the also and RV higher essentially They AI, to Workforce a cloud-based SMB suite. we Zoom. Content Center our Zoom process, It's look at customer lot during Enterprise innovations right? very their compete any on-prem or vendors. innovating become how based However, look right? also, Center just to we we at And every full a Center with we Management against compete. of right, well confidence, Contact around Contact Not can't other part, to just one and and

kind adoption? to [Multiple of And like Phone similar Speakers] is going that be

Yes.

Sorry, yes. -- go ahead

quarters today. six old Only

very ARR though. the it's growing right, existing It's base. relative, So to very small. quickly, It's

as four visible six time. to a Management, mentioned, we’re be Virtual platform won't be but to over really when driver it four least that then you for growth probably which a start So Eric is Quality probably, And growth. itself with to don't Agent, Management, considering -- at of really pleased quarters, another to the I know, five you Workforce could be coming, starts it significant Zoom course,

[indiscernible] Zoomtopia.

Thank you.

Our with RBC. comes Rishi next Jaluria question from

for so Kelly. my taking Two question. Hey, Thanks Wonderful. Hey, quick much Eric. ones.

Is discretionally charging around term making want to know for that monetizing the lot First, strategy of you it how appreciate And investments you're it's it think behind look, your about about I I and drive early, I longer and a Is specific around about upgrades? think them tiers modules but them? using do AI? to generative generative around AI. higher gatekeeping

you billion customer $X.X noncore better to alongside called of out think, adoption, great your AI and Phone some starting using maybe packaging? that, Chat. in drive noncore of do Zoom you're to on Zoom of ARR. And a think products, kind connective Eric, wins products you One see the generative How entire I even including usage Thank pricing of as Zoom maybe tissue about more you.

wonderful question. Yeah. That's a

Scheduler the we so still of For right? company company, not have right? only we're sort So a look Meeting So at Zoom full people those platform, also the just and customers, Chat. deployed of USPS right, Phone do companies a some [indiscernible] Clips. deployed Zoom like Meetings, Whiteboard we Chat, of lot deployed Zoom Zoom Team the and as Zoom Center well Team A Contact

As services, essentially, we we a platform, build look to add perspective, right, and our and value? how customer how from more when on to everything at double more more

a take like Team really of say, Chat and late already Zoom, how to lot to the that. to charge often, minutes. some not GenAI features to features generative are inquiry for get One, the only to discussed summary customers make paid features right? platform. and say, more take sticky, A had this meeting competitors the summary say, some example. So let's leverage can platform, Let's also those Customers like yes, a you Meeting meeting, and and I GenAI Zoom X past you over value, can what entire a do quick real-time been other All but quite about

You add does do and not online, right, mean right? are services, you you -- example. platform, AI why was price, the new about they likely a to Back do Internet, [indiscernible] XXXX, move think to want to you How approach. when monetize are let's on AI. build I sort customers, right? different increase one our -- were we to taking when We mean right? of if the doing It cannot to born, increase say, more buy price? think to stores, We entire not value Internet every more they XXXX,

GenAI improvements right? not leverage that’s and do I can you leverage you Internet our different think approach, the build However, gave on And taking we competitors. GenAI. focus price. crazy charge right, a to other a value innovations. why AI, more approach future a god, to as my to are some to service existing us customers taking to That's different not free the we're oh they have services, They new new customers, fair

leverage at clear. Otherwise, given That’s the goal. speed talk our as brand is direction. to our our answer innovation, more Zoomtopia. services pricing my AI That’s differentiated build some strategy That’s time, monetize. of well. to to new let’s Hopefully, how At GenAI same our

Yeah. to forward Thank helpful. I’m it. Very you. looking

it. you. Thank Appreciate

Zukin Our comes with next from question Alex Wolf Research.

Thanks the for quarter, taking a so different at little quarter. guys. than sit quarter looks Hey, look I the back bit question. when and I guess, last this

and first your some base Enterprise together in time for things of happen. grew revenue those where You sequentially both on time Online the

as grew actually billings Enterprise well. Your

I I guidance, at And the look step taking appreciate back, a the looks and and macroeconomic we're the it like so in conservatism environment.

think where I at on what's of and revenue, we as year? go-to-market. we of exiting appreciate about as -- for in rate help then right next here a Online to got working the Enterprise they trends any business follow-up. this floor fact year, Because be in the to up first got it's on. Enterprise the down don't new for churn quick if rate year the understand, us look you've a but interpret the if Enterprise that you this the changes through expect, instance, a said can in I But NRR back count the think and jumping maybe can you're exit sitting into look still the -- on mentioned way at to I us the side we half stabilized that go up And at growth is point the would I that next starting I've you

