Q2 2025 Zoom Video Communications Inc Earnings Call

All right.

Hello, everybody, and welcome to Zoom's Q2 FY25 earnings webinar. As a reminder, today's webinar is being recorded.

Alright, Hello, everybody and welcome to Zoom Q2, FY 'twenty five earnings Webinar as a reminder, today's webinar is being recorded and now I would love to hand things over to Charles of Slog head of Investor Relations Charles.

And now I would love to hand things over to Charles Eveslage, head of investor relations.

Charles.

Charles: Thank you David Hello, everyone and welcome to Zooms earnings video webinar for the second quarter of fiscal year 2025.

Charles: Thank you, David.

Speaker Change: Hello, everyone, and welcome, to Zoom's earnings video webinar for the second quarter of fiscal year 2025. I'm joined today by Zoom's founder and CEO, Eric Yuan, and Zoom's CFO, Kelly Steckelberg.

Speaker Change: I'm joined today by Zoom is founder and CEO, Eric <unk> line.

Charles: Soon the CFO Mike Steckelberg.

Speaker Change: Our earnings release was issued today after the close that may be downloaded from the Investor Relations page at investors day that assumed at U S.

Speaker Change: Our earnings press release was due today after the meeting closed and may be downloaded from the investor relations page at investors.zoom.us.

Speaker Change: Also 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 earnings release, include a reconciliation of GAAP to non-GAAP financial results.

Also 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 earnings release 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 third 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 and business aspirations, and the product initiatives and expected benefits of such initiatives.

Speaker Change: During this call we will make forward looking statements, including statements regarding our financial outlook for the third quarter and full fiscal year 2025, our expectations regarding financial and business trends.

Speaker Change: Impacts from the macroeconomic environment, our market position opportunities go to market initiatives growth strategy and business operations and the product initiatives and 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 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.

Speaker Change: These statements are only predictions that are based on what we believe today and actual results may differ materially.

Speaker Change: These forward looking statements are subject to risks and other factors that could affect our performance and financial results, which we discuss in detail in our filings with the SEC, including our annual report on Form 10-K, and quarterly reports on Form 10-Q.

Speaker Change: Zoom assumes no obligation to update any forward-looking statements we may make on today's webinar.

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

Speaker Change: 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: Hey, thank you, Charles.

Eric: Hey, Thank you. Thank you everyone for joining us today.

Eric: I had a strong quarter marketed by broadening our zoom workplace offering much of the market as Carnegie Center and deepening the AI capabilities that <unk> our entire platform.

Eric: The rollout of our zoom workplace features over the last few months represent the most significant obligated to zoom experienced years.

Eric: We reinvigorated the U S with the simplicity and the reliability that has defined as zoom from the very beginning.

Eric: Thank you, everyone, for joining us today.

Eric: We had a strong quarter, marked by broadening our Zoom Workplace offering, matching up market with Connect Center, and deepening the AI capabilities that underpin our entire platform. The rollout of Zoom Workplace features over the last few months represents the most significant, upgrade to the Zoom experience in years. We reinvigorated the UI with the simplicity and reliability that has defined Zoom from the very beginning, while also adding to the capabilities of Zoom meetings, Zoom team chat, and Zoom phone, and strengthening how AI companion operates across these modalities.

Eric: While also adding to the capabilities of the zoom meetings, some kimi chat and as zoom phone and as fishing all AI companion operates across modalities.

We also brought a zoom rooms visitor management and workplace reservation to the next level to better support our customers' needs.

Eric: We also brought Zoom rooms, visitor management, and workplace reservation to the next level in order to better support our customers' flexible work needs.

Eric: And just days ago, we announced the launch of a new Zoom webinar offering that can host up to 1 million attendees, revolutionizing the way organizations can connect with massive audiences, and demonstrating the clear scalability advantage inherent in our modern architecture.

Eric: Yeah.

