Q1 2025 Zoom Video Communications Inc Earnings Call
Takes over to Charles Epic Flash incoming head of Investor Relations Charles over to you.
Thank you Kelsey Hello, everyone and welcome to the zooms earnings video webinar for the first quarter of fiscal year 2025, I'm joined today by Zoom is founder and CEO, Eric Yuan and Zoom CFO Kelly Steckelberg.
Kelly Steckelberg: Our earnings press release was issued today after the market closed it may be downloaded from the Investor Relations page at investors <unk> zoom that U S.
Kelly Steckelberg: So on this page you'll be able to find a copy of today's prepared remarks, and a slide deck with financial highlights that along with our press release.
Kelly Steckelberg: Include a reconciliation of GAAP to non-GAAP financial results.
Speaker Change: During this call we will make forward looking statements, including statements regarding our financial outlook for the second quarter and full fiscal year 2025, our expectations regarding financial and business trends impacts from the macroeconomic environment, our market position opportunities go to market initiatives growth strategy at this effort.
Operations and product initiatives and the expected benefits of such initiatives.
Speaker Change: These statements are only predictions that are based on what we believe today and actual results may differ materially. These.
Speaker Change: These forward looking statements are subject to risks and other factors that could affect our performance and financial results, which we discussed in detail in our filings with the SEC, including our annual report on Form 10-K, and quarterly reports on Form 10-Q.
<unk> makes zoom assumes no obligation to update any forward looking statements. We may make on today's webinar and with that let me turn the discussion over to Eric.
Eric Yuan: Thank you Charles Thank you for joining us today.
Speaker Change: Our rapid innovation over the years is it taking us far beyond videoconferencing.
Eric Yuan: Every step of the way has been guided by our mission to solve customer problems and enable greater productivity.
Eric Yuan: In the process, we have very deliberately created our communication on a collaboration powerhouse with the AI infused natively across the platform.
Speaker Change: Time and time again, we are recognized as a leader by Governor Q2, plus radius and many others.
Speaker Change: And we are so pleased that in March Foster company editors zoom through their prestigious list of the world's most innovative companies of 'twenty 'twenty four.
Parents and enable greater productivity.
In the past we have very clear.
Communication on a collaborative powerhouse.
Speaker Change: Further validating our delegation.
Literally across the platform.
The validating our dedication to providing our customers with a higher quality open collaboration pliable, Alberta by AI than it just works.
Speaker Change: Hi, Amanda.
Speaker Change: As a leader by Gartner.
Speaker Change: Q2, plus radius and many others.
Speaker Change: And we are so pleased that in March.
Speaker Change: Okay.
Speaker Change: In March we announced assume workplace, our AI powered a collaboration platform designed to help our customers streamline communications improve productivity increase employee engagement and optimize in person type.
Speaker Change: The company added zoom to their prestigious list of the world's most innovative companies.
Speaker Change: Before.
Speaker Change: Further by our.
Speaker Change: Our delegation otherwise.
Speaker Change: Hello, validating our dedication to providing kosmos is a higher quality.
Speaker Change: Within the launch of a zoom workplace on new enhancements and capabilities like multi speaker view document a collaboration.
Speaker Change: Biopharm offered by <unk> that it just works.
Speaker Change: Yeah.
Speaker Change: In March we announced the zoom workplace, our AI powered a collaboration platform designed to help our customers.
Speaker Change: Alberta plotted a nike along with upcoming features and products like Arthur AI compiler, which will work across the platform to help employees make the most of their time.
Speaker Change: Your line communications improved.
T.
Speaker Change: Okay.
Speaker Change: Oppenheim and person times.
Speaker Change: The workplace launch also boosted zumba fone team and Chad events and wire board with many more AI combining capabilities to help make our customers more productive.
Speaker Change: Within the launch of his new workplace enhancement and it capabilities like modest speaker view.
Speaker Change: Built into Collab reason.
Speaker Change: Harvest posted a lighting along is becoming features and products like <unk>.
Speaker Change: Well look whole pillars of zoom workplace is optimizing in person time.
Speaker Change: Diamond, which we work across the platform.
Speaker Change: And embracing flexible work.
Speaker Change: Our services portfolio has expanded from zoom rooms into integrated Adjacencies like a workplace reservation visitor management and digital signage.
Making the most of their time.
Speaker Change: The workplace launched also bodes zoom a full team in China event and wire board is minimal.
Speaker Change: Combined capabilities to help them to customers more productive.
Speaker Change: As of the end of Q1, the cumulative number of zoom rooms licenses purchased was over $2 million.
Speaker Change: But our core belief zoom workplaces is optimizing and of course in time and embracing flexible work.
Speaker Change: And in the last few months, we have provision 100 is solid and as decks in workspace reservations to support in office work.
Speaker Change: Our Ccs portfolio has expanded.
Speaker Change: Into imitated adjacencies like a workplace reservation visitor management and a digital signage.
Speaker Change: Leading financial services, and the legal swaps, such as capital, one and including using zoom rooms to support their globally dispersed hybrid of workforce in August like a flex in and beyond our home health care.
Speaker Change: At the end of Q1, the accumulative number of zoom rooms, licensees purchased with over $2 million.
Speaker Change: And in the last few months, we provisioned 100 solvent tax workspace reservations.
Speaker Change: The expanded format zoom rooms to workspace reservation in order to optimize in office type.
Speaker Change: All this work.
Speaker Change: Zoom workplace is also designed to increase employee engagement through the integration of work vivo into our platform.
Speaker Change: Leading financial services legal firms, such as capital, one and including using zoom rooms to support their global it is first hybrid of workforce.
Speaker Change: In Q1, we landed a major telco customer on work vehicle.
Speaker Change: August like flex and beyond our home health care.
Speaker Change: Approximately 101000 seats.
Speaker Change: Have expanded from zoom rooms.
Speaker Change: And the work available was named matters Mooney prefer migration partner for its customers as eight retards workplace for Mecca.
Speaker Change: Regulation in order to optimize office's time.
Speaker Change: The workplace is also designed to increase employee engagement through the accretion of work vivo in our platform.
Speaker Change: Our success in employee experience represents.
Speaker Change: Putting the beachhead for us in offsetting customers on the full suite.
In Q1, we landed a major telco customer on work in vivo.
Speaker Change: Approximately 101000 seats.
Speaker Change: Zoom workplace exist alongside and ASIC design co stimulatory, <unk> integrated with our abilities services, including zoom events revenue accelerator Onager Center, what's your agent and others.
Speaker Change: I know it.
Speaker Change: Was named Matt Mooney prefer my gruesome partner for E Commerce.
Speaker Change: It retards workplace for Mecca.
Zoom Kannan incentive loss of only two years ago is ready for Prime time, we now supported PCI compliance opening the door for customers that have a payment of processing in their workflows.
Speaker Change: Our success really experienced represents.
Speaker Change: Yes.
Speaker Change: For us in offsetting customers on the full suite.
Speaker Change: Drew quite exist alongside and as is done seamlessly integrated with our opinion.
Speaker Change: We also received a federal moderate authorization for our essentials and our premium skus.
Speaker Change: Including zoom events revenue accelerator Arnica center, what's your agent and others.
Speaker Change: Allowing U S government agencies and the entities do convenience visa to leverage zoom contact center.
Speaker Change: So the amount of incentive lost two years ago.
Speaker Change: We have launched all key social channels, including Facebook Messenger Whatsapp and Gmail.
Speaker Change: Already for some time, we now support the SIFI compliance opening in adult customer set to have a payment of processing in their workflows.
Speaker Change: And have enabled the regular transfers between contact center agents and other departments via zoom phone, having to further bridge the employee and customer experiences.
Speaker Change: We also received a fighter moderate authorization for our essentials and premium Skus.
Allowing U S government agencies, and the entity dubious visa to leverage room contact center.
Speaker Change: As a result of all the product has car we have seen strong growth in a number of deals where we have a beat or displaced <unk> got enough trouble for C cost per year.
Speaker Change: We have lost all key social channels, including Facebook Messenger Whatsapp and anemia.
Speaker Change: And he reports directly transfer between Carnegie Center agents and other departments.
Speaker Change: We have also strengthened our channel partnerships, leading to a significant increase in our channel business and our ability to compete for larger deals.
Speaker Change: Yeah.
Speaker Change: Having before the bridge.
Speaker Change: Okay.
Speaker Change: Experienced.
Speaker Change: Asp's are heading north buoyed by the popularity of our higher tier packages that allows agents and managers to learn further.
Speaker Change: As a result of all of our product has car.
Speaker Change: Strong growth in a number of peers.
Speaker Change: Pete.
Speaker Change: Please.
Speaker Change: Lean further into AI with AI expert assist workforce management quality management and more.
Speaker Change: Helpful.
Speaker Change: We have also strengthened our channel partnerships, leading to a significant increase in our channel business and our ability to compete for larger deals.
Speaker Change: Now, let me recognize some of our amazing Kosmos first let me offense, Expedia, who needs no introduction for becoming a lighthouse zoom revenue accelerated our customer in the quarter.
Speaker Change: Asp's.
Speaker Change: Buoyed by the popularity of our higher tier packages that allow agents and managers to learn further.
Speaker Change: Leaning heavily into our AI products to drive oven.
Speaker Change: <unk> further into AI with AI expert assist workload management quality management and more.
Speaker Change: A power user of assuming from four years, they wanted them to better ultimate workflows coaches sellers and drive efficiencies.
Speaker Change: Now, let me recognize some of our amazing customers first let me attack Expedia.
Speaker Change: We partner with them on the initial <unk> data that zoom around the new ACA side of the deal which includes working directly with our team to improve and are tailor the product based on their business model and industry specific use case.
Speaker Change: No introduction for becoming a lighthouse zoom revenue accelerated our customer in the quarter.
Leaning heavily into our products provide.
Speaker Change: Our power users of zoom phone, but years, they won't get into better ultimate of workflows coaches sellers and drive efficiencies.
Speaker Change: We're so excited about this AI surgical partnership to drive volume for Expedia and continuously improve our plasma based on customer feedback.
We partner with them on the initial <unk> data the zoom around et cetera.
Let me also said major league baseball a year ago <unk> made a highly strategic decision to adopt zoom Carnegie Center.
Speaker Change: Which induce working directly with our team.
Speaker Change: And a tailored based on their business model.
Speaker Change: In Q1, they chose to expand our successful partnership by integrating zoom quality management into their zoom Carnegie Center deployment.
Speaker Change: And industry specific use cases.
Speaker Change: We're so excited about this <unk> partnership to drive volume for Expedia and continuously improve our platform based on customer feedback.
Speaker Change: This enhancement further strengthens their fab and gives them a strategy and a streamlined.
Speaker Change: <unk> operations.
Speaker Change: All set.
Speaker Change: <unk> was particularly impressed but into revenue features enhanced visibility and the ability of zoom quality management to support <unk>.
Speaker Change: Major League baseball, a year ago, and they're a bit.
Speaker Change: Highly strategic decision to adopt zoom Carnegie Center.
