Zoom Video Communications (ZM) 20 Nov 232024 Q3 Earnings call transcript

Well, hello, everyone, and welcome to Zoom's Q3 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 third 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 including fiscal this call, we will the and regarding make for financial full fourth quarter statements, outlook our XXXX. year statements

growth and impacts of the business Our expectations our and the such regarding aspirations, initiatives. macroeconomic from financial and product and expected strategy business go-to-market benefits initiatives market trends, initiatives, environment, position, opportunities,

are other predictions with on on filings assumes These differ what turn are XX-Q. results, and SEC, risks our make may obligation are on annual webinar. And statements discussion that, on that the no to forward-looking believe update we statements Form to discussed any Zoom statements over our affect which may forward-looking based quarterly These and today's results we and detail including materially. Form in in XX-K me performance report with the reports the let Eric. today, factors could on financial that the actual to only we subject

excitement and attendees Group, the it of everyone, Zoom customer for future. Like and our that Thousands awesome. Thank in-person JPMorgan, such who amazing Zoom hybrid about us it XX Thank us were their Zoomtopia, HubSpot, event ran yearly October, Events. spoke MIT, year, you, you, innovation-focused hosted and we on presenters on last joined Boston experiences many In and virtually. Among Tom. the joining about as today. early multiples in-person customer we was Consulting Kohl's, and

countries. in XXX,XXX Team to creating and to AI chain of store is of especially for Expert to plans, I as million Assist with today. meeting of AI Contact about had leader, in innovations no sharing is the spoke less of cost Management months. At at growth Remarkable We and for created use it the included Companion, and like three Center. fared noteworthy connect newly-released summaries as Quality as large, employees And Zoom and have them being accounts globe, than and Since partnership their XXX%. who a manufacturing across Zoom paid also Flex, global has also over with Zoom to by Companion also distributed We Zoom Zoomtopia, well XXX%, for journey the tremendously X.X Rooms supply by in and enabling Whiteboards. workforce quickly circuits Chat. and XX for Whiteboard, were ownership. of users over moving cost power became share total XXX,XXX Meetings Zoom what their cannot Rooms Phone Flex Zoom Team infrastructure happy at increased Zoom XX,XXX to XX% Chat allowed so to next. They of wait and Zoomtopia, a how Zoom they pleasure our eliminate users our the well a additional Flex Flex stage showcased XX% XXXX, AI Zoom reduce and Zoom then, started by using followed across

our to QX. customer wins on moving of some in Now

world-class Events. base. Rooms, global AI-enabled their who Phone thank extending amazing and to to many has to Dropbox, In and Zoom let selected support customer starting First, Contact me Zoom Virtual for Center they and user QX Meetings with Agent an years Zoom then been provide

innovations Management, with year. standardize the Seeing AI limited and decided especially are integrating with offering, QX with to Virgin and Zoom Virgin Group, adopted encourage Phone you a scale the agility, Family to Contact knowledge. Zoom connection of administrative making modern initially our boost in see a new flows, offered Group of Center Let who and company, a Zoom they how me this the insurance Workvivo platform inspiring are pace Thanks is social life functionality, solution rapid into their drive CX experience the on to Management, on strengthening their also Amynta It’s the our on Workvivo Quality customer Workvivo. These premier I customization thank in superior us. I'd Agent to XX,XXX love one stack add services also wins culture for spend and XX customer-facing Assist. in their testament The much brand to progress Dropbox, also They highlight experience, Workvivo employee a sales Xx Expert monthly the Group client. all. like nearly with congratulate employees Workforce investments so support to and almost to and and bringing Group. with is launch Virgin bring Amynta, Virgin the Zoom we leading companies collaboration Zoom platform Virtual our Virgin like Workforce to of how Zoom's across platform. to increase together helping in Management, on QX to

it And with that to I'll pass Kelly. over

beat QX. guidance top you, pleased everyone. and Thank in we line profitability Eric, hello, We're our that and

milestones. few a are Here

seats. reached Zoom First, paid approximately X Phone million

end, XXX% customers quarter-over-quarter. year-over-year while Contact points platform. In This result to doubled grew above customers' reached demonstrate the approximately we nearly year-over-year. grow with $X.XXX their in approximately EX as Center commitment billion, willingness proof expand Agent One up million the our Zoom Phone CX of finally, constant currency. guidance. end Zoom Zoom include and customers with on and that was approximately of And in our critical their us bundles customers number revenue processes Virtual X% X% at Zoom $XX and entrust our high quarter These Second, came as QX, XXX total to us of