Eric: On adjusted basis, we are not at the launch of our new zoom webinar.

Eric: That account for close to up to 1 million attendees.

Eric: Revolutionizing the way of <unk>.

Eric: <unk> can connect.

Eric: Massive audiences.

Eric: And demonstrating the clear scalability advantage inherent in our modern architecture.

Eric: Earlier this month, we took another major step towards our platform visit by launching Zoom Docs. Docs fits right into our strategy of expanding the platform across, more touch points in the productivity lifecycle.

Eric: Earlier. This month, we took another major step towards our Applebee's bylaws zoom dos.

Speaker Change: <unk> fits right into our strategy of expanding the platform across more touch points in the productivity lifecycle.

Speaker Change: Thank you for joining us.

Speaker Change: I'm so glad to be here.

Speaker Change: Having to effortlessly transform information from zoom meetings into exiting about documents tasks and the knowledge basis, So timken steel folks at all meaningful work.

Speaker Change: I'm also very excited to be here.

Speaker Change: I'm a member of the Zoom team.

Speaker Change: We're a team of over 100 people.

Speaker Change: Helping to effortlessly transform information from Zoom meetings into actionable documents, tasks, and knowledge bases so team can stay focused on meaningful work.

Speaker Change: In Q2, we landed our largest deal or a new contact center customer who chose our top tier Elliot CX package car part a is zoom phone.

Speaker Change: In Q2 we landed our largest deal for new contact center customer who chose our top-tier elite CX package coupled with Zoom phone.

Speaker Change: This increased adoption of our advanced contact center packages as customers seek to utilize our AI capabilities to enhance agent performance.

Speaker Change: We are seeing increased adoption of our advanced the Carnegie center packages as customers seek to utilize our AI capabilities to enhance agent performance.

Speaker Change: Of our top 10 contact center wins, all represented displacements of major contact center vendors, and 40% were migrations of our first-generation cloud-based solutions. These metrics highlight how well our contact center meets the needs of customers and prospects, while also validating our better-together strategy.

Speaker Change: Of our publicly cognizant of wins all represented displacements of a major Carnegie Center vendors.

Speaker Change: And a 40% were migrations of first generation cloud based solutions.

Speaker Change: These metrics highlight holwell, our cognizant meets the needs of our customers and prospects, while also validating our better together strategy.

Speaker Change: In fact, most contact center wins represent either existing Zoom Workplace customers who add on contact center, or new customers to Zoom who buy contact center in conjunction with Zoom Workplace. This demonstrates the desire for seamlessly integrated customer and employee experience solutions, which Zoom excels at delivering.

In fact, most economists at <unk>.

Speaker Change: <unk> is existing zoom work with the customers will add on Carnegie Center.

Speaker Change: Our new customer.

Speaker Change: <unk> hundred center in conjunction with Zumba release.

This demonstrates the desire or seamlessly integrated our customer and employee experience solutions.

<unk> zoom excels at the delivery.

Speaker Change: The seamless integration of the customer and employee experience rests upon Zoom's AI companion technology as a fabric to unify the whole platform. Today, our AI companion enhances and employs capabilities using general AI to boost productivity through features like meeting summary, chat compose, image generation, live translation, and enhanced features in contact center.

Speaker Change: The seamless integration of the customer and employee experience.

Speaker Change: Upon zooms AI companion technology, as a fabric to unify the whole platform.

Speaker Change: Today I compare companion enhances employs capabilities using January two.

Speaker Change: To boost productivity through features like a meeting summary, cheddar compose image generation live translation and he Hasnt features in contact center.

Speaker Change: As these features have grown in popularity, we are very happy to share that Zoom AI companion is now enabled on over 1.2 million accounts.

Speaker Change: And these features have grown in popularity, we are very happy to share that zoom air and timing is not enabled on over one point into many of comps.

Speaker Change: But we have only scratched the surface.