Speaker Change: In Q1, it was to expand our successful partnership by integrating zoom quality management.
Speaker Change: Engagement.
Speaker Change: Let me also thank centers too.
Speaker Change: Contact center product.
Speaker Change: Non profit health assistant specializing in mental health and substance use disorder treatments for individuals families and whether risk or doubling down on zoom.
Speaker Change: This enhancement for the <unk>.
Speaker Change: And gives them a strategy and a streamlined.
Speaker Change: S operations.
<unk> was particularly impressed by the inherited features enhanced visibility and the ability of management to support what's your.
Speaker Change: Seeing strong value from their existing zoom meetings zoom phone and the rooms deployment in Q1, the expanded zoom phone.
Speaker Change: Engagement.
Speaker Change: <unk> Zoom Carnegie Center in order to leverage AI to provide better care and assumed team has had in order to streamline communications in all from a single platform.
Speaker Change: Linda.
Speaker Change: Understood.
Speaker Change: Nonprofit.
Speaker Change: Specializing in mental health and substance use disorder treatment for individuals families and weather risks or Dublin zoo.
Speaker Change: Okay.
I'm also very excited to share that we greatly expanded our footprint with a leading global financial services firm, who downloaded their zoom phone sales to over 100 Assortments.
Speaker Change: Same store Martin from their existing zoom meetings zoom phone and rooms deployment.
Speaker Change: The expanded assume from an editor zoom Carnegie Center.
Speaker Change: We're so pleased to see more customers adopting our new workplace and bring into service as a product in order to reap the benefit of our modern natively integrated AI powered technologies.
Speaker Change: With the AI.
Speaker Change: Medicare.
Speaker Change: And as <unk> had in order to streamline communication.
Speaker Change: In all from a single platform.
Speaker Change: I'm also very excited to share that we actually expanded our footprint with a leading global financial services firm, who downloaded our zoom from phase two over $100.
Speaker Change: And with that I'll pass it over to Kelly. Thank you.
Kelly Steckelberg: Thank you, Eric and Hello, everyone, let's.
Kelly Steckelberg: Let's start with some exciting milestones for our emerging products in Q1.
Speaker Change: We're so pleased to see more customers adopting our new workplace and bring into service as a product in order to reap the benefit of our motive natively integrated AI powered technologies.
Kelly Steckelberg: We saw additional traction in <unk> contact center as we reached 90 customers with over $100000 in <unk>, representing a 246% year over year growth.
Kelly Steckelberg: This was driven by our recently launched higher pricing tiers as well as our success in larger deals.
Kelly: And with that I'll pass it over to Kelly. Thank you.
Kelly: Thank you, Eric and Hello, everyone.
Jim: Jim pounds saw continued expansion upmarket with the addition of the marquee financial services quarter customer Eric just mentioned, we now have five customers with 100000 or more 10000 seats.
Kelly: Let's start with some exciting milestones for our emerging product in Q1.
Kelly: We saw additional traction in contact center as we reached 90 customers with over $100000 in <unk>, representing a 246% year over year growth.
Speaker Change: Hume AI companion has grown significantly in just eight months with over 700000 customer accounts enabled as of today.
Kelly: This was driven by our recently launched higher pricing tiers as well as our success in larger deals.
Speaker Change: These customers range, all the way from solar printers up to enterprises with over 100000 users.
Kim: Kim pound saw continued expansion up market with the addition of the marquee financial services quarter customer Eric just mentioned, we now have five customers with 100000 or more 2000 seats.
Speaker Change: Embedding AI across all aspect has been workplace and business services is a key priority as we continue to drive productivity and engagement for our customers.
Speaker Change: Hey, I can pin has grown significantly in just eight months with over 700000 customer accounts enabled as of today.
Speaker Change: Now, let's dive into the financial results.
Speaker Change: In Q1 total revenue came in at 114 1 billion up.
Speaker Change: These customers range, all the way from solar printers up to enterprises with over 100000 users.
At 3% year over year.
Speaker Change: This result was approximately $16 million above the high end of our guidance.
Embedding AI across all aspects has been workplace and business services is a key priority as we continue to drive productivity and engagement for our customers.
Speaker Change: Our enterprise revenue grew 5% year over year and represented 58% of total revenue up from 57% a year ago.
Speaker Change: Now, let's dive into the financial results.
Speaker Change: Online average monthly churn came in at three 2% as compared to three 1% in Q1 of FY 'twenty four.
Speaker Change: In Q1 total revenue came in at 114 1 billion up.
Speaker Change: Up 3% year over year.
Speaker Change: The slight uptick in churn was related to tightening up the grace period, and made payments, which pulled some churn forward.
Speaker Change: This result was approximately $16 million above the high end of our guidance.
Speaker Change: Our enterprise revenue grew 5% year over year and represented 58% of total revenue up from 37% a year ago.
Speaker Change: Absent this change online average monthly churn would remain consistent with the last two quarters at 3.0%.
Speaker Change: Lowest we have ever reported.
Speaker Change: Online average monthly churn came in at three 2% as compared to three 1% in Q1 of FY 'twenty four.
We saw 8% year over year growth in the upmarket as we ended the quarter with 3883 customers contributing more than $100000 in trailing 12 months revenue.
Speaker Change: The slight uptick in churn was related to putting up the grace period, and made payments, which pulled some churn forward.
Speaker Change: These customers represented 30% of revenue up from 29% in Q1 of FY 'twenty four.
Speaker Change: Absent this change online average monthly churn would have remained consistent with the last few quarters at 3.0% the lowest we've ever reported.
Speaker Change: As a reminder, our classification of enterprise versus online is determined by how we engage the customer with enterprise, referring to customers who are supported by our direct sales team resellers, our strategic partners and online referring customers to self serve.
Speaker Change: We saw 8% year over year growth in the upmarket as we ended the quarter with 3883 customers contributing more than $100000 in trailing 12 months revenue.
Speaker Change: These customers represented 30% of revenue up from 29% in Q1 of FY 'twenty four.
Speaker Change: During Q1 as part of an effort to improve the customer experience and drive greater efficiency in our operations, we transitioned 26800 enterprise customers with low <unk> to online.
Speaker Change: As a reminder, our classification of enterprise versus online is determined by how we engage the customer with enterprise with brand new customers, who are supported by our direct sales team resellers, our strategic partners and online referring customers to self serve.
Speaker Change: The number of enterprise customers at the end of Q1 after accounting for the transition was approximately 191000.
Speaker Change: It is important to note that while the customer transition had a noticeable impact on our number of enterprise customers in Q1, the associated revenue with de Minimis, representing an approximately $4 million shift from enterprise to online.
Speaker Change: During Q1 as part of that effort to improve the customer experience and drive greater efficiency in our operations, we transitioned 26800 enterprise customers with low a RR to online.
Speaker Change: Additionally, our trailing 12 month net dollar expansion rate for enterprise customers in Q1 came in at 99%, which was not affected by this transition.
Speaker Change: The number of enterprise customers at the end of Q1 after accounting for the tradition was approximately 191000.
Speaker Change: It is important to note that while the customer transition had a noticeable impact on our number of enterprise customers in Q1.
Speaker Change: Our Americas revenue grew 4% year over year, while EMEA increased by 2% in APAC declined by 2%.
Speaker Change: Revenue was de Minimis, representing an approximately $4 million shift from enterprise to online.
Speaker Change: The APAC performance was due to the FX headwind in Japan and Australia.
Speaker Change: Additionally, our trailing 12 month net dollar expansion rate for enterprise customers in Q1 came in at 99%, which was not affected by this transition.
Speaker Change: Moving now to our non-GAAP results, which exclude stock based compensation expense and associated payroll taxes.
Speaker Change: Acquisition related expenses.
Speaker Change: Our Americas revenue grew 4% year over year, while EMEA increased by 2% in APAC declined by 2%.
Speaker Change: Net gains on strategic investments and all associated tax effects.
Speaker Change: non-GAAP gross margin in Q1, with 79, 3%, which was slightly lower than 85% in Q1 of last year, mainly due to our investments in AI innovation.
Speaker Change: The APAC performance was due to the headwinds in Japan and Australia.
Speaker Change: Moving now to our non-GAAP results, which exclude stock based compensation expense and associated payroll taxes.
Speaker Change: In Q2, we will incur onetime investments to upgrade our datacenter backbone and expect gross margins to get to 78% for the quarter.
Speaker Change: Acquisition related expenses net gains on strategic investments and all associated tax effects.
Speaker Change: For the full year of FY 'twenty five we continue to expect our gross margin to be approximately 79%.
Speaker Change: non-GAAP gross margin in Q1 was 79, 3%, which was slightly lower than 85% in Q1 of last year, mainly due to our investments in AI innovation.
Speaker Change: non-GAAP income from operations grew by 8% year over year to $457 million exceeding the high end of our guidance of $415 million.
Speaker Change: In Q2, we will incur onetime investments to upgrade our datacenter backbone and expect gross margins to get to 78% for the quarter.
This translates to a 40% non-GAAP operating margin for Q1, an improvement from 38, 2% in Q1 of last year.
Speaker Change: For the full year FY 'twenty five we continue to expect our gross margin to be approximately 79%.
Speaker Change: non-GAAP diluted net income per share in Q1 with a one dollar and 35 cents on approximately $315 million non-GAAP diluted weighted average shares outstanding.
non-GAAP income from operations grew by 8% year over year to $457 million.
Speaker Change: Exceeding the high end of our guidance of $415 million.
Speaker Change: This result was 15 <unk> above the high end of our guidance at <unk> 19 cents higher than Q1 of last year.
Speaker Change: This translates to a 40% non-GAAP operating margin for Q1, an improvement from 38, 2% in Q1 of last year.
Speaker Change: Turning to the balance sheet.
Speaker Change: Deferred revenue at the end of the period was $135 billion down approximately 1% from Q1 of last year.
Speaker Change: non-GAAP diluted net income per share in Q1 dollar and 35 on approximately $315 million non-GAAP diluted weighted average shares outstanding.
Speaker Change: This was roughly three percentage points higher than the range, we provided last quarter, partially due to tightening up our discounting practices last year.
Speaker Change: This result was 15 <unk> above the high end of our guidance at <unk> 19 cents higher than Q1 of last year.
Speaker Change: For Q2, we expect deferred revenue to be up approximately 1% year over year.
Speaker Change: Turning to the balance sheet.
Speaker Change: Looking at bolt, our billed and Unbilled contracts, our RPI increased 5% year over year to approximately $3 $67 billion.
Speaker Change: Deferred revenue at the end of the period with $1 $35 billion down 1% from Q1 of last year.
Speaker Change: This was roughly three percentage points higher than the range, we provided last quarter, partially due to tightened after discounting practices last year.
Speaker Change: We expect to recognize approximately 59% of the total <unk> as revenue over the next 12 months consistent with Q1 of last year.
For Q2, we expect deferred revenue to be up approximately 1% year over year.
Speaker Change: Operating cash flow in the quarter grew 41% year over year to $588 million.