Yeah.

when a terms considering are growth this into, it Enterprise, on pleased itself. we're And say I very not a stabilizing been do right, is in do call. from But you I historic say, look the to around in comment from terms of it you've still at we're that reasonable are, in that And that rate to point. in we a to forward. expecting, seeing going And think of levels. back assumption the performance Online, you're rate the terms look that's on -- in what new that that And to this we you would FY obviously at 'XX level not you. is. macro no We're that When you So going going the as think with for we're this at improvement I don't churn say yet. back of we're Enterprise, then make I it place

longer the settle continuing you've stronger And we force strong. rest to pipeline We're of -- we're took EMEA coming heard said, into structure. you QX, into sales thrilled than is the was QX. to have as We a and of organization. talk transitions into our the But as the new in us little it leading have as Graeme bit the than were world, APAC coming about. It's the some as

you for the as rate So take think rest the for the you're consideration the can those factors year. growth are of into I looking

then And Obviously, is the maybe, of point a solution to from a watch. for nice evolution Okay. Eric, platform Zoom to you.

Zoom about talked You've One.

annualized million base? in us within today does And in Zoom Phone here One mind, look Phone. base? what now given number Enterprise you? You've penetration success penetration product where Enterprise the for What's the like from your And that for $XXX for the go the like does the for Zoom it what's

Yeah.

free services, for right? a one I relatively if Zoom is But of value. had opportunity, opportunity, deploy well. Chat, think and a the huge Zoom One, think Meetings, medium kind needed Phone for Team penetration them we to a right? think share other to and the lot Zoom customers especially I wanted Whiteboard the we huge not is of our and Chat doing larger-sized still Phone, Also the Zoom and Team right, customer solution only I

Zoom Phone but features, right And the the earlier, So of will is a I One we Zoom I doing up, those One, well, And more I [indiscernible] give itself share, part reader kind penetration. it's take all features, all I also is do focus the amazing, at about One and example. example. also have wow, you that's deploy platform, free. when think on. need more When One, value, Zoom full right? is for right? started. USPS, right customers of Zoom one for cool about ahead That's they just the a the say solution market Zoom things greater We why right? Zoom of to us GenAI not of many like penetrate to opportunity One One a Zoom huge As I those leverage So part potential right? of Chat realize said Team

Thank you, guys.

Thank you, Alex.

question with Peter next Our Bernstein. Weed comes from

Alex very Thank to exciting you. I off, with Zoom there. all Contact folks Center. this I really watch been going what things on getting And a that are that of it's positive see first at. do to progress on amazing Phone want are up say the It's follows bit kind little maybe and checks But just of and to the

minutes starts think maybe and the see to year I'd sight beginning there. I come benefit ago like next that to were love here, dig the of year, drive may some by think, that what start into reaccelerating some of to of will line we Kelly, really of improvement? you commented down few Alex this NRR before a end to and maybe a fiscal with bit it kind

been like kind bolt-on out do greater quick on customers. the less that delivering And to XXX,XXX with really like those XXX,XXX, up to of $XXX,XXX, math really reacceleration suggests kind growing And recently painful figure they're of to them these on a than less and is reignite I customer where some XXX,XXX between that job base, XXX,XXX when than than those of reigniting the greater what is it's mature. is going it split like reporting greater bases? customer it is really about you less the that customers nice than like than you tried with And be the opportunity are because

customers' and when employee employee upselling our but sales on seen helping the if do some our parts that right revenue a size base have we have they about of those So reps job potentially and things their to our in that they're in one downsize of platform. talking I great is customers commented other own dislocation retaining them in base, that

maintaining still but for not down see going that have So maintaining there's the macroeconomic pressure the to amount in sell an So been a would if even same due that little environment, bit, a of right? -- logos, seat. revenue, to upsell, as is you're

So macro, part the we we gave. is of into factored not that which ongoing it in just potential an change the guidance have

remember, talking And then of obviously doing is stride. And new that it's But well Phone products four well. years right? acceleration we the to taken really three accomplish. these about, all that's continued its keep hit to

then Center the -- Management follow over both more Workforce coming, over just just you And growth ZDA, Management of to heard itself expect then hinted Quality Eric with revenue. help is those the all and of that's is additions platform AI the thinking And a grow we time. that to the time all contribute with about as as going to ways time. will same Center continue Contact needs Contact well with it potential little about into so retention sort And that opportunity to

stage -- little them. see can into that just or bit grow to have the that So contributing things just of bit mature and these little you a age some a it's a they're in way

once seen stuff you've anticipate those And get mean, that obviously, out? headwinds. how all do NRR of works able some to you high being I