Speaker Change: But we have only scratched the surface our progress broadening zoom workplace building, our enhanced AI truce, while Carnegie Center and amassing a large base of AI users set us up well to transition into the two <unk> phase of AI enabled work.

Speaker Change: Our progress broadening Zoom Workplace, building out enhanced AI tools for contact center, and amassing a large base of AI users set us up well to transition into the 2.0 phase of AI-enabled work.

Speaker Change: In this case, assuming a companion you move beyond enhancing skews towards simplifying work day.

Speaker Change: <unk> contextual insights and performing tasks on your behalf.

Speaker Change: In this phase, Zoom AI companion will move beyond enhancing skills to simplifying your workday, providing contextual insights, and performing tasks on your behalf. It will do this by operating across our collaboration platform to ensure your day is interconnected and productive.

Speaker Change: It will do this by operating across our collaboration platform to ensure your day is interconnected and productive.

Speaker Change: We will have more to share about our AI strategy at Zoomtopia in October.

Speaker Change: We will have modest share about our AI strategy. It has been pulp here in October and we hope you all can join us.

Speaker Change: We hope you all can join us.

Speaker Change: Now, let me recognize some of our amazing customers.

Speaker Change: Now, let me recognize some of our amazing customers.

Speaker Change: Let me think of TIAA, a leading provider of a secure retirement and all the cloud folks are investment solutions for.

Speaker Change: While strengthening their partnership with zoom.

Speaker Change: First, let me thank TIAA, a leading provider of secure retirement and all-account-focused investment solutions, for strengthening their partnership with Zoom. A long-time customer, TIAA obligated to Zoom Workplace Enterprise Plus and added a Zoom contact center and quality management in Q2 in order to further enhance the employee and customer experience.

Speaker Change: Longtime customer TIAA obligated to zoom workplace enterprise, plus and editors Zoom Carnegie Center and quality management in Q2 in order to further enhance the employee and customer experience.

Speaker Change: I would also like to thank Prime Inc, one of the largest trucking and freight delivering, companies in North America.

Speaker Change: I would also like to thank the Prime Inc. One of the largest or trucking and freight are delivering companies in North America.

Speaker Change: Prime came to us through the channel, and chose to further elevate the experience they provided their drivers with the Zoom Connect Center and quality management. But the value did not stop there.

Speaker Change: But came to us through the channel and the tools to further elevate the experience they provided their drivers with zoom accounting center and quality management.

Speaker Change: And while it did not stop there recognizing the power of our natively integrated employee and a cosmic since platform. The editors zoom workplace as well as the webinar and rooms to support a collaboration and a flexible working needs of their corporate offices.

Speaker Change: Recognizing the power of our natively integrated employee and customer experience platform, they added a Zoom workplace as well as webinar and rooms to support the collaboration and flexible working needs of their corporate offices.

Speaker Change: In addition, I'd like to thank Lira Health, a leader in workforce mental health benefits for integrating Zoom's video SDK toolkit into their platform. Lira has successfully migrated to Zoom, bringing our cutting edge video technology directly into their applications, exemplifying our developer-focused approach.

Lira Health: In addition, I'd like to thank lira health.

Speaker Change: Neither in workplace.

Speaker Change: Workforce mental health benefits for integrating zooms video SDK toolkit in their platform.

Speaker Change: <unk> has successfully migrated to zoom.

Speaker Change: Our cutting edge <unk> technology directly into their applications exemplifying our developer folks of that approach.

Speaker Change: Finally, Workvivo had an amazing quarter with wins including a leading Southeast Asian brand and a famed European automotive brand. Workvivo's success was extended by the Meta partnership, which contributed some exciting new logos in Q2, including a major North American telco.

Speaker Change: Finally, we will.

Speaker Change: Raising quarter with wins, including a leading source east.

Jason: Jason back and our fifth European automotive breath.