Speaker Change: Looking at both our billed and Unbilled contracts, our RPI increased 5% year over year to approximately $3 $67 billion.
Speaker Change: Free cash flow free cash flow grew 44% year over year to $578 million.
Speaker Change: Our operating cash flow and free cash flow margins expanded to 51, 5% and 49, 9% respectively.
Speaker Change: We expect to recognize approximately 59% of the total <unk> as revenue over the next 12 months consistent with Q1 of last year.
Speaker Change: The sharp increase in our cash flow metrics that due to stronger collection targeted expense management and higher interest income.
Speaker Change: Operating cash flow in the quarter grew 41% year over year to $588 million.
Speaker Change: We ended the quarter with approximately seven $4 billion in cash cash equivalents and marketable securities excluding restricted cash.
Speaker Change: Free cash flow free cash flow grew 44% year over year to $570 million.
Speaker Change: Our operating cash flow and free cash flow margins, and 1.5, and 49, 9% respectively.
Speaker Change: Last quarter, we announced the authorization of a $1 $5 billion share buyback plan.
Speaker Change: The sharp increase in our capital metrics is due to stronger collection targeted expense management and higher interest income.
Speaker Change: As of the end of Q1, we have repurchased $150 million of stock representing two 4 million shares.
Speaker Change: We ended the quarter with approximately $7 $4 billion in cash cash equivalents and marketable securities excluding restricted cash.
Speaker Change: Now turning to guidance.
Speaker Change: For Q2, we expect revenue to be in the range of 1145 to 1.15 billion Rep.
Speaker Change: Last quarter, we announced the authorization of a $1 $5 billion share buyback plan.
Speaker Change: Representing approximately 1% year over year growth.
Speaker Change: We expect non-GAAP operating income to be in the range of $415 million to $428 million.
Speaker Change: As of the end of Q1, we have repurchased $150 million of stock representing two 4 million shares.
Speaker Change: Our outlook for non-GAAP earnings per share is $1 20 to.
Speaker Change: Two $1 21 based on approximately 316 million shares outstanding.
Speaker Change: Now turning to guidance.
Speaker Change: For Q2, we expect revenue to be in the range of 1145 to 1.15 billion, representing approximately 1% year over year growth.
Speaker Change: We are pleased to raise our topline and profitability outlook for the full year of FY 'twenty five.
Speaker Change: We now expect revenue to be in the range of $4 six one to $4 $62 billion, which represents approximately 2% year over year aircrafts.
Speaker Change: We expect non-GAAP operating income range of $415 million to $428 million.
Speaker Change: Our outlook for non-GAAP earnings per share of $1 20.
Speaker Change: We still believe that Q2 will be the low point from a year over year growth perspective, and for it to improve from there.
Speaker Change: But the $1 21 based on a 316 million shares outstanding.
Speaker Change: We forecast our non-GAAP operating income to be in the range of $1 74 to $1 $75 billion, representing an operating margin of 37, 8% at the midpoint.
Speaker Change: We are pleased to raise our top client and profitability outlook for the full year of FY 'twenty five.
Speaker Change: We now expect revenue to be in the range of $4 six one to $4 six 2 billion, which represents approximately 2% year over year growth.
Speaker Change: Our outlook for non-GAAP earnings per share for FY 'twenty five is $4 99 to $5 <unk> based on approximately 319 million shares outstanding.
Speaker Change: Still believe that Q2 will be the low point from a year over year growth perspective, and for it to improve from there.
Speaker Change: Moving on to free cash flow.
Speaker Change: We forecast our non-GAAP operating income to be in the range of $1 74 to $1 $75 billion, representing an operating margin of 37, 8% at the midpoint.
Speaker Change: Please remember that due to the timing of U S Federal and state tax payments, we paid two quarters' worth in Q2 and minimal amounts in Q1.
Speaker Change: Primarily due to seasonality and AI related Capex, we expect free cash flow in Q2 to decrease by approximately 50% to 60% quarter over quarter before normalizing in Q3 and Q4.
Speaker Change: Our outlook for non-GAAP earnings per share for FY 'twenty five is $4 99 to $5 two based on approximately 319 million shares outstanding.
Speaker Change: With the strength in free cash flow in Q1 and increased outlook for operating income in FY 'twenty five we now expect free cash flow to be towards the high end of our range of $1.44 billion to $148 billion for the full year.
Speaker Change: Moving on to free cash flow.
Speaker Change: Please remember that due to the timing of U S Federal and state tax payments, we pay two quarters' worth in Q2 and minimal amounts in Q1.
Speaker Change: Primarily due to seasonality and AI related to Capex, we expect free cash flow in Q2 to decrease by approximately 50% to 60% quarter over quarter before normalizing in Q3 and Q4.
Speaker Change: Thank you to the entire zoom team our customers our community and our investors for your trust and support.
Speaker Change: Telsey please queue up the first question.
Speaker Change: With the strength in free cash flow in Q1 and increased outlook for operating income in FY 'twenty five we now expect free cash flow to be that towards the high end of our range of $1.44 billion to $148 billion for the full year.
Speaker Change: Thank you so much Kelly and Mike Kelly mentioned, we're going to go ahead and move on to taking your questions.
Meta Marshall: When I call. Your name please turn on a video and on mute and as a reminder to try to hear from everyone. Please limit yourself to one question. So our first question will come from meta Marshall with Morgan Stanley.
Speaker Change: Thank you the entire home team our customers our community and our investors.
Speaker Change: Great. Thanks, I appreciate it.
Trust and support.
Speaker Change: <unk> please queue up the first question.
Speaker Change #100: That's on the quarter a couple of questions. Maybe just to start with you could just give a sense of what you're seeing kind of on the SMB side of the environment, just given kind of commentary from other shrout.
Kelly: Thank you so much Kelly and like Kelly mentioned, we're going to go ahead and move on to taking your questions.
Kelly: Yeah.
Speaker Change: When I call. Your name please turn on a video and as a reminder to try to hear from everyone. Please limit yourself to one question. So our first question will come from John Marshall with Morgan Stanley.
Speaker Change: <unk>.
Meta Marshall: Throughout the quarter and then second just maybe on D V N and you'd noted last quarter that you expected fiscal Q2 to kind of be the the down point of the year. If that's still kind of holds as you look throughout the year. Thanks.
Speaker Change: Great. Thanks.
Speaker Change: Appreciate it.
Meta A. Marshall: And congrats on the quarter a couple of cents, maybe just to start with you could just give a sense of what you're seeing kind of on the SMB side of the environment, just given kind of commentary from other throughout.
Speaker Change: Sure.
Speaker Change: So Jaime that's as we're looking at the outlook for the rest of the year.
Speaker Change #101: And we do still expect Q2 to be the low point from a year over year growth perspective.
John Marshall: <unk>.
Speaker Change: Throughout the quarter and then second just maybe on D V N and you'd noted last quarter that you expect in fiscal Q2 to kind of be the the down point of the year. If that's still kind of holds as you look throughout the year. Thanks.
Speaker Change #102: And that the net dollar expansion rate will for Apollo stimulating behind that.
Speaker Change #103: When you look at if you look at the in quarter net.
Speaker Change #103: Net dollar expansion, you'll see that it actually was consistent.
John Marshall: Sure.
John Marshall: So Jaime that's as we're looking at the outlook for the less severe as we mentioned we do still expect Q2 to be the low point from a year over year growth perspective.
Speaker Change #104: Quarter over quarter. So we're starting to see that stabilization and we think that's a really good indicator that the.
The net dollar expansion rate on trailing 12 months will similarly follow.
John Marshall: And that the net dollar expansion rate will will follow similar in behind that.
Speaker Change #105: And then in terms of SME we.
John Marshall: When you look at if you look at the in quarter net.
Speaker Change #105: So I think similar.
Speaker Change #106: Performance across all.
John Marshall: Net dollar expansion, you'll see that it actually was consistent.
Speaker Change #107: Of our different segments of our enterprise business and bolt you heard about some of the amazing customer wins that we had in the up market, but also some really nice wins in SMB as well.
John Marshall: Quarter over quarter. So we're starting to see that stabilization and we think that that's a really good indicator that.
John Marshall: The net dollar expansion rate on trailing 12 months will ultimately follow.
Speaker Change #108: Great. Thanks, I'll pass it on.
Speaker Change #108: Thanks, Nita and we will now move on to Samad Samana with Jefferies.
John Marshall: And then in terms of SME.
John Marshall: <unk>.
Samad Samana: Hi, good evening, Thanks for taking my question.
John Marshall: So I think similar.
John Marshall: Performance across all.
Samad Samana: Eric I wanted to dig into the <unk> side as you mentioned the product is ready for prime time, and we thank the investors to see it at enterprise connect as well a couple of months ago. I was wondering if maybe you can help us understand.
John Marshall: Of our different segments of our enterprise business and bolt you heard about some of the amazing customer wins that we had in the up market, but also some really nice wins in SMB as well.
Speaker Change: Great. Thanks, I'll pass it on.
Samad Samana: I understand that the payment side, but.
Speaker Change: Thanks, Nita and we will now move on to some odd samana with Jefferies.
Speaker Change #110: When you think about kind of how would you define that as the uptime gotten better and you're clearly seeing larger logos.
Speaker Change: Hi, good evening, Thanks for taking my question.
Speaker Change #110: How should we think about what what primetime means don't inflection and larger customers going forward.
Eric Just: Eric I wanted to dig into the <unk> side as you mentioned the products ready for primetime and we took investors to see it at enterprise connect as well a couple of months ago. I was wondering if maybe you can help us understand.
Yes, great questions first of all.
Speaker Change #111: Over two years ago, right, we lost resume contact center at kind of our quarterly progress every quarter. We added so many.
Speaker Change: I understand that the payment side, but.
Speaker Change: When you think about kind of how would you define that as the uptime gotten better and you're clearly seeing larger logos. So how should we think about what what primetime means right don't sugar hit inflection and larger customers going forward.
Speaker Change #112: The customer <unk> constantly trust of cognizant the product in terms of Primetime Europe look at just the recent quarter right like I gave you tweak examples right so like.
Speaker Change #113: Well, the selling commodity based or cloud or silver company deployed our competitor solution, which is one of the top three in our cloud business because the provider.
Speaker Change: Yes, great questions first of all just.
Speaker Change: Over two years ago write offs presumed contact center, you kind of our quarterly progress.
Speaker Change: Okay.
And guess what.
Spices asset when she buys from the trust of a cornerstone of the product in terms of Primetime Europe look at just the recent quarter right like I gave you tweak examples right <unk>.
Speaker Change #113: 302, our contact center platform, because they really like our future said Sim.
Speaker Change #114: <unk> integration and doses of grid oftentimes and also a lot of AI features if you read my last one example, another example, we're also competing we're competing against another very also one of the top three C cost of vendors right for all for the most.
Speaker Change: <unk>, the sudden and commodity base to cloud for silver company deployed our competitor solution, which is one of the top three in our cloud business, because the provider and guess what.