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

online the lowest have approximately improvement is X% This we FY churn, rate X.X% QX XXX,XXX. in see to average to of X.X% decreased ever Enterprise reported. The continue 'XX. grew customers which in year-over-year churn number of monthly We to from

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

a grew revenue APAC Americas year-over-year. On while currency declined APAC basis, slightly by each. Our X% EMEA and year-over-year, X% grew constant

QX optimization results, associated XX.X% Moving gross in Non-GAAP taxes, QX non-GAAP from expense XX.X%, an improvement but exclude usage in year. our associated first all primarily compensation across and performance in additional technologies. data public cloud gains AI strategic and The lower in partially gross the last half the expenses, stock-based effects. slightly investments new of than investments was net to by centers, offset our of payroll the our margin driven co-located on acquisition-related or tax losses this which by year, and of was margin strong

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

percentage provided roughly sheet. to year. X end QX from at Turning the This end down last was the $X.XX quarter. balance Deferred last billion, period was we revenue high of than point guidance of the of X% our approximately better

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

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

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

grew throughout As seasonality flow expense XX% QX quarter stronger renewal flow declines higher the cash million. in XX% Free rest interest cash cash sharp to year. Operating year-over-year increase income. management, $XXX a year-over-year and of flow to the due to was in reminder, collections, grew The of the metrics million. $XXX our and peaks targeted

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

which and in we free at cash billion $X.XX increasing would strength $X.XX cash for the FY in collections, to profitability of free outlook now billion, are We midpoint represent year-over-year growth. the Given the be range flow flow our expect 'XX. XX% to

guidance. to Turning

implied impact, guidance For would this the $X.XXX $X.XX slightly our represent range call. the growth. the QX Adjusting than previously higher in expect projection which for X% year-over-year approximately QX, is revenue be billion currency midpoint at to we billion, to from of

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

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

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

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

the and outlook our entire community your non-GAAP question. first customers, million $X.XX please XXX to share Zoom $X.XX the outstanding. Thank queue our for on 'XX you Kelcey, team, and support. is for Our up based per to earnings approximately trust FY shares for our investors

Kelly. And Kelly move as into [Operator Q&A the you, Instructions]. Thank now will we mentioned, session.

from Our with Barclays. Ryan will first question MacWilliams come

with the touch have the any you in the new quarter bookings? start to the for environment macro to how Kelly, linearity you do overall And Just did compared in throughout quarter? could second quarter on changes third

to pretty Ryan, been so consistent has the macro QX. QX from Yes.

We loaded. trends of see terms deal continue scrutiny, similar back-end in to

perspective was from back-end the loaded. So direct quarter a fairly

the the business is throughout reminder, quarter. a typically pretty As linear the segment online of

only saw Asia fairly Asia FX, a -- actually least QX was had the as that a got flat was worse headwind impact. year-over-year, not thing for that think Pac that whereas you would us, to for been I Pac little significant from QX at that if have in

Meta to Stanley. on with Marshall Moving Morgan

on kind a the you're of customers a And using just jump Maybe getting question Companion. that's big what kind in pretty it. on feedback of AI

So some guys conversion kind that they and were is for? really of just what features it hoping you with liking, the of are helping free-to-pay

a question. it's great Yes,

speed right, very that. the One Zoom are I a a lot earlier, cost the additional we really as that single a and team's on success AI proud A of so think, time. it's accuracy, the federated no AI of to latency, and since of the progress ] I meeting the that and terms is contributed lot our it very AI accounts features. really it think take and not [ Amazingly, it outpay because for model, mentioned save approach and a Remember, really of I feature of helped enabled of also count summary, Companion, also, our do response, And accurate forth, like host example. on to customer. this so lot is launched AI Companion. our very, we meeting in

Again, and also the producers and for no online additional it's cost.

Companion, not AI for data a free free -- sure, cannot those for users, approve For ] this upgrade. sure, enjoy for who it's they to for they do health online [

we AI So anyway, on innovating keep Companion. so

any We to our AI have compared high some confidence. of by functionalities differentiation features, competitors. offered That's true a other

Our question Goldman with Rangan Kasthuri Sachs. next on

to just myself because Thank it that could significantly X%, number question, from quite Any churn one. which implications would Thanksgiving. came to would Happy initiatives for and down even assume I if growth down margins, that, X.X%. rate restrict could are that bring online you your much. know good. see one Happy SMB more the had and you already very are big that that have The I results, I I undertaking

working users. tool future, really the and for come her mentioning all initiatives. think always -- Wendy because a team included retention is retention -- free paid on going But what to a was AI a key reminder, AI as and our Well, probably our of Eric the be for are features just I about Companion differentiator in sorry,

well. as but it really we long help for conversion, seeing we're that will the not help it with with term, believe retention So only