looking have much you're it much NRR so So lost soon I like if better. forward, you there? do should think getting to aspire you you're how this back get we Like we kind what be of been know And like would and to? can like how

but Yes. we're to Peter, that guidance, we'll give today. talk FY when more about ready 'XX not

more, Yeah, I can Peter. bit take a little

They of even facing. happen make until not inflection those realize think we a just think – sure share and will customers we all a the a That's are case, Meetings right? unfortunately, full they not existing How asked very to a not also customers. had One. what similar meetings that’s make then. platform, Actually, When point One most was the Zoom to we – even are just sure side, customers lot mention Zoom number right? the that services, publicly other challenge too So story, greater is of Zoom the the to Zoom our existing on not right, only meeting, question the you Zoom did a Many platform, our I for the not of brand have problem a realize even about right? strong is one today,

you. Thank

you. Thank

comes with Our next from question Wedbush. Taz Koujalgi

my Thanks taking guys. questions. Two for question. Hey,

First one for Kelly.

that you any the think, the been for had comment tailwind increase in rolled being if business QX, I different can phased out Online was and at in Has think that across on the from in price increase business? globe? geos out, price times. that I you QX a Online And saw you different

Yeah.

as been to in effective out now, this rolled separately, rates having it's general break value the out, but annual is every very in been in price that from full monthly continue the when given customers strong terms out And for and believe a it effect is live maintaining not point. it has market in going our increase. this moving see they -- it but of we it So retention time at certainly great to for overall it's break it I including we're impact Online to in and momentum

you've of you've rate had early follow-up Contact early -- I just But on Center. attach on price know one your Got you're seats. it. started comments and first then pretty seeing And points it's any just just customers.

a seats Meeting, kind customers seeing buy Center, XXX attach that the early customers? Zoom what is you're when of for of rate Contact So a say these let's customer has

customers. to typically is the depends one Yeah. to is like right, Contact their desk, it's It's case of Contact where Phone, deals our we're -- and near like one it one help different. very the It or even a BPO, more it's use one different, was it's sometimes to on in seeing If of an internal it's business, largest not date Center. drive I attach -- is if mean one Center right, near, of very terms to rate. anywhere

much don't so can necessarily at a there's based standard look that you it varies use think ratio I on cases. because So

And $XX -- of other comparing brings as It's think given in value a in it customers. Contact it a our seat. it's our it's price that, terms lot of And given I really the disruptive. to list competitors pricing, for market, comparing highly to Center -- per then -- a the is reminder,

been the competitive able manage are while we've given and customers and discounts, So disruptive compared customers large to how certainly market. to to it is going in Enterprise get others to points, price maintain

one you implying we XX% Kelly, quarters. will It's you clarification. Were six six be of for close still won't to four visibility very it to to just that sneaking into in quarters? Guys, Contact that revenues have Center revenues early. another mentioned more four

was growth don't see No. over to milestone be all. that rate it and -- contributing, to that see more I the just Zoom that's that how like mean and metrics at about would I laughing saying. occur. I imply you talked I time, what started mean best that Phone if I that mean we to was were

lot. Got it. a you guys. Thanks Thank

Thank you.

comes question Matt with William Our from next Stotler Blair.

on customers ARR. One? large I'll Thank question. taking Maybe let's XX% BPO out seeing you Is kind double-click ramping there? -- success that some go-to-market like right? driving ballpark the sequentially you Zoom Phone of, would and for last Zoom look be this the into Hey. the The maturity Anything Zoom of guess, million just in say, the of the something Phone like growth Zoom follow-up is just just for on, that it we're what's evidence there? or revenue. quarter, little up? mentioned I terms indicative of dig Is of call quarter, $XXX more Phone. a maybe Is in ARR XX%, growth, to I that If you'd at a implication disclosure of

is do trying Zoom -- of Phone great is an as would Matt, value to -- say. it. a think is Center in today to on-prem or across I Zoom natural to -- mean, Phone efficiencies every that look and do Contact we've I the with to of the helping Yeah. customers CIO about very their -- above drive a just compared talking how especially is it's to talk about organization to taking One it of And about are solution. at then them I what the driving the taken think is about we Center renewals, to force, talking and more Zoom Contact also adjacency having you a the ROI, they way them world CFO opportunity our when actually, as It's all

continue combination I just Zoom a that, create and more of continues going Center mature. So all to to as it's synergies think Contact more of it's and especially to

Yes.

customers, hard some it's and think Phone we a a phone right? a like Zoom I So jump have deploy of a more for integration, they really that they very like Meetings, similarly when experience kind a click business similar – helped with opportunity, we call, Phone and Zoom not offer right? to don't customer build just like sustainable Center, video and us – you a one both quickly, of on they’re Phone Just have that’s to the new further our Meeting a And deploy point our customers meeting, Phone solution, not the solution, Contact particular, really like The If customers point want they -- scalable, a together. of a you just it’s talk those business, sustainable. would both you play If road, a more have more really right? down of and Zoom. to platform move growth, on really in