The largest deal in Q1, and I guess, what we want and this is not a small view isn't ought to go through in all of the handler that's more than 1000 seats. That's another big deal right.
Speaker Change: We added to our contact center platform, because they'd really like all features that seamless integration.
Speaker Change: And those are the grid <unk> and also a lot of.
Speaker Change: Features of your regions.
Speaker Change #114: To adjust examples also you look at our total installed base.
Speaker Change: By example, another example, we're also competing we're competing against another very also one of the top three C cost of vendors right for all for the most.
Speaker Change #115: Just go look at it.
Speaker Change #116: More than 100000 right for those customers and you look at the end of Q1, we have.
Speaker Change: Largest deal in Q1.
Speaker Change: What we want and this is not a small view is and ought to go through.
Speaker Change #117: <unk> hundred 90 <unk>.
Speaker Change #118: And the new deals like that you look at a comparator last year, almost 250% year over year growth I think it with all of those.
Speaker Change: Henry that's more than 1000 seats, that's another big deal right.
Speaker Change: Most of them to adjust examples also you look at our total installed base.
Speaker Change #119: Factored in I would say yeah. This is a prime time and the most important things and the Cosmo Trust our brands, they know and we listen to customers and we innovate that's reason why in our contact center when we convert good progress is made.
Speaker Change: As we look at it.
Speaker Change: More than 100000 right for those customers right and you look at the end of Q1, we have.
Speaker Change: Around 90.
Speaker Change: The new deals like that you look at a comparator last year almost.
Speaker Change #120: As the prime time so.
Speaker Change #121: Great. Thank you so much thank you.
Speaker Change: 250% year over year growth.
Speaker Change #121: Our next question will come from Michael Funk with Bank of America.
Speaker Change: With all of those.
Speaker Change: <unk> factored in I would say yeah. This is a prime time and most importantly, the customer trust our brands, they know and we listen to customers and we innovate that's reason why.
Thank you all for questions Tonight, and Eric you touched briefly on the last question, but love to hear about the competitive environment today, maybe in contrast to what was 12 or 24 months ago and specifically pricing.
Speaker Change: 100, and central when we convert good progress to soar as the <unk>.
Speaker Change #121: And how pricing is changing.
Speaker Change: Primetime so.
Speaker Change: Great. Thank you so much thank you.
Speaker Change #122: For a more competitive less competitive.
Michael Funk: And I guess related to that if you see more competition from Microsoft on the video side.
Speaker Change: Our next question will come from Michael Funk with Bank of America.
Michael J. Funk: Thank you all for questions Tonight, and Eric you touched on briefly in the last question, but love to hear about the competitive environment today, maybe in contrast to what was 12 or 24 months ago.
Speaker Change #124: So sorry, youre talking of pricing on our contact center overall.
Speaker Change #125: We're really thrilled with it.
Speaker Change #126: [noise] tire platform now that more competitors are likely bond Duane solutions.
Speaker Change: And specifically pricing.
Just in the journal pricing trends, yes.
Speaker Change: And how pricing is changing.
Speaker Change #127: Overall, I think a woman one competitor they bundled a solution together, which is a Microsoft direct so and so you know over the past few years why for sure. There are some in the <unk>.
Speaker Change: Why did it from a more competitive less competitive.
Speaker Change: And then I guess related to that if you see more competition from Microsoft one of your songs.
Impact you already saw a number over the positive several years because there are bonding Australia. However, you look at our installed base.
Speaker Change: Yeah, So sorry, your cargo pricing on accounting under our overall really really busy.
Speaker Change: The entire platform now that more competitors are likely bonvillain solutions.
Speaker Change #128: Year ago, we increase it on a price and we do see a very positive feedback and cost of re appreciated all of our service and also look at the our installer base and a lot of our customers really like however, the reason why and the reason why it and our customers know that our customers employees and the lack of zoom.
Speaker Change: General pricing trends overall.
Speaker Change: Overall, I think a woman and one competitor they bundled a solution together, which is some X soft direct so and so you know over the past few years why for sure. There are some in the <unk>.
Speaker Change: Impact you already sold a number with a positive.
Speaker Change: Four years, because there are bonding Australia. However, you look at our installed base.
Speaker Change #129: Enjoy using zoom right when they use the other competitors of product gets what it do not like it but even into the bond or the price is sort of a free whole era when customers a deep dive look at a total cost of ownership in terms of support cost and <unk> cost I guess, what I think we're much better positioned now.
Speaker Change: A year ago, the increase of the on enterprise and we do see a very positive feedback and cost of re appreciated all of our service and also look at our installer base and a lot of our customers really like ourselves. The reason why the reason why it is the customers that are our customers employees they like zoom.
Speaker Change #130: That's the reason why I think not unlike every time, we talk customer <unk> customer always tended to us hey, your price or are those kind of things cause a route of preceded by the wanted to deploy the best of breed reserves that the reason why we do not see the.
Speaker Change: Enjoy union zone might be when they use all the competitors product guess, what it do not like it but even into the bond or the price is sort of a free <unk> era when customers a deeper dive look at a total cost of ownership in terms of support cost and <unk> cost gets what I think we're much better positioned now.
Speaker Change #130: The big price pressure over the as we've seen in the.
Speaker Change #131: Last quarter and I think we mentioned in our press.
Speaker Change #132: <unk> did very well so.
That's the reason why I think not unlike every time with our customer <unk> customer always turn it off Hey, you know what your price or are those kind of things are the root of preceded by the wanted to deploy the vessel. The pud reserves that reason why we do not see the.
Speaker Change #133: And despite quite close to your last comment there you didn't really see price pressure last quarter should.
Speaker Change #134: Should I take that to mean that pricing is stabilizing relative to where it was.
Speaker Change #135: Pricing is getting better I think.
Speaker Change #136: So because you look at it overall of all insurance right in kind of our historical low as Kelly mentioned earlier and also look at our integrated customers involved because we have a lot of other services also in part.
Speaker Change: The big no price pressure over the as we've seen in the.
Speaker Change: Last quarter.
Speaker Change: And I think we mentioned in our press release.
Speaker Change: Australia did very well so.
Speaker Change: Okay, and just quickly to your last comment there you didn't really see price pressure last quarter.
Speaker Change #137: Product suite, and I think it's a much better position to now right.
Speaker Change: Should I take that to mean that pricing is stabilizing relative to where it was.
Erik: Alright. Thank you Erik Thank you Kelly precede thank you.
Speaker Change: Pricing is getting better.
We'll now hear from Rishi Jain Loria with RBC capital markets.
Kelly: So because you look at it overall of online churn right in kind of our historical low as Kelly mentioned earlier and also looked at of our enterprise customers of all because we have a lot of other services the OXXO in par.
Speaker Change #139: Wonderful Thanks, Eric Thanks for taking my question.
Speaker Change #140: Just wanted to ask following up on the <unk> side, Eric you made the comment that you have either displaced or beaten on each of the top four <unk> vendors as ranked by Gartner can you provide a little more color on those wins, maybe and what vector did you tend to windows on was it on pricing was it on certain features and capabilities.
Kelly: Our product suite and I think it's a much better position now right.
Alright. Thank you Erik Thank you Kelly proceed thank you.
Speaker Change: We will now hear from Rishi Jain Loria with RBC capital markets.
Eric: Do you have that they don't have maybe help us understand and provide more color. There would be helpful. Thank you. Yes. So yes, just to give you two examples so a lot of other examples. So if you look at it just the two examples I do not think just one factor and the led to let a customer make that decision. They look at our first of all do this part of this vendor not right and if you look at our product roadmap.
Speaker Change: Wonderful Thanks, Eric Thanks, Kelly for taking my question.
Speaker Change: Just wanted to ask following up on the <unk> side, Eric you made the comment that you have either displaced or beaten on each of the top four <unk> vendors as ranked by Gartner can you provide a little more color on those wins, maybe and what vector did you tend to windows on was it on pricing was it on certain features and capabilities.
Eric: Looking at our existing feature set look at integration.
Speaker Change #142: Ah Futures will also look at the pricing and all of those factors missing because some customers <unk> zuma years ago, many years ago. They deploy zoom phone busy yes. This is the greatest story, whereas into replicated that story, that's arisen among customers, yes, but interestingly enough those costs from some of the logos.
Speaker Change: Do you have that they don't have maybe help us understand and provide more color that would be helpful. Thank you. Yeah. So just to give you two examples so a lot of other examples. So if you look at just the two examples I just one factor.
Speaker Change: And the lead to let a customer make that decision then look at our first of all to the trough of this vendor not right and if you look at our product roadmap look at existing fears that looks at it integration.
Speaker Change #143: We werent in Q1.
Speaker Change #144: Even though it is in process, but the transfer of a breath. We know we are very innovative but you'll get the Odyssey course winners guests what their solution was we're not a bureau recently revised long time ago from on Prem to cloud and this is really sort of a clunky interface and that's the reason why we have a high confidence we're going to win more deals. So.
Speaker Change: AI features will also look at our pricing and all of those factors. This thing because some customers do trust resumed my years ago right. Many years ago. They deploy zoom phone Bcf that was greeted story, whereas.
Speaker Change: To replicate at that store, that's the reason why customers, yes, but interestingly enough those costs from some of the logos, we werent in a queue.
Speaker Change #145: Alright, thank you.
Speaker Change #145: Thank you.
Speaker Change #146: Our next question will come from CPE Panic Rocky with Mizuho. Please go ahead.
Speaker Change: Even though artisan partners, but the trust of a breath. We know we are in the video, but you look at the Odyssey course vendors guests what their solution was we're not a build it recently revised long time ago from on Prem to cloud in is really sort of a clunky interface and that's the reason why we have a high confidence we're going to win more deals. So.
Speaker Change #147: Thank you.
Speaker Change #148: I saw the Denmark assume workspace, a very impressive in terms of like <unk>.
Oscar: Oscar I companion that you added Eric So I have couple of questions. Firstly like how do you see you know the zoom workspace, how do you plan to do the whats your strategy in terms of branding or go to market push this product and do you see this more traction on the more on the low end like.
Speaker Change: Alright, thank you.
Speaker Change: Thank you.
Speaker Change: Our next question will come from CPE Panic Rocky with Mizuho. Please go ahead.
Thank you.
Speaker Change: I saw the demo zoom works with a very impressive in terms of like Hey, I see.
Speaker Change #150: Small business segment or more on the enterprise side and if you combine this workspace with AI. So do you expect this to drive more free to paid migration and if so when should we start seeing that effect. Thank you.
Speaker Change: Sure like Oscar I companion that you added.
So I have a couple of questions. Firstly like how do you see you know this Jim workspace, how do you plan to do the you know what's your strategy in terms of branding or go to market. You know push this product and do you see this more traction on the more on the low end like small business segment or more on the enterprise side.
Speaker Change #151: Yeah. Good question, you know as good as I know you like zoom workplace.
Speaker Change #151: It's not only drive.
Speaker Change #152: Revenue growth adult person notable F&B enterprise customers overall, if you take a step back and look at zoom workplace lucrative foster.