And and on much seen, also ever I basis it lowest was like, the gotten our better. question many times, we've this is online this would gosh, I've platform for is It's say our than pre-pandemic a better infinitely users. but so where

should And level. you see at is to improve. I this I modeling over we continue But will it time, we're retention so -- how think to just this continue think

] side, as happy But let me add well. you world on [ the the side to with also coming

for like users, right? example, So part this Team customers And more had A wow, Zoom and take This for for a the other they features, more Zoom For great only realize, lot Events position for of it's spend Zoom of the online platform. solution. meetings is users as offering, the a Zoom but pretty Chat features, which Meeting. well. not It's a time for platform, sure, powerful, right? well, other lot on paid for user just only entire really is free of even more as a not

ahead Wells Fargo, your go with Michael Turrin. Please question.

guess the down complement to Enterprise you're a on I metrics, to some XXX%. stabilization Kash's major as took showing the step of a question, expansion metric here

takes And just so similarly side for to just on any commentary kind like us product Anything as in show there what for wondering is renewal that. other or of cohort metric given the it that QX stabilization to walking through and helpful. consider

XX-month trailing Well, metric. it's as a reminder, a

Virtual But general Phone, we that key it. we've our see year rate in we those are So again to reaccelerate come metric our as in of worsely contributors success Center, be the growth AI reaccelerate behind following well all will seeing this Zoom seen rates growth to seeing that in believe start Companion as as Contact as Zoom as that down Agent, well. to absolutely, starting Zoom we that's

from will Michael of Bank question come next with Our Funk America.

deferred the new the in for 'XX we the decline deals that. on revenue in the commentary given year Kelly, deferred revenue affecting in XQ, about on in rates macro rate and just on calendar So and think guidance How Enterprise? impact growth the should

Yes.

customers deferred cash they're So committing in RPO, advantage preferring shorter-term I what's which seeing implies long-term see interesting, the very pay in growth decline you you're at, look their if take agreements, increments are while revenue, you rate they for in a mean environment. keep to to but of right, and interest

impacted that come thing, to reminder, going then that customers had we've other as big we to the a a that which we're majority lot in, FY through moved believe currently we cycle in -- of we we're that's during down. it's a some going and So And and 'XX, have peak that FY of right, means 'XX period sort our had the in renewal renewal the our QX, that customers of believe we've extent doing has know about in FY team transition from reduction. the bundle. customers, preserving Meetings One through And majority a of say, were have or talked renewal spend. But rightsize of great the Zoom themselves Zoom gone helping think to of the customers We past that we're we been job our a the by in period our majority 'XX. that a them to

the cycle. So hopefully, renewal that in by time 'XX, normalized we we're more a get into FY little

UBS. And moving Karl with on to Keirstead

Okay. Kelly, Great. algorithm business been lately. Phone growth has Thank of the Zoom you. part big the a

did elaborate So the that if in wondering I'm the could on of how part business you quarter.

about rounding, know to elaborate the sequential the you round On might you it platform adds the the maybe that that's I like that that number, a surface, seat have and a Maybe less seat phone give part than several quarters. business. been wanted but but to lot looks of I last

lower are are our QX a quotas. given month -- just as of reminder, on cyclically enterprise QX Enterprise that cyclically, orders, some reps reps X our our and QX So

be So add Phone, did What we've see historically customers we in in seen Zoom just QX the in was upper and QX the segments. that big quarters QX.

X% customers with seats grew quarter-over-quarter. So XX,XXX greater

So of in we're end strength the of upper Zoom Phone. seeing a lot

so had then that far same a given exact I to at we've we honestly So as haven't always reminder, period. this really that's increase largest that. mean the the happy year. And metric,

little make we'll And on in you sense. single you tell how future to quarter. continue milestones for as trending as just exactly So bit they the it's a to past, it's hard every update

Oppenheimer has the Iwanyc question. George next with

us can extra you of the give on maybe So bit a customer and on up following center contact color seeing there? Zoom you're the traction Phone, Kelly,

Yes.