Speaker Change: What we will success was extended by the meta partnership which contributed some exciting new logos in Q2, including a major North American telco.

Speaker Change: We're also happy to provide these companies with that employee experience platform that elevates the way they inform connect and engage employees and integrated seamlessly with a broad zoom portfolio.

Speaker Change: We are so happy to provide these companies with an employee experience platform that elevates the way they inform, connect and engage employees and integrate seamlessly with a broader Zoom portfolio.

Speaker Change: I'd like to take this opportunity to share the news that, after almost seven years, Kelly has made the decision to leave Zoom. Kelly joined Zoom about two years before our successful IPO in April 2019, and her role in that has been a highlight of her time here.

Speaker Change: I'd like to take this opportunity to share the news that after almost seven years.

Speaker Change: Kelly has made the decision to leave a zoo Kelly joining zoom about two years before our successful IPO in April 2019, and a hurdle in that has been a highlight of her time here.

Speaker Change: She will leverage her skills in helping companies scale and building successful businesses to help another startup in that process for the next Zoom.

Speaker Change: She will leverage <unk> skus in helping companies of scale and building successful business. It is to have another startup in that process for the next vasu.

Speaker Change: She has been an integral part of the Zoom journey, steering our IPO in 2019 and continuing the momentum as our customer base rapidly expanded during the pandemic. Under her strong financial leadership, Zoom has maintained a consistent track record of profitability and cash flow growth.

Speaker Change: She has been integral part of the Zuma journey.

Speaker Change: During our IPO in 2019, and continuing the momentum as our customer base rapidly expanded during the pandemic.

Speaker Change: I know her strong financial leadership zoom Hasnt maintain a consistent track record of profitability and cash flow growth.

Speaker Change: We are conducting a comprehensive search for our next CFO with the assistance of a leading executive search firm.

Speaker Change: We are conducting a comprehensive search for our next CFO with the assistance of a leading executive search firm.

Steve: Kelly will be staying on through Q3 earnings, and given that we have a very robust financial organization through her commitment to talent development, I'm very confident that there will be a seamless transition.

Hello, Steve.

Steve: Staying on through Q3 earnings.

Speaker Change: We have a very robust financial organization committed to talent development.

Speaker Change: I'm very confident.

Speaker Change: We wish Kelly all the best.

Speaker Change: There'll be some.

Speaker Change: This transition.

Speaker Change: We wish you all the best now are puttable to partially the op two <unk>.

Speaker Change: Now, I'll pass it over to, pass it off to Kelly.

Speaker Change: Okay.

Speaker Change: First I'd like to thank you and the entire team for an incredible experience over the past 10 years <unk> has not been made where corporate taxes.

Speaker Change: Thank you, Eric.

Speaker Change: First, I'd like to thank you, of course, and the entire Zoom team for an incredible, experience over the past seven years.

Speaker Change: <unk> everyday lives people globally.

Speaker Change: As Eric mentioned I am committed to staying through the QE earnings. So this is not the bi will get to see each other again and I will help with the seamless transition.

Speaker Change: Zoom has not only made work more productive, but we have transformed the everyday lives of people globally.

Speaker Change: Now back to earnings.

Speaker Change: We are pleased that we beat our top line and really.

Speaker Change: Guidance for Q2.

Speaker Change: Here are a few even from the ports.

First <unk>.

Speaker Change: As Eric mentioned, I am committed to staying through the Q3 earnings, so this is not goodbye.

Speaker Change: I can yes reached approximately $1 2 million accounts enabled as at the end of Q2.

Speaker Change: We started making traction with vivo as we reached 69 customers with over $100000 in IRR roughly doubling year over year.

Speaker Change: Finally, we surpassed 11 regime context to customers representing more than 100% year over year growth.

Speaker Change: Now, let's dive into the financial results.

Speaker Change: Q2 total revenue came in at 116 3 billion.

Speaker Change: As a percent year over year.