Speaker Change: And if you combine this workspace with AI. So do you expect this to drive more free to paid migration and if so when should we start seeing that effect.
Speaker Change #153: 10 years is one of the alternate essentially more like our slogans mid happy right now we have a collaboration powerful and our customers can leave within our platform to get.
Speaker Change: Yeah. Good question as you know is greater than one <unk> zoom workplace I think a scenario when we drive.
Speaker Change #154: Two to get all the work at home right now no I mean, this will use air with symptoms zoom, but we do have a collaborative platform. We also can co exist with our the witness wherever like Microsoft Google Assistant our Salesforce are authorized and all of those.
Speaker Change: The revenue growth adult person notable SMB enterprise customers overall, if you take a step back and look at assumed workplace lucrative poster.
10 years right is it June one other journey essentially more like our slogans mid happy right for now we have a collapse and powerful and customers can leave within our platform to get.
Speaker Change #155: The SaaS leaders.
Speaker Change #155: Same time.
Speaker Change #156: If you look at the customer requirements and as Lindsey user zoom meetings in a phone or <unk> LIBOR on our clients and a lot of them together. That's a full collaboration platform used to be formed Mitt happy not what a worker happy right. That's sort of our slogan evolution right and also AI as a part of that.
Speaker Change: To get all the work at home right.
Speaker Change: I mean, this will use air with simple zoom, but we do have a collaborative platform. We also can co exist with other windows worry about like a magnet or a Google search and our sales force are authorized and all those.
Look at our workplace customers guess, what AI is not only a part of that but also at no additional cost right. So this is our vision and essentially.
Speaker Change: The sauce leaders.
Speaker Change: Same time.
Speaker Change: You look at the customer requirements and as Lindsey user zoom meetings and phone phone acumen Shire LIBOR and cognizant of a lot of things together, that's a full collaboration platform used to be in the mid happy not wear to work are happy right. That's sort of our slogan evolution right and also AI as a part of that.
Speaker Change #157: And for many many years ago from where applications service provider and into a full collaboration suite and SMB customer for surely like that integrated customer they want to deploy the best of breed service. They also likely they are to some plus is the open platform and that's the reason why we're doubling down our workplace platform to become <unk>.
Speaker Change: Looking at our workplace customers guess, what it is.
Speaker Change: <unk> been a part of that but also at no additional cost right. So this is our vision and essentially in the form of.
Speaker Change #158: Our work happy platform.
Speaker Change #158: Thank you.
Many many years ago from where applications. So it's a brighter and into a full collaboration suite and S&P Cosmic force really likes that enterprise customer. They wanted to deploy the best of breed service. They also liked some plus is the open platform that the reason why we are doubling down.
Speaker Change #158: <unk>.
Moving on to Catherine <unk> with Rosenblatt Securities.
Speaker Change #159: Hi, Thanks for taking my question.
Catherine: Can you update us on the partner program, what I'm really trying to dig into is really how you are positioning yourself competitively Kimberly competitively against Ryan and the traditional partners. Thanks.
Speaker Change: Please the platform to become our work.
Speaker Change: Platform.
Speaker Change: Thank you. Thank you.
Eric: You got it Eric.
Speaker Change: Moving on to Catharine <unk> with Rosenblatt Securities Hi, Thanks for taking my question.
Eric: Okay.
Catherine: Yeah. So we continue with our partners and with our direct sales organization. We continue to win I think not only against other providers in the phone cloud, but also as Eric just mentioned on the contact center side.
Can you update us on the partner program.
Speaker Change: Really trying to dig into is really how you are positioning yourself competitively Kimberly competitively against rang and traditional partners. Thanks.
Speaker Change #161: As several vectors right it's around <unk>.
Speaker Change: You got it.
Speaker Change #161: Pricing and total cost of ownership it's around.
Speaker Change: Okay.
Speaker Change: Yeah. So we continue with partners and with our direct sales organization. We continue to win I think not only again.
The momentum because of the ease of use of deploying and selling this product we believe that our partners on should.
Speaker Change #162: Should be able to see that value in not only the deal you know the end user but also in their deals as well and so if you're asking about.
Speaker Change: Other providers in the phone cloud, but also just mention on that protect center side as several vectors right. It's around.
Speaker Change #163: Compensation as a partner as we continue to ensure that our partner programs are competitive but also appropriate we are always thinking about the impact to them as well as to our internal margins.
Speaker Change: Pricing and total cost of ownership it's around.
Speaker Change: The momentum because of the ease of use of deploying and selling this product we believe that our partners on should.
Speaker Change: Should be able to see that value in not only the deal you know the user but also in their deals as well and so if you're asking about.
Speaker Change #164: And as you've heard us talk about last quarter and also this quarter. We have some additional partnerships that we've been named as the preferred partner migration for not only matter, but if you remember also twilio as well.
Speaker Change: Compensation as a partner as we continue to ensure that our partner programs are competitive but also appropriate we are always thinking about the impact to them as well as to our internal margins and as you've heard us talk about last quarter and also this quarter we have some.
Speaker Change #165: Yeah. Thank you.
Speaker Change #166: Just quickly add onto voluntary side those are partnerships most of time before the reason why how all those are going to partners because the customers.
Speaker Change #167: But for that because we see YOD as you run up one or two more bonuses zoom and this reason why we have assumed many partners. He recently like Avaya Omega this as good examples so.
Speaker Change: <unk> partnerships that we've been named as the preferred partner migration for not only matter, but if you remember also twilio as well.
Speaker Change: Thank you.
Speaker Change #167: Thanks, Catherine and Ryan Macwilliams with Barclays. Please go ahead with your question.
Speaker Change: Just quickly add onto volatile inside those are partnerships.
Speaker Change #168: I appreciate it Kelly and Eric you beat me to it as usual I was going to ask about the <unk>.
Speaker Change: Most of time before the reason why all of those are going to partners because our customers asked before that.
Speaker Change #168: <unk> and Avaya partnership so great to see that they chose work vivo is the migration partner for their workplace solution I guess, the doubleclick or Matt do you have any sense of the timing on how these customers could move over and how would you frame the opportunity for those partnerships and then just on the Avaya partnership Love to just hear kind of what exactly that partnership was trying to get at how that going up.
Speaker Change: <unk> got one or two 2% more <unk> zoom and this reason why we have assumed millennium partners. He recently like Amaya Omega bite. This is great. Examples so.
Speaker Change: Thanks, Catherine and Ryan Macwilliams with Barclays. Please go ahead with your question.
Speaker Change: I appreciate it Kelly and Eric you beat me to it as usual I was going to ask about.
Speaker Change #169: The door for more customer relationships when you guys. Thanks.
Speaker Change #170: It looks like I know your question now.
Speaker Change: Meta and Avaya partnership so great to see that they chose worked vivo is the migration partner for their workplace solution I guess the double Cocomat do you have any sense of the timing on how these customers could move over and how would you frame the opportunity for those partnerships and then just on the Avaya partnership what the just here like kind of what exactly that partnership was trying to get at.
Speaker Change #171: Thank you for for US on those two questions. So into most of our Mega partnership I think are in Americas, such as grid company.
Speaker Change #171: A lot of <unk>.
Speaker Change #172: Number three is grid open source, that's reason why and he wanted to retire their workplace for Mega product for sure the public customers and an extent we have assumed <unk> platform is very preferred solution.
Speaker Change: How to open the door for more customer relationships when you guys. Thanks.
Speaker Change: It looks like I know your question now.
Speaker Change: Yeah.
Speaker Change: Thank you for for Automotives two questions. So into most of our Mega partnership I think are in Americas, such as grid company.
Speaker Change #173: As I mentioned earlier with just a very large telco deals is not a small deal 100000 seats right. So the very mature platform is a lot of innovation. That's the reason why.
Speaker Change: So on the you know a lot of Lama three as screwed open source, that's reason why and that he wanted to retire their workspace for backup product for sure the top customers and in <unk>. We have assumed we will platform is very preferred solution.
Speaker Change #174: <unk> became a preferred at a partner working to working together to make sure all of those workplace format of customers have a smooth transition in extra I think in the next 12 to 18 months.
Speaker Change #175: I can work working together with Mehta with customers make sure. The entire transition period are very very similar so we have high confidence there are greater.
Speaker Change: As I mentioned earlier right with just won a very large telco deals is not a small deal 100 thousands of seats right. So the very mature platform has a lot of innovation. That's the reason why zoom became a preferred partner working to working together to mix all of those workplace for major customers have a smooth transition.
Speaker Change #176: And our partner and normal not only possible, but also agreed upon our Ami metals. So.
Speaker Change #176: And.
Speaker Change #177: Again, we are very excited about that partnership and bought it out of.
Speaker Change #177: The transition into most of our deals right. So.
Speaker Change: Next year I think in the next 12 to 18 months.
Mehta: Have a loss off a very very big large enterprise customers, who deployed both SKU costs NSE cost solutions. Those large enterprise customers, we are not fully ready to migrate ever since the cloth.
Speaker Change: Well what could the Gallup is macca with customers mutual the entire transition period are very very similar so we have high confidence there are greater.
Speaker Change: Partner and not only the customer, but also a greater partner Ami metals. So.
Mehta: Integrations.
Speaker Change #179: Many many years effort. They put is almost impossible to migrate to cloud overnight. However, they also want to elaborate a lot of the features like AI features a lot of innovation right. So that's the reason why on a customer of the <unk>.
Speaker Change: And.
Speaker Change: Again, we are very excited about that partnership and part of that.
Speaker Change: That transition into most of our deals right. So.
Speaker Change: Have a loss of very very big.
Speaker Change: Large enterprise customers with deployed at both SKU costs NFC cost solutions those lobbying bus customers, we are not fully ready to migrate ever since the cloth no you got it.
Speaker Change #180: Sure most of US all of them from Amaya and.
Speaker Change #181: When they are not already to move to the cloud and you're also doing onto Steve as an on premise solution guest well. This is a hybrid architecture, a hot languages zoom workplace client I.
Speaker Change: Integrations.
Speaker Change: Many many years effort. They put is almost impossible to migrate to cloud overnight. However, they also want to leverage a lot of the features like AI features a lot of innovation right. So that's the reason why on a customer.
Speaker Change #182: To talk with our on Prem and feature source right and on the van the Zoom Zoom work with this client has a lot of rich features the kind of leverage on the other hand, but also kind of similar to seamlessly integrate with Avaya on Prem future service I think thats it.
Speaker Change: Sure most of US are lymphoma Amaya and.
Speaker Change: When they are not already to move to the cloud, but you're also doing onto Steve is in the on premise solution guest well. This is a hybrid architecture.
Speaker Change #183: The women partnership by benefit Osborn Avaya benefited the customers in particular for all of those very very big and very complicated.
<unk> Leverages zoom workplace clients.
Speaker Change: With our on Prem feature source right and on the van the Zoom Zoom work with this client has a lot of rich features the kind of leverage on the other hand, you also kind of similar similar as an integral with Avaya on Prem future service I think that's it.
The enterprise customers. That's the reason why I think this hybrid architecture will help us from a lot.