Zoom as up double on So customers Contact we quarter-over-quarter. Zoom Agents mentioned, of XXX Center, we're to our and customers over saw the product we number Virtual

thrilled functionality, with excited far. really we're talk can but so So that about mean, there we're I features there. and the of maybe some the making progress Eric

Yes.

and [indiscernible] Center phone architecture, I stable and to of a right? you extremely excited terms Phone, many follow well, Center it and in ask what Zoom you large feel our have we we at plus today maybe because extremely think years if a are people feels to when take number wow, are at of announced for I often, better And the it years Quite of by deployed guys it innovation ago, even Contact Contact features AI mentioned, we So going to similar recognized, our journey a lot speed. like and we would look opportunity. of about customers like lot if modern look and we the few get back

very Contact whenever modern and Management you on Center and very really few take think right, feedback excited. think quite scalable. so very, Zoom seriously, lot new team's he realize The down And Center. Again, I our customer Wow, is just did very boosted Contact Agent let's it a I a customer architecture, also this cases, shared very Contact I Contact features not right? A and it's so down, there's own a very, have of double that something triple our consistent. AI Workforce the guys powerful Center. I confidence, excited. it's this we Zoom so we are further are is in value Center, call, and Virtual forth. during a amazing,

Levine know We'll with Evercore. from Peter hear

look the keeping these is away is at as But dilution the and Companion think users. way year, part prepaid Maybe as about you that? cost think but guess, durable margins, How levels? given how models, to second, being of you package, for think it guided, Phone. and I Kelly, run if levels? And the comp about AI stock-based kind Center have it is of through know as Contact the next to you gross to you what's of manage these best at then I these of sustain I sustainable as profile into margin from kind

Yes.

the of So give team this next we'll in and FY But are its room terms thoughtful all planning, job of very innovation. our about obviously best to amazing and our an our working around DevOps as we use our leveraging margins, continuing is call quarter. 'XX highest guidance and gross centers of for on data doing AI making to optimize capacity being on

on we're really actually to long to XD for we invest will what the for our the So there's that want for going -- co-los continue going there's ROI it's to and need going because do to be extent that we we margins. you our believe and going be our do to while forward. Do Eric? some as you growth it's in significant we some team anything, expect and way, to do margin to we going to add run but it's I impact move operate our we very that to at mean are that going -- look we're think to and that don't efficient gross amazing team retention. But the to gross invest, an our manner term, the customers, and for the be do when expect they I impact

Yes.

right So on. you are

team our to as our led what mentioned Just really Kelly on and echo AI CTO, federated by earlier, lot. I approach, a side, contribute his XD

really, think I think quality And a cost very our terms is I team also manageable, smart That's for really, but in the why there's cost, extremely is good. had very of manageable, So architecture. federated I right? sure, impact, AI and pretty but a

innovating and are keep on we that. So

this is of supplemental stock-based year about regarding the Peter, Eric. to X/X grants. Thanks, related our expense comp,

that are with reminder, underlying grants a vest the vesting. as along So those how

just couple for you years if start will. to off, bleed So there's to a more that

out. model to If going that you're

And JMP Walravens we hear will Patrick from Securities. with now

Great.

customer on So the of Eric, the Center your ideal what side is profile business? Contact

That's great question.

is think architecture I and this first again, based features. AI of all, on

for agents but want still I look customers, think our early, sometimes ever It's for but now even reach just you out very, at, tens are our solutions too hey, large, why even let's customers. the the if say up very fully even architecture, take to reason large not ready, for and sometimes they to reason they ready. medium-size because why seriously... them. do That's the if everything, thousands very of we

or freeze I Oops, freeze. did Eric did

Eric think is... I

that I if don't was know me.

Okay.

Let me...

Sorry that. for

you You're back, there. a minute okay. lost We for

I'm sorry.

That's my solution if on it's of new the if agent companies, XX,XXX medium-sized And say, of medium-sized so when given we they me, event, know have let's mentioned AI earlier, little focus agent. our like is, obviously here, win. there, and have Contact large from we sweet XX,XXX, to however, I architecture it proactive, be going get they the on of a customers, going want bit of like to point our and solution solutions seriously, spot. But look those, I'm sort Because a companies. we're a any a big to modern at companies, while seriously, like new a hundreds to [indiscernible] look very stop confidence do focused we're as But our features, at Center the that, confidence. you all

example, Patrick. you I give quick a could

well We and which also their And became have payroll as called the Management Zoom they as They've their services. digits Center year, seats, X seats. doubled Phone deployed our now. like in Contact have provides and management and quality last -- a Workforce customer they VA. Zoom they they're They doubled Vensure, HR

see So not power, but its Center full exciting the think and Zoom the grow. products, the see suite Zoom. really taking very deploy start only like it's suite advantage that, And of of they and Contact of them they really when been the I to extensions, to whole

with Our next Bhatia Blair. question comes William from Arjun

some about just your with Contact on there like faring It the how that Phone Zoom business touch they're And growth U.S. bit? of turn a gets around? and to seems drivers, trailing certainly maybe you it's the business Can But what new little international Center? talk

Yes.