Thank it. Got you.

you. Thank

Our with next Sterling question comes Nathanson. Moffett Auty from

Sterling. Hi,

this much differentiating is much SKUs? Kelly, outlook, Online little a the of all Zoom and kind AI innovation pricing that about monetization the model products macro? that driving, -- And specific to Hey, AI When seems bringing just the of guidance AI be is this or for a that had the is Eric, before. it is How for driving how this much we premium one Online what and how going is core guys. think of versus you. of than right. execution? like of worse you're much innovation we How because bit All

want Eric, to go do first? you

Yeah.

all, you terms account. growth. it you of of study. have Online So still Hopefully, to for have And Online our in can I sure, contribute first an account. know

we I So speaking different about AI, approach. a think are taking

perspective, federated AI. an said earlier, I As it's from different, architecture

more leverage our price, offer value, of monetization, Zoom core improve price a look to the at terms deliver GenAI lot it to a charge features more again, to always go all, and more the we at Meeting right, They trust. In services time, Phone how increase to of sticky more build not the right? And values. platform. and right, for experience do want That's Zoom make kind we we same at

in new the bring huge same of GenAI terms service. the monetization, of At opportunity time, terms in does like

earlier, to said leverage As how some branded GenAI new build I service. to

cannot low-hanging You turn fruits. on only

You deployed services it. approach, make A a GenAI innovation. focused That's feature our already have like do to and price. I do innovation, approach. not GenAI need customer this on think right? not that's crazy now, innovation build pay GenAI and our you happy sure new leverage sustainable. I to how service. That's leverage customer existing to to

And of annual from customers macro, movement the to great of the and well some the where that Online, That, think, the the that's in of the pleased improvements X Eric. of headwinds Sterling, think is now. really you, over I platform, indication the monthly and we I do rate. the really, buy terms say is in you I been really ongoing ongoing has of execution for is the the would driving a in last where overall which done churn top stabilized flow, see And Thank the with more we're stabilization quarters ongoing funnel. see

to that over driver it new so that's the time pricing focus on And things and add can be new stable to we top as That's to products be online. focus of team can the a what where not that as well want when but this. then payment continue new the they well. will funnel eventually be starting Ideally, to growth on packages, only drive to eventually expand sold currencies,

sense. Makes

Thank you, Sterling.

Okay.

goes Power for We one time question. to question Baird. And have William with that more last

if Thanks are I Contact there. Center. with to capabilities more in like feels Center about if virtual on And How being Great. can and traction on market? of new has perhaps, you where opportunity to is it me wonder I do Okay. whether market? focus. even other big to to see there's the think one a a the Maybe question then part on much that entrant, big with been Great more Eric, I respect front? it's know be opportunity or how that room Contact opportunity taking is AI help you to disruptive for guess a for us you in. more go the respect you that second that there update

Yeah. question. Great

a innovation other have of speaking have features every think Management, being quarter. Workforce yes, front, high, high many of we a and we confidence go-to-market, speed, so I So introduced product on are lot features

Center what Meetings, go-to-market, In Contact we terms I like like of large, by not more primarily is did right, [indiscernible] different. think and driven before by for business,

we on one so triple indirect on need have to so the invest down embrace more master down, Contact and And this [indiscernible] of sort Center things sure, channel, need even but greater why not like the For a double And accelerated all front. of and that Phone agent right, forth. we product. Zoom partners on the is to revenue, essentially,

that I on As market you result. see see great front, go-to we will progress the the think

a growth leaders us like solution certainly to When Organic also And add acquired Contact vendors, the very a Not of Center Virtual Center. kind for to a of so acquisition also lot flexible, terms do the other organic we AI, AI product Center. is the terms why have in realized look not We only put to forth. those and Agent to have so of and Solvvy for features architecture. big also the right? all a AI going innovation. build and existing already how AI already at of on look help long, we and AI, they time. that flexible the in but long Contact right, Contact and AI architecture And That's you right, importance

confidence We that higher very front. can well do we on have

Thank you.

Thank you.

closing Okay. comments. Eric back would Q&A. our things This now to I to like for concludes pass

for all very, for thank earnings us support your you. really QX call. very Appreciate. for joining the you Thank I And beautiful. and great appreciate

everybody. Thanks,

look thank your you This of your for participation, forward to rest today's seeing conference. Enjoy we the again. We you concludes all and day.

you. Thank

Good-bye.