Speaker Change #184: Please go ahead.
Speaker Change #185: Thank you.
Speaker Change #185: Fair to William Power has the next question.
Speaker Change #186: Okay, Great hopefully you can hear me okay.
Speaker Change: The women partnership by benefit Osborne Avaya benefited the customers in particular for all of those very very big very company to the the <unk>.
Speaker Change #186: Mobile.
Speaker Change #186: I guess Kelly for you.
William Power: Can you talk about the enterprise growth outlook from here should we expect that trough in Q2, as well and then accelerate I guess tied to that maybe.
Speaker Change: <unk>. That's the reason why I think this hybrid architecture will help us from a lot.
Speaker Change #188: Maybe just help us understand your level of confidence in raising our full year guidance to reflect the.
Please go ahead.
Speaker Change: Thank you.
Speaker Change: Third volume power has the next question.
Speaker Change #189: The Q1 beat given we're still pretty early in the year here.
Speaker Change: Okay, Great hopefully you can hear me, okay, calling from my mobile.
Speaker Change #190: So hi, well, yes, we expect that enterprise growth will follow the similar trend that we've discussed for the entire company with Q2 being the low point for FY 'twenty five from a year or a growth perspective, and then seeing re acceleration in the back half from there.
I guess Kelly for you.
Speaker Change: Can you talk about the enterprise growth outlook from here should we expect that trough in Q2 as well and then accelerate I guess tied to that maybe just help us understand your confidence in raising our full year guidance to reflect the.
Speaker Change #191: And in terms of our confidence for the year.
Speaker Change: Just want to be given we're still pretty early in the year here.
Applied has a similar approach that we always do to setting guidance, which is.
Speaker Change: Yeah.
Speaker Change: So hi, well, yes, we expect that enterprise growth will follow the similar trend that we discussed for the entire company with Q2 being the low point for FY 'twenty five from a year of a growth perspective, and then seeing re acceleration in the back from there.
Speaker Change #192: Talking to our sales organization of course looking at the pipeline that we're seeing also the trends that we're seeing with online and what what's on deck in terms of initiatives. What's the performance. We're seeing a return and then looking at all of that and putting it together and coming up with our outlook.
Speaker Change: And in terms of our confidence for the year.
Speaker Change: Applied has a similar approach that we always do setting guidance, which is.
Speaker Change #193: Thank you.
Speaker Change #193: Yeah.
Speaker Change #193: We will move on to Tyler Radke with Citi.
Speaker Change: Talking to our sales organization of course looking at the pipeline. We're seeing also the trends that we're seeing with online and but that's on deck in terms of initiatives. What's the performance. We're seeing for churn and then looking at all of that putting it together and coming up with our outlook.
Speaker Change #193: Okay.
Tyler Radke: Hi, Kelly Hi, Eric Thanks for taking the question Kelly to start off just on the enterprise customers appreciate the explanation.
Speaker Change #195: The movement of some of those customers moving into online.
If I back that out it still.
Speaker Change #196: <unk> declined sequentially. So I was wondering if you could.
Speaker Change: Thank you.
Yeah.
Speaker Change: We will move on to Tyler Radke with Citi.
Kelly Steckelberg: Unpack kind of the drivers of that.
Enterprise customer number and then how youre thinking about growth of that long term and then second of all.
Speaker Change: Okay.
Tyler Radke: Hi, Kelly Hi, Eric Thanks for taking the question Kelly to start off just on the enterprise customers appreciate the explanation.
Speaker Change #197: Just as we think about the billings outlook I think that came in a little bit stronger for the second quarter. Despite revenue being a little bit below consensus should we think about that as kind of.
Speaker Change: The movement of some of those customers moving into online.
Speaker Change: I backed that out it still.
Speaker Change: Decline sequentially. So I was wondering if you could.
Speaker Change #198: I guess what are the puts and takes on that that would be kind of driving the divergence any change in billings terms, we should be thinking about yeah. So first of all on the enterprise number and it didn't decline quarter over quarter I just wanted to be clear, even if you back out those numbers. So it's it should be up.
Speaker Change: Unpacked.
Speaker Change: Hybrid debt.
Speaker Change: Enterprise customer number and then how youre thinking about growth of that long term and then second of all.
Speaker Change: Just as we think about the billings outlook I think that came in a little bit stronger for the second quarter. Despite revenue being a little bit below consensus should we think about that as kind of.
Speaker Change #199: We've discussed this in the past that as our strategy, especially on selling zoom phone in contact center is selling into our existing installed base and that as more of our revenue growth is coming from these emerging products and selling into our existing installed base that you should expect those customer add two did not grow at the same rate that they did.
Speaker Change: I guess what are the puts and takes on that that would be kind of drive the divergence any change in billings terms, we should be thinking about yeah.
Speaker Change: First of all on the enterprise number it didn't decline quarter over quarter I just wanted to be clear, even if you back out those numbers. So it's it should be up.
Speaker Change #199: Historically, but it did grow quarter over quarter.
Speaker Change #199: I just wanted to be clear about that and then.
Speaker Change: We've discussed this in the past that as our strategy, especially on selling zoom phone in contact center is selling into our existing installed base and that as more of our revenue growth is coming from these emerging products and selling into our existing installed base that you should expect those customer add to to not grow with its great that they get.
Speaker Change #199: In terms of.
Speaker Change #200: We've said this before to you which is I know, it's not always what you have here, but in terms of billing and <unk> really the best indicator that I can give you of the future is our revenue guidance itself. So.
Speaker Change: Simply but it did grow quarter over quarter.
Speaker Change #201: There are changes in the trends in terms of we do we.
Speaker Change: So I just wanted to be clear about that and then.
Speaker Change #202: We continue to see strength.
In terms of you know we've said this before to you which is I know, it's not always what you have here, but in terms of billing and RP O really the best indicator that I can give you of the future is our revenue guidance itself. So.
Speaker Change #203: And movement from monthly to annual to <unk>.
Speaker Change #204: Multi year billing terms, so that's really positive.
Speaker Change #204: As well as DC expansion and growth into the longer tenured customers in online, which typically also means they've expanded into longer billing terms.
Speaker Change: There are changes in the trends in terms, we do.
Speaker Change #205: And we've also seen some benefit as we mentioned as we've really been more thoughtful about our discounting practices, which includes fewer free periods in the enterprise and so all of that is leading to the growth that youre seeing from billings and the deferred revenue side of things.
Speaker Change: We continue to see strength and movement from monthly to annual to.
Speaker Change: The multiyear billing terms, so that's really positive.
Speaker Change: As well as DC expansion and growth into those longer tenured customers in online, which typically also means they are expanding into longer billing terms.
Speaker Change #206: Great. Thank you, yes, we are.
Speaker Change #206: Moving right along so we will now hear from Alex Zukin with Wolfe Research.
Speaker Change: And we've also seen some better than that as we mentioned as we've really been more thoughtful about our discounting practices, which includes.
Alex Zukin: Hey, guys. Thanks for taking the question first I just wanted to acknowledge we saw something from you guys. This quarter, we haven't seen in a long time accelerating enterprise revenue growth accelerating enterprise billings growth and declining opex. So.
Fewer free periods in the enterprise and so all of that is leading to the growth that youre seeing from billings and deferred revenue side of things.
Speaker Change #208: Just maybe stack rank for us like if you look at all of the things you called out whether it's contract center.
Speaker Change: Great. Thank you.
Speaker Change: Yes.
Speaker Change: We are moving right along so we will now hear from Alex Zukin with Wolfe research.
Speaker Change #208: Phone work vivo.
Aleksandr J. Zukin: Hey, guys. Thanks for taking the question first I just wanted to acknowledge we saw something from you guys. This quarter, we haven't seen in a long time accelerating enterprise revenue growth accelerating enterprise billings growth and declining opex. So.
Speaker Change #208: Even the sales product and the quality management product you referenced in the prepared remarks, Eric stack rank where those.
Speaker Change #208: Kind of landed in terms of the driving factors are the driving force behind that acceleration.
Speaker Change #209: I've got a quick follow up.
Aleksandr J. Zukin: Just maybe stack rank for us like if you look at all of the things you called out whether its contact center.
Speaker Change #209: Yes.
Speaker Change #210: You won't ticket, yes, sure. Let me, let me talk about revenue and you can talk about sort of the business momentum in general but.
Speaker Change: Phone work vivo.
Eric: The sales product and the quality management product you referenced in the prepared remarks, Eric stack rank where those.
Speaker Change #211: <unk> continues to be a very strong growth driver.
Speaker Change #212: We are pleased with the growing momentum we are seeing from contact center and then work D. How also gaining and it's right in terms of relative.
Eric: Kind of landed in terms of the driving factors are the driving force behind that acceleration.
Speaker Change: And then I've got a quick follow up.
Speaker Change #213: Relative overall dollars were keto is still a smaller component of the business, but is growing very very quickly. So certainly contributing and some really exciting customers that are coming to consume as a result of both contact center and where can you go and also we had won a new customer coming from.
Speaker Change: Yes.
Speaker Change: You won't ticket, yes, sure. Let me, let me talk about revenue and you can talk about sort of the business momentum in general but.
Speaker Change: Continues to be a very strong growth driver.
We are pleased with the growing momentum we are seeing from contact center and then work D. How also gaming and its right in terms of.
Speaker Change #213: <unk>.
Speaker Change #214: Revenue accelerator as well this quarter. So that's really exciting to see these emerging products that are bringing in new customers and new logos to the company. So I think in terms of momentum we're excited across all of those vessels, but kind of in that order.
Speaker Change: Relative overall dollars worth Tivo is still a smaller component of the business, but is growing very very quickly. So certainly contributing and some really exciting customers that are coming to consume as a result of both contact center and work legal and also we had won a new customer coming from.
Speaker Change #214: Yeah, I'll, let Eric anything else you want to add.
Speaker Change #214: Yes.
Speaker Change #215: Great observation.
Speaker Change #215: Pink.
Speaker Change: Hum.
Speaker Change #216: For water cutting side that have momentum.
Speaker Change: Revenue accelerator as well this quarter. So that's really exciting to see these emerging products that are bringing in new customers and new logos.
Speaker Change #217: Its board boils down to our product strategy.
Speaker Change #218: It's really the two key pillars, the first one and the zoom workplace.
Speaker Change: The company. So I think in terms of momentum we're excited across all of the cell phones, but kind of in that order.
Speaker Change #219: Second one is business services, if you look at it a workplace zoom workplace for those customer deploy mid teens and a phone now and as they have resumed work with this client and the rich fiber consolidate some other solution zoom and <unk> is as good a flags for Maersk <unk> solution is part of that at a new additional.
Speaker Change: Yes, I'll ask Eric anything else you wanted to Alex that's a great observation I think to echo.
Speaker Change: For water cutting side that have momentum.
Its board boils down to our product strategy.
Speaker Change #220: Cost, we need people or other viable solutions look at XOMA is viable zoom has a meeting for scheduler functionality as well right.
Speaker Change: Really the two key pillars. The first one is <unk> the second one.