have actually and leader Australia a But last have the added new by in European has APAC leader in EMEA by new our and both and focus, terms very been a been of then both impacted New the Unfortunately, currency impacted year recently and So war economy the there. we Zealand. over general EMEA and

And year, than have little starting they're we a team. very and the we're that excited again about we're regions excited So success what about the but going to taken reorganization did their momentum contribute the build and U.S. watching earlier see those just the since future. to this in bit really longer

will with Alex His not Zukin answering, video may be is from Wolfe come question Research. it audio just only. next Our

is ] This in Alex. just two [ Ethan I Brock quick for train on right now. He's questions. had

Just has the what we any of bookings rate what expecting level helpful. in growth expectations, -- we the and for or be of it above NRR sequentially. what's of Enterprise the give expect in XQ quarter, kind color when guide? the numbers also kind how it cRPO. And above is should the enterprise revenue do for like guess, think puts can kind at around next think would would that RPO, probably cohort in in to Just was implied around Enterprise just be to you're was trough? XQ takes fair accelerated. if it your And right, and you cRPO it churn, Online all and I more year's that the any of grew

Yes.

see So our QX, look as QX, the very which about talking theme of they been have strength to having cycle. And customers typically coming we we our in are X-month the that the continues reps end to have the we've are this forward loaded that were year-end quota-carrying of just benefit we And year-end year-end direct January having XX. macro. then on where terms overall we have we in have, of and on we did course, quota their in back-end bookings, of their XX/XX

if that to sort one of January expecting well. But terms their similar back-end in be and So expecting are hopefully taking of advantage bump then XX/XX have we we XX a behavior even of accelerators. loaded as

little your net mean, reaccelerate down for In given not on your that give to and going little even next a terms room I to stabilize to year. might further we're I don't we more come of growth rates expansion, that. that a -- come it expect more be guide dollar bit probably have there question bit around starts until down sometime that

a Okay. just then And follow-up. quick

prepared change, shorter comment I how if Just moving to there's different just to qualitatively think a to in about payment billings is remarks your just shorter guess, made you XQ, relative terms. there think the more on duration. the any any around obviously, -- to people way

terms we what's XQ of guide? implied So the in just in how that think about

we was -- We in so saw trend we and first this time, commented Yes. seeing QX.

you we remember, about going we happening. this If talked the our any prepared it's I also given in And to high, soon. time expect this are change saw interests don't remarks,

health shorter And news the good just committing think -- period. are underlying to customers the is they strong very I had preferring right, the obviously yet, duration from on cash contracts, flow of longer-term business, are to we pay term. the in

So I don't think it's something you should about. be worried

be going audio Murphy JPMorgan. at only. is Mark to our question from next Mark will And come

Ardie on quarter. This Congrats the Murphy. Mark on for is

Virgin to front? seeing across those launch that You Can what kind speak their guys just and the workforce-related of the a the XX,XXX momentum of innovations and Workvivo called you on out launched you've employees of recently. of you're adoption number products and Group

want to you do Yes, that?

Kelly, ahead. go Yes,

talked all, we're as run of continued we're and an mean terms unit, already -- quarter we Workvivo. we General continuing adoption. last operating talked They to about in making and -- amazing of excited they're about support really their on and call first them about momentum, I Dollar sure their the which we've operating, -- that

we that gave family really said, target, an and and us, the bookings are They joined -- welcome we're to they about excited and them accelerated So achieving when they running team. against that.

continue succeed. really to watching and thrilled have them So that to

come is to question going with Our Catharine from Trebnick next Rosenblatt.

last year? at looking M&A they CNBC oh, we're of growth, all the in kept appetite on changed your saying, Has for day growth. All reacceleration for long

if your billion, So $X.X the attitude you're I'm looking just wondering towards M&A? at and

reason that it a for does did. make it honestly we're on retained, through match, if we have that should there. And other able of is a technology really look of we tests. wouldn't have it. high we such out make always purposely someone basis. I at would very something we companies price dev are to that balance Zoom. just find that evaluating do that our at as And to it to we the two Is love strategy really at potential lens that opportunities have to to continue having makes doesn't hard a found And interesting, companies. And bar, We think have the act that think terms say, why we that customers. We the Catharine. great but It's a indicator see that then, a sense? well look of good that our we There today. strong on all the looks evaluate companies the our it you, a is pay. something really for that a remained, like has high-quality culture sure love doesn't find it work Zoom or we time. that to been it cash that does I sheet and customers lens through about daily all, M&A and the Yes. date, something on bring to right first do of product of those mean we three what with we all they a the one want we of valuation flexibility Thank that because with and in enjoy usually to course, of is, haven't integrating that success make corp team are we won't. mean sure it And it's we to And that look so willing some

to KeyBanc's on Moving Tom Blakey.

Eric, Kelly. you, and to see hi, Good

in about into the and XQ expect Just that churn. that's should stability of in quarters were little a that that that went talking you maybe on we about that forth wondering very back the helpful. maybe be -- bit fiscal It's record just here of and 'XX, update Can obviously of I the maybe would stable. talked similarly the into type couple on fiscal Online. pretty a Online in terms ago impressive mean stability a same quickly on we we been and that us you even

Yes.

to -- year fronts this work on of lot around a many done has team Online. the So

seeing additional it's things and First today the all, on brakes. And that to top well benefits that funnel, we're the of free-to-pay are of being retention, focusing stabilizing to continuing and conversion of are able as like of strategy procure as scheduler our well products as the things those important whiteboard us fill which really force the because very to mentioned also aligned Eric like buyers. online, earlier, you're online

are to and focus of continuing those Wendy are that initiatives on. her So the team all

see stabilization, is quite stabilization mean, We on we quarter-over-quarter. I And it's see will hold initiatives 'XX it's be -- again there. drive close, that to slightly slightly want a terms down, some standard. with very expect planning to just And forward high the But stabilization. down very dollar to In we in not working it very, while What really very, ourselves into as FY and 'XX. not, really we're if QX. FY very team, looking growth I

Securities. from next with Shebly question The Seyrafi is FBN

Yes.

QX. billing Enterprise related to big in Do this, in customers. decline that to question frequency is X% revenue kind have without going of would The I that deferred X% you have change? And to to QX. you're with billing a cycle frequencies what decline guided been shorter renewal have You

meaningfully to deferred QX? pick up So expect do revenue growth you in

Yes.

So the as happening. deferred two in the the things is throughout the there's and And are year. reminder, year the it revenue declines trends QX a throughout highest it's that always way then

First of the renewal period. all, QX is largest

subsequent than bucket So renewal the cycles the getting gets QX. up, amortized the also are the rest year. that's through and if lower of filled then But

So where quarter. adding we actually every in you're adding amount dollar single SaaS of single it's every usually probably quarter, world renewals number every lower the higher lower a are company -- other a inverse of renewals the

that QX for getting coming into amortized as quite top what's at now, typically the deferred in number of decline of refill every revenue is is quarter. down, years down And have a seen sequential bucket that's why you So coming a quarter-over-quarter. single

James Piper We'll now hear from with Fish Sandler.

of few quarter. a some is at points up kind product about the off average we're have think count this what how of XXX Contact talked of that If kind Appreciate seat that of with ARR all questions now? should But Center, is prior the with seems math details XXX of lines. versus my million given the about nearing building Or $XXX last we customer guys count right, point? about around like you price

released Center this for gone how function in with mid-market. was the available and small acting really consolidation of but Eric, engagement that of it got for especially And Contact penetration quarter, that you, has solution then, workforce look, a terms is bases, installed as underneath sort

for offer So -- Center, from Contact just not you This have up. cloud, integrated I of not a architecture, We modern the the time, something to the the right, built full want Contact on-premise think like, in solution for including It's the us Center right? platform, whole well with everything that's on Contact Center capabilities, put offer the ground and to right? if core Management, only is -- hey, tied long not it you Workforce a based into at we just look case. the our solutions. you

are our all why right reason enterprise, at you I mentioned should think major. spotters way when sweet however, the to be we earlier, as customers the That's medium-sized, look ready. from the I And large SMB,

so is However, Workforce Agent, we [ you everything, called, Center, to indie thing Contact them. have ] seamless of one want to realized, AI in experience offer one are feature Virtual customer, for a trying all Management, do

kind our strategy. that's So of

contribution, to terms In tell Management really it hey, you. everything customer, Workforce helped because of we we offer our

platform. all services, other not with third-party let We solutions. are to Management offer going the to deploy you the Workforce one We all functional you

doesn't announced but with that them that to so of milestone to And see are in how those understand start progressing really we'll Yes. your do others new we and kind emerge. as terms over metrics as sense, we do will of we James, time. right themselves, They're done just now ability products

number to tuned We yet the with let's customers in quarters. Management, are not Workforce number, a stay exact future ready share about how deploy the many so

next our VanVliet Matt will with from question BTIG. fleet come And

Zoom one up of following more on sort Center Phone. guess the and I Contact Yes.