Speaker Change #100: Business services.
Speaker Change #100: Look at it a workplace zoom workplace for those customer deploy mid teens and a phone now and do they have resumed work with this client and the rich fiber consolidate some other solution zoom and teams is as good a flags for mirth scalable <unk> solution is part of that at no additional cost we need people or other viable solutions.
Speaker Change #221: A lot of features in the part of the zoom workplace, but it was more important that we look at it a particular zoom meeting summary feature for example, that's our <unk> feature.
Speaker Change #221: It hasn't been feature.
Speaker Change #222: Their feedback is not only positive Wow I cannot believe that has worked so well plus and a new additional cost. They also trust like AI vision as well. This is kind of a workplace crossed the reason why it <unk>. Good accompany Trudeau tomorrow why are they pick up what could be more because we also look at it.
Speaker Change #100: Zuma is viable zoom has a meeting for scheduler functionality as well right.
Speaker Change #100: A lot of features as part of the zoom workplace, but what's more important is that they look at it a particular zoom meetings summary for feature for example, that's our <unk> feature when they present and future.
Speaker Change #223: From their cotton perspective, do you want to pick out the best partner, who can deploy a greeter solution part.
Speaker Change #100: Their feedback is not only positive Wow I cannot believe that has worked so well plus an additional cost. They also trust like our AI vision as well. This is kind of a workplace crossed the reason why it in America. There's good accompanied Trudeau tomorrow why are they pick up work in vivo.
Speaker Change #223: Part of that what could be also part of our workplace platform Duke.
Speaker Change #224: Billions of services.
Speaker Change #225: <unk> Center for support team revenue accelerator for sales team you winter sessions of our marketing team and all of those are new services also will help us a lot again back to the contact center story, a lot of opportunities a lot of enterprise customers buying novartis do on premise solution we.
Speaker Change #100: So look at it from their cotton perspective, do you want to pick out the best partner, who can deploy a greener solution AI a part of that will be.
Speaker Change #226: Think about rich Corrado to contact center solution. They can trust. They can come in the next two years zoom into much better powerful is the reason why I think that's kind of.
Speaker Change #100: Part of our.
Speaker Change #100: Workplace platform, you got a billion of services contact center for support team.
Accelerator for sales team you went to sessions of our marketing team and all of those are new services right also will help us a lot again back to the contact center story, a lot of opportunities a lot of enterprise customers buying novartis do on Prem solution.
Speaker Change #227: And the momentum is coming in and really focus on the enterprise side. So.
Speaker Change #227: Eric maybe just on on pricing you got asked this question a couple of times it feels like you're talking about it being stable you also raised price and you didn't see.
Rich Corrado: Think about rich Corrado to contact center solution. They can trust they can count on in the next five to 10 years zoom into much better powerful as the reason why I think I'm just kind of.
Eric: Real change in churn I guess I know you don't like raising price too many times, but if you think about just the strategy.
Rich Corrado: And the momentum.
Speaker Change #228: <unk> to add a tremendous amount of value, whether it's through consolidation or incremental functionality like sales for quality management is the upper what is if you look at the HCV uplift in those two accounts that you've called out for Expedia in MLP and you look at that across your pipeline for adding those types of features assumed.
Rich Corrado: Coming in are really focused on the enterprise side. So.
Eric: Eric maybe just on on pricing you got asked this question a couple of times it feels like you're talking about it being stable you also raised price and you didn't see a re.
Eric: Real change churn I guess I know you don't like raising price too many times, but if you think about just the strategy.
Speaker Change #229: Some kind of attach rate, what's that opportunity look like for you guys.
Speaker Change #102: <unk> to add a tremendous amount of value, whether it's through consolidation or incremental functionality like sales for quality management is the upper what is if you look at the HCV uplift in those two accounts you called out for Expedia in MLP and you look at that across your pipeline for adding those types of features of <unk>.
Speaker Change #230: Yes, I can talk about being inside of that and feel free to chime in on the revenue side I think that you've got it. This is expedia is good example, right and deployed revenue accelerated again.
Speaker Change #231: Business services is kind of I would say is very compiling service right. We are in.
Speaker Change #232: Arguing competitive computer compared to our competitors.
Eric: Kind of attach rate.
Speaker Change #103: What's that opportunity look like for you guys.
Speaker Change #233: We have been dramatically lower price ethanol case, because there is a huge part of that not all of the workplace.
Speaker Change #104: Yes, I can talk about <unk> <unk> on the revenue side I think that you'll go to Expedia is good example, right and deployed revenue salary right again those are business services right. It's kind of I will say is we're combining story. So we are not giving us.
Speaker Change #234: Additional cost however, here is putting a very big role for all of the business services and also most of them are enterprise customers.
Speaker Change #235: Reason why I think.
Speaker Change #236: Our dominant although the business services and the pricing is.
Speaker Change #104: Computer compared to our competitors as well can dramatically lower price ethanol all cases, because there is a huge part of that neurology workplace.
Speaker Change #237: Normally when we open our meeting and so it was many years ago right, it's a better pricing better product better service and however here is a very different story.
Speaker Change #104: Additional cost right. However, here is putting a very big role of all of the business services and also most of them are enterprise customers right at the reason why I think.
Speaker Change #237: And we competed against other competitors also the prices.
Speaker Change #238: I'm also a customer like that as well because they do not want to use them at all or is it just a low price that's not the case for business services because of the huge about it.
Speaker Change #104: Dominant although the business services and the pricing is.
Speaker Change #104: Nor would I call. It when we open our meetings there was many years ago right, it's a better pricing better product better service and a however here is a very different story.
Speaker Change #238: Yeah and in terms of the revenue upside Alex it it kind of varies by product because certain products have much higher Asp's. For example, like zoom contact Center, then meeting but of course, the attach rate in terms of number of seats isn't one to one right. There's a lesser ratio there.
Speaker Change #104: We're competing against.
Speaker Change #104: Other competitors also the prices.
Speaker Change #104: Also a customer.
Speaker Change #104: Customer like that as well because they do not want to use them at all or is it just a low price that's not a piece of business services because of the future by.
Speaker Change #239: <unk> found yeah, we saw an attach rate of generally one to one or do you see a saturation say a one to one for meetings to phone, sometimes even greater when we look at customers that we've talked about here before.
Yeah in terms of the revenue upside Alex it it kind of varies by product because certain products have much higher Asp's for example, like zoom contact center than meetings, but of course, the attach rate in terms of number of seats isn't one to one right there.
Speaker Change #239: That have a bigger attach rate because they have phones in retail locations for example.
Speaker Change #240: So it just varies the thing that I will say is generally a lot of these products also have better gross margins, which is helpful. When you look at something like like contact center because of the ASP, especially with the rollout of the pricing tiers, we saw asps for those products almost double from quarter to quarter with the rollout of the new pricing tiers.
The ratio there.
Speaker Change #104: Found yeah, we saw an attach rate of generally one to one or do you see a saturation say a one to one for meetings to phone, sometimes even greater when we look at customers that we've talked about here before.
Speaker Change #104: That have a bigger attach rate because they have phones in retail like patients for example.
Speaker Change #240: And I think that will continue as the features and functionality, especially in the upper tiers continues to expand.
Speaker Change #104: So it just varies the thing that I will say is generally a lot of use in Brazil also had better gross margins, which is helpful. When you look at something like like contact center because of the ASP, especially with the rollout of the pricing tiers, we saw asps.
Speaker Change #241: Congrats guys. Thanks, a lot thanks.
Speaker Change #241: Yes.
Speaker Change #241: Matthew Vanvliet with BTG has the next question.
Speaker Change #242: Hey, good afternoon. Thanks for taking the question I guess on the last point as you include more AI companion in the mix.
For those products almost double from quarter to quarter with the rollout of the new pricing tiers.
Speaker Change #243: How do you feel like Thats actually monetizing maybe more seats, a larger opportunity at those individual customers.
Speaker Change #104: And I think that will continue as the features and functionality, especially in the upper tiers continues to expand.
Speaker Change #244: Then then maybe limited by only phone early meetings.
Speaker Change #105: Congrats guys. Thanks, a lot thanks.
Speaker Change #104: Thanks.
Speaker Change #106: Matthew Vanvliet with BTG has the next question.
Speaker Change #245: Workspace and sort of bring all this together, helping drive deal sizes higher.
Hey, good afternoon. Thanks for taking the question I guess on the last point as you include more AI companion in in the mix.
Speaker Change #245: I think <unk>.
Speaker Change #245: And not only.
Speaker Change #246: To help our mid teens and a phone saw Kim said is across the entire zoom workplace personal lines platform plus all the opinions of services right.
Matthew David VanVliet: How do you feel like Thats actually monetizing maybe more seats, a larger opportunity those individual customers.
Speaker Change #247: And because of our federal approach you look at our workplace that are deploying rightful entire collapse in platform and another one at MC all those services are better but it also is customer.
Speaker Change #108: Then then maybe limited by only phone early meetings.
Workspace and sort of bring all this together, helping drive deal sizes higher.
Speaker Change #109: I think combining not only.
Speaker Change #248: Appreciate it without a note that the tighter cluster more right.
To help our mid teens and a phone so <unk> is across the entire zoom workplace programs platform plus all the opinions of services right.
Speaker Change #249: To add more value to customers because at no additional cost right. That's just kind of a power.
Speaker Change #250: Part of the zoom a companion at the same time in terms of monetization as I mentioned earlier all of our opinions of services.
Speaker Change #109: And because of our federal approach you look at our workplace.
Speaker Change #109: Deploying rightful entire collapse in platform and another one is mix, although Suez is better but it also is customer appreciated my resolve and note that the cutting customer more right.
Speaker Change #251: AI is a key differentiation by leveraging AI and also and it's hard to a premium price as well and that's because the value at the same time and we also are going to leverage AI.
Speaker Change #109: And more value to customers because at no additional cost right that is kind of a power.
Speaker Change #109: Part of the zoom a companion at the same time in terms of monetization as I mentioned earlier look at all of our opinions of services.
Speaker Change #252: Combining the Bureau, a lot of new things New services like Oscar AI Oscar EIC that'll be introduced there later this year and also some other new services.
Speaker Change #109: <unk> is a key differentiation right.
Speaker Change #253: <unk> well, but overall I think that AI for the existing collaboration customers and more value for new services and also.
Speaker Change #109: And also and it's hardware premium price as well and that because this is the value at the same time, we also.
Speaker Change #254: Can charge a premium price plus also can leverage AI companion to Bureau, new services, given the edge AI is coming and there's a lot of new opportunities.
Speaker Change #109: Going to leverage AI companion to Bureau, a lot of new things New services like Oscar AI Oscar EIC that'll be introduced there later this year and also some other new services.
Thank you. Thank you.
Speaker Change #109: We're working on as well, but overall I think that AI for the existing collaboration customers and more value for new services and also we can charge a premium price plus also can leverage AI, combining two bureau of new services and new game at the edge AI is coming and there's a lot of new opportunities.
Speaker Change #254: We will now hear from Ryan Koontz with Needham.