you Contact next the you're after? target the that customers, an You on that, XXX,XXX attachment there. of terms customer well XXX,XXX on of can years X% your work up you're you roughly -- way XXX,XXX going do Contact of identified a then think few comparably and mix, have maybe if In Zoom into. And penetration go below on Center existing following to or customers? think customers that customer Phone as customers high revenue you've How overall of Center Zoom sort is here. over share have the sort Is what you of percentage, there an Center Contact

its I the it's far progress that Center that map, that Contact than Zoom way about is road very, pulling is if think will, guess I Phone very so and a So in similar you did.

as a grow It that then start in which we're need contributor. seeing. did, the we to think for can very that a we starts we to example, similar ARR quickly, for that's Zoom as really Phone. But encouraging. visible couple then little while going see be if a very, So But you. you it's Zoom small that internally and very a just just way to terms something And it with far, and about visibility I in it's metric what is more of be so tracking that's to take think growth could Phone a and -- significant years

of look similar still deployments And also, on opportunity, plan. you look most lot at ago, at still Contact our if years as Enterprise on Center our track. see Many customers, Today, a customer, of well. phone, you you very their Enterprise

out ahead a very of us, why modern in architecture opportunity scalable. that's So lot particular, is of given

Needham's Koontz has the Ryan next question.

as you yes, with view From doing the product? there. Thanksgiving. I The a for innovation your use opportunity Zoom what that you're can see for market on it's stand-alone impressed that opportunity how Rooms Rooms Do you really Zoomtopia, the enough seems really the promising And And what's you and market. think wondered company. team years ahead you updated the that with more lead the you -- we're product. Happy strong of almost as a

You sort questions. have of to go-to market initiatives, those

yes, So, Ryan.

the ahead of on Zoom our speaking I We So in you're customers. have embrace Rooms they to evaluated and modern they out is many right, solution more Zoom They the multiple never, mean of in customer, they opportunity, also their indeed other need years, to solutions, for for for years any competitors. try work. more a hybrid deployed Rooms indeed stands right. conf-rooms,

management, for to hybrid customers lot time, is and hybrid the a with one sometimes when same they middle only and in the layout work, layout now, of workplace for the and not new entire the work right of conf-room many workplace, a of supposed. What's However, also what's work needed to new on they they're how customers when so but the innovation, that opportunities. At forth, That's they the support embracing [indiscernible] so together right? support try conf-room entire and right? why

with or as and sure to for solution, hybrid also not only Rooms, side part lot right? All full work to conf-room a workplace build the marketing on it's we the of think for for all focus like digital things how and we a I desk, opportunity, solution, itself, only entire as Zoom a reserve for just needed -- a why Rooms Rooms of conf-room the part workplace not Zoom your well. also in like share those signage like that's conf-room make customer. is a Again, and but of for to the as example, Zoom

Peter to Weed on move We'll Bernstein. with

Thank you.

customer least of either has and the of great far the it appears churning expansions you or they're than I where increase, shrinking we're going? should at effects? And Or quarter this hearing kind the pronounced we've some imply time, is temporary like I or are And pain is greater larger think bit those may the that of of have which churn? before to customers kind we stories that's Or about at some it more a is recently. How and see it churning think this got kind through is we for we it is downgrading, something effects? where of seen perhaps get when something more that ending? it And time and were are another customers would continued those the as enterprise a for number of set whole quarter-over-quarter. about look customers customers there's can that as than flat enterprise first But in roughly model, looks $XXX,XXX that downgrades?

Yes.

think in of certainly we've impact We this businesses, their count. about retraction last customers own I their seen employee talked having the quarters. our have in in couple So own

news that's the Zoom that terms that opportunity that seen rightsizing, retention we've -- talked one is grow are bundles great that's meetings advantageous if and license potentially to Phone. We we even selling more year-over-year them, are a not many of include numbers. Zoom their One that taking of situation, -- retention. and of very than good working the terms It of in been team in bundles, from great And our a terms yet doing is reasons, prepared using down number our we in the XXX% them for situation in to lot so the transition with of churn. as job So customers to meeting we over logo has of deployed, of right, remarks, those one our see more customer saw about product we we in having that

where package of they place. period that of have our some their we that. many but know as this right renewal those meaning hope, we've anticipate customers our transitions call, and that the that own earlier, end licenses we of through are sort also many, got that of that many, this with worked And this have their certainly aligning organizations the on have the and customers through about we we -- had on of moved So year, the FY year earlier reductions ensuring get majority talked 'XX, in have done I in we've to most

But like X the churn. through not the in And the Bernstein, things love kind that which expansions then at [ and are uptick even that once you're in we're work reduction set it us so force. of mostly a of an in going great buying, is sounds that, just on product. you seeing customers all forward we're people kind ] great can This

FY knowing But I yes, clear. they've customer their be year, assume to not gotten we've we're just and that giving general guidance, So mean our yes, reductions. we this of that's what in through I just but most renewals that anticipate, 'XX through that's, worked

be case. on macro, overall depends we happens it the to with what believe but Now the what that's

Our next question with Koujalgi Wedbush. will come from Taz

Sorry, guys now? you hear me can

Yes.

Zoom on question Phone. A

the have So down seems ASP, half which to like more this Kelly, a quarter. $X list like last us $X almost price. or it even comes I can seat if you Phone math ARR rough quarter, of the month, on per give Zoom the the Further, something do we to

just that If discounting has down, confirm you that can and gone gone up?

distance. Phone reminder, either buy you if as per $XX top month $XX metered for per Zoom if you a can have license or long So calling on unlimited get you

we willingness So is ASP that, of do SKU of upfront. their enterprise their the going length terms they Phone, in depend for to of value customer which are to obviously, longevity how purchases of on for but for discount come Zoom pay not of the a just which our about version think overall or cycles, the value buying some customers together. And being largest of and the then of customers, if you

all So right things it in. but sounds you're of like contribute, those

the You're right of sort in ballpark.

in not shift have discounts down. or dramatic seen those up a We

discounting the Zoom just contact price the Is similar in seen Contact in compares in think what comment I what Contact Any you're on the your one to to Center. And Center seeing since for follow-up. or was list center you've how XX Phone? that

and No. I different Yes. don't can sales their They're correlate with different cycle think approach. a very you if them. products

and apply a product expect think percentage a So I one one. different to don't necessarily discount you can to to try take from it

Citi. We hear Radke with will from now Tyler

puts that help and the beyond business. that, about see we QX, QX. It about off a currency of the are in than in 'XX? as and we thinking parts for how be for you're X% point how about jumping your if lower. What like for year us there. should to just does there I kind it's takes that higher at also stabilizations be that some guidance be Kelly, in would of fiscal cause So the trajectory should growth starting growth of to midpoint is But frame then sound But look some thinking

Yes.

call. obviously we on FY So guidance give the QX will 'XX

considerations. and all many the stabilization than be could slightly rate rate But Online, we've aspects We considerations our higher in 'XX all extra macro in rate. you stabilizing the drive you're now, modeling. into the -- I in take is do implied QX to as improving Contact and be at FY talked right However, account are Center, all growth growth I if consider time of and exit if could extra that contributors Phone, look today, And that implied mean, growth the it important think do that QX great about or around see over the business macro?

We'll with Baird. move on to William Power

for quick just on? on feedback what greatest to of you're couple like? can are most you a can I in I where follow-ups. add about seeing asking Companion, continue AI customers Eric, question look more AI? usage. the guess, what's the are what early focused talk an mean to And And Maybe customers Where there? value earlier Great. you

great Yes, it's question. a

have of all you And when and so AI a features you are on, can First of includes you a kind of Companion a to related the upon what's use missed, our it all, lot what chat, built call, of point I kind right? those of the features. if ask, quickly lot Like of you can composer to features. also you and solution that, going want instead chat right, team

generated. meeting meeting only after And be summary, is really forward not over, one of is very key for features the the right? customer like sure stepping And to

a record anymore. sometime not Sometimes, your meeting record a do meeting you or

already feature in blink. works among just well. You of started record do summary. lot other a features, We And that extremely a see customers a

this think way the in obvious feature. our very highlights. see that It I very you enable of to probably and right the went easy is use one to

lot also right? client, connect lever road And Almost for other features as well, awareness to it's as the compose lot again, going of have can I and a So a Whiteboard with platform, [indiscernible] for down like the well. we're other of the features, client, our -- can, You e-mail you every entire And you as Companion. service services the right? me, well. Companion It's right? AI AI use

of So AI the Companion. and a and features lot

that. sure and I'm explore features, Make sure many you love pretty summary meeting you'll so enable

of early those lot adopter. from a feedback got positive we've So very

go going with HSBC. want you And out no not, Stephen if I question come longer think don't you us. our If Stephen, to you I last Stephen, to Bersey from there? he's are ahead are just believe, disconnected. is -- with Stephen, still

Eric, remarks. you I'll out what, for know turn just you closing to So

Yes.

all, time you. your to I support. holiday Thank families a again call, you of thank wish first your really QX your So and join earnings season. I Thank you all wonderful all you have our appreciate. great for for

I Thank you much, Eric. concludes today's apologize, Kelly. so Again, this everyone, earnings release.

and our Kelly and Eric May and thank happy we your have And rest As the all safe you of holiday Enjoy yours day. your yours. mentioned, season. family you for participation. to a from