Ryan Koontz: Thanks for the question first a quick housekeeping one the.
Ryan Koontz: The reclassification of customers is that expected to change in any of your kpis like any art.
Speaker Change #256: <unk> in the right direction at all.
Ryan Koontz: I mean, no significant as we mentioned, although the number was pretty significant the revenue shift from enterprise to online was only $4 million and we as we indicated it didnt change because it was so de minimis the impact on net dollar expansion calculation for example didn't it didn't make him it didn't move at all.
Speaker Change #110: Thank you. Thank you.
Speaker Change #111: We will now hear from Ryan Koontz with Needham.
Ryan Boyer Koontz: Thanks for the question first kill a quick housekeeping one.
Speaker Change #113: Classification of customers.
Speaker Change #114: Is that expected to change any of your kpis like any are terrific.
Ryan Koontz: Got it helpful and Eric maybe a quick strategic question on events any update there in terms of how the ecosystem is building out I know thats a complex market.
Speaker Change #115: <unk> in the right direction at all.
Speaker Change #116: I mean, no significant as we mentioned, although the number was pretty significant revenue shift from enterprise to online was only $4 million and we as we indicated it didnt change because it was so de minimis the impact on net dollar expansion calculation for example didn't it didn't make him it didn't move at all.
Speaker Change #257: To penetrate in the update your efforts there.
Eric: Yeah. Good question I can answer that I gave a few examples about that but I can tell ya zoomy Vince is doing extremely well and you look at it every quarter contribution to our ROE.
Speaker Change #257: Our revenue growth.
Speaker Change #117: Got it helpful and Eric maybe a quick strategic question on events any update there in terms of how the ecosystem building out I know thats a complex market.
Speaker Change #258: Risen wise kind of Ah is we had a vibrant long technical right.
Speaker Change #259: And on Nozomi introduce zoom sessions events is very Trustable brand into all for the most of flexible.
Speaker Change #118: <unk> yeah.
Speaker Change #119: Yeah. Good question I can answer that I gave a few examples about that but I can tell you zoom you've been doing extremely well.
Speaker Change #260: <unk> into service and I think that our service is going to have us more and more because you don't get any other competitors most important competitor and pick up the very large amount they even do not have something similar.
Speaker Change #119: And you look at it every quarter contribution to our.
Speaker Change #119: Revenue growth.
Speaker Change #119: <unk> wise, we had a vibrant long cycle right.
Speaker Change #261: And then it probably their product on par with our webinar now we have as events an assertion.
Speaker Change #119: And on Nozomi introduces zoom sessions events is very trustful breadth to offer the most of flags for.
Speaker Change #262: We offer the best humans and assessments.
Speaker Change #263: And if our customers. That's the reason why for almost every enterprise customer and then you look at the very large events and resume is.
Speaker Change #120: You mentioned service and I think of that as service is going to have us multiple because you will get any other competitors most important competitor tick up the wire lodging they even do not have something similar.
Speaker Change #264: Platform, our competitor, even though I don't have that so.
Speaker Change #265: By the way also forgot to mention actually is not one for evens itself is actually a lot of our customers using zoom.
Speaker Change #120: And is it probably their product on par with a webinar now we have as events and assessments.
Speaker Change #266: For to improve their working marketing.
Speaker Change #120: We offer the best humans and assesses.
Speaker Change #267: The efficiency right how to drive the leads generation.
Speaker Change #120: And of our customers as a reason why.
Speaker Change #120: Everybody's enterprise customer and then you look at the very large events in a zoom is.
Speaker Change #268: Our workflow integrated very well with our unions and decisions.
Speaker Change #120: Platform competitor, even don't know how that <unk>.
Speaker Change #269: Great. Thank you. Thank you.
Speaker Change #269: So we will now hear from James fish with Piper Sandler.
Speaker Change #120: By the way also forgot emission actually is not one for evens itself is actually a lot of our customers using zoom.
James Fish: Hey, guys. Thanks for the question here, maybe just bridging the phone in context, and our opportunity whether it's kind of hard to probably parse this out from the entire installed base, but as we think about those greater than 90 contact center accounts over 100, K, maybe could you go over the overlap of adoption between falling contact center how that.
Speaker Change #120: So to improve their working marketing.
Speaker Change #120: The efficiency right now to drive the leads generation.
Speaker Change #120: Our workflow integrated very well with arguments and decisions.
Speaker Change #121: Great. Thank you. Thank you.
Speaker Change #271: Packaging of the two is growing together and if you guys are starting to see that pipeline or backlog increased for cloud conversions across those spaces relative to the last year. Thanks guys.
Speaker Change #122: And we will now hear from James fish with Piper Sandler.
James Edward Fish: Hey, guys. Thanks for the question here, maybe just bridging the phone contact center opportunity, whether it's kind of hard to probably parse this out in the entire installed base, but as we go.
Speaker Change #272: Yeah, sure so kind of feel free to chime in because you look at it.
Speaker Change #272: When we started we saw you look at it.
Speaker Change #122: Yeah.
Speaker Change #122: Contact center accounts maybe.
Speaker Change #272: Quarterly.
Speaker Change #122: Maybe could you.
Speaker Change #273: Notably the contact center.
Speaker Change #124: While adoption between falling contact center, how that packaging is growing together and if you guys are starting to see.
Speaker Change #274: We were we thought it'd probably most of our customers.
Speaker Change #275: Existing customer I E. The metering consummate a phone customers. However, that's in heart rate.
Speaker Change #124: Of that pipeline or backlog increase for cloud conversions across those spaces relative to the last year. Thanks guys.
Speaker Change #276: And as an acquired often some customer the anoro meeting cost of Anoro from customers, but they became the first customer to deploy this contact center. So that means we have a lot of opportunities for existing installed base. So when you double down on that because the product order works very well in the Prost buyers of <unk>.
Speaker Change #125: Yeah sure so feel free to chime in because you look at it.
Speaker Change #125: When we started we saw you look at it quarterly.
Speaker Change #125: Quarterly.
Speaker Change #125: Quarterly the Congress Center.
Speaker Change #125: We were we thought probably most of our customers.
Speaker Change #125: Existing customer I E. The metering costs and Vodafone customers.
Speaker Change #277: We're also that's reason why they invest anymore to our channel partnership as well I think more and more existing installed base right. After they heard about our contact centers success story I think we are going to see acceleration of our <unk>.
Speaker Change #126: That's in hard right.
Speaker Change #126: And as an acquired often some customers they are not in meeting customer nautophone customers Buck.
Speaker Change #126: Became the first customer to deploy this contact center. So that means we have a lot of opportunities for existing installed base. So we doubled down on that.
Speaker Change #278: Contact center business grows so.
Speaker Change #279: Thank you.
Speaker Change #126: Because the product order works very well on a plus buyers are different. We're also that's reason why they immerse them more to our channel partnership as well I think more and more existing installed base right. After they heard about our contact centers success story I think we are going to see acceleration of our contact center business grows.
Michael <unk>: We have one additional question, which will come from Michael <unk> with Wells Fargo.
Michael <unk>: Hey, Thanks for thanks for squeezing me in Kelly.
Michael <unk>: Kelly you got a few comments on tightening discounts tightening grace periods, just as things for US we might have.
Michael <unk>: In terms of the models I'm wondering if that's somewhat standard operating procedure for zero or if thats coming from more confidence that the business is now stabilizing and if youre just able to help us with visibility you have from here into Q2, marking the low point.
Speaker Change #127: Thank you. Thank you.
Speaker Change #128: We have one additional question, which will come from Michael <unk> with Wells Fargo.
Speaker Change #129: Hey, Thanks for thanks for squeezing me in.
Speaker Change #281: In terms of growth and any additional driver details on driver centers useful. Thank you.
Kelly: Kelly a few comments on tightening discounts saving grace periods, just as things for us we might have.
Speaker Change #281: Yeah, I think that.
Speaker Change #130: In terms of the model I'm wondering if that's somewhat standard operating procedure for a zero or if thats coming from more confidence that the business is now stabilizing and if youre just able to help us with visibility you have from here into Q2, marking the low point.
Speaker Change #282: You know the discounting we started working on being more thoughtful and disciplined about that last year, we've talked about that several times before and you're starting to see the impact and the benefit of that rolling through the results. This year, which makes sense as customers are coming up for renewal, especially some of those ones that are on annual accounts.
Speaker Change #130: In terms of growth and any additional driver details on driver centers useful. Thank you.
Speaker Change #283: And then in terms of tightening up the dining period.
Speaker Change #131: Yeah, I think that.
Speaker Change #132: You know the discounting we started working on being more thoughtful and disciplined about that last year, we talked about that several times before and you're starting to see the impact and the benefit of that rolling through the results. This year, which makes sense as customers are coming up for renewal, especially some of those ones that are on annual accounts.
Speaker Change #284: Think of that it's just you know as we continue to mature as an organization and really be thoughtful about not only what's what's good for our business with what's good for our customers as well and.
Speaker Change #285: Being that.
Speaker Change #286: It was just the right time, and we continuously go through and look at our financial and accounting policies and make sure that those align with what's right again right for the business right for our customers as well.
Speaker Change #132: And then in terms of tightening up the Dunning period.
Speaker Change #132: Think of that it's just you know as we continue to mature as an organization and really be thoughtful about not only what's what's good for our business with what's good for our customers evolve and.
Speaker Change #286: It's more about that.
Speaker Change #286: And less about sort of anything else that's happening in the business other than just being thoughtful and maturing into some of those policies.
Speaker Change #286: Thank you.
Speaker Change #132: Being that.
Speaker Change #286: And again that is all the time, we have for questions today that concludes our questions. So I'll turn it back to Eric for any closing comments you might have.
It was just the right time, and we continuously go through and look at our financial and accounting policies and make sure that those align with what's right again right for the business right for our customers as well.
Speaker Change #286: Yes. Thank you all for joining us today really appreciate it and we are working as hard as we can truly deliver happiness to our customers and partners and also at the lagging to leverage this opportunity to affect every zumiez for their hard work and redeploy. Thank you all for your time see you next quarter. Thank you so much Eric.
Speaker Change #132: I think it's more about that.
Speaker Change #132: And less about sort of anything else that's happening in the business other than just being thoughtful and maturing into some of those policies.
Speaker Change #133: Thank you.
Speaker Change #134: And again that is all the time, we have for questions today that concludes our questions. So I'll turn it back to Eric for any closing comments you might have.
Speaker Change #286: Kelly and again, everyone. This concludes today's earnings release, we thank you all for your participation enjoy your summer and we will see you next quarter.
Yes. Thank you all for joining us today really appreciate it and we are working as hard as we can truly deliver happiness to our customers and partners.
Speaker Change #135: At the lagging to leverage this opportunity to some areas zumiez for their hard work and I really appreciate it. Thank you all for your time see.
Speaker Change #136: See you next quarter. Thank you so much Eric and Kelly and again, everyone. This concludes today's earnings release, we thank you all for your participation enjoy your summer and we will see you next quarter.