Speaker Change: This is approximately $13 million above the high end of our guidance.

Speaker Change: Our enterprise revenue grew 4% year over year and represented 9% of total revenue.

Speaker Change: 58% a year ago.

Speaker Change: Online average monthly churn came in at two 9% down from three 6% and keeps us FY 'twenty.

Speaker Change: This is the lowest rate we have ever reported.

Speaker Change: We saw 7% growth in the upmarket as we ended the quarter with 3900 <unk>.

Speaker Change: The risks and trained more than $100000 into free installments revenues.

Speaker Change: These customers represent 31% of revenue up 9% in Q2 about FY 'twenty one.

Speaker Change: Our trailing 12 month net dollar expansion rate for enterprise customers in Q2 came in at 98%.

Speaker Change: The number of enterprise customer at the end of Q2 with approximately 191600.

Speaker Change: He's now metric.

Speaker Change: Metric has diminished in value over time, as we focused on upselling existing customers and landing larger prospects.

Speaker Change: Some context center and other products.

Speaker Change: Our Americas revenue grew 3% year over year, while EMEA was flat in APAC declined by 6%.

Speaker Change: On a constant currency basis, APAC grew 1% and EMEA declined 1% year over year.

Speaker Change: Moving to our non-GAAP results, which exclude stock based compensation expense and associated payroll taxes acquisition related expenses net gains on strategic investors.

Speaker Change: Net litigation settlements all associated tax effects.

Speaker Change: non-GAAP gross margin in Q2, with 78, 6% as compared to 83% in Q2 of last year, mainly due to investments in AI as well as upgrades to our data center back to them.

Speaker Change: For the full year of FY 'twenty five we continue to expect our gross margin will be approximately 79% before improving towards our long term target of 80%.

non-GAAP income from operations came in at $456 million exceeding the high end of our guidance of $420 million.

Speaker Change: This translates to a 39, 2% non-GAAP operating margin for Q2 as compared to 45% in Q2 of last year.

Speaker Change: non-GAAP diluted net income per share in Q2 with $1 39 on approximately 314 million non-GAAP diluted weighted average shares outstanding.

Speaker Change: This result was 18% above the high end of our guidance and <unk> <unk> higher than Q2 of last year.

Speaker Change: Turning to the balance sheet.

Speaker Change: <unk> revenue at the end of the period grew 3% year over year to $141 billion.

Speaker Change: The growth with roughly two percentage points higher than the growth rate provided last quarter, partially due to the continued refinement of discounting practices as well as lengthening billing terms.

Speaker Change: For Q3, we expect deferred revenue to be up approximately 5% year over year.

Speaker Change: Looking at malls are billed and unbilled contracts, our RPI increased 8% year over year to approximately $3 78 billion.

Speaker Change: We expect to recognize approximately 60% of the total RPM as revenue over the next 12 months up from 59% in Q2 of last year.

Speaker Change: Operating cash flow in the quarter grew 34% year over year to $449 million free.

Speaker Change: Free cash flow grew 26% year over year to $365 million.

Speaker Change: Our operating cash flow and free cash flow margins expanded to $38, seven and 31, 4% respectively.

Speaker Change: The year over year improvement in our cash flow metrics is due to higher collections and increased billings higher interest income and a prior year legal settlement.

We ended the quarter with approximately $7 5 billion in cash cash equivalents and marketable securities excluding restricted cash.

Speaker Change: Under the $1 $5 billion share buyback plan in Q2, we purchased four 8 million shares for $288 million. This was up from $2 4 million shares for $150 million in Q1.

Speaker Change: We'll get to see each other again, and I will help with the seamless transition.

Speaker Change: Now back to earnings.

Speaker Change: Turning to guidance for.

Speaker Change: For Q3, we expect revenue to be in the range of $1. One six to one $1 5 billion, which at the midpoint represents approximately two 3% year over year growth.

Speaker Change: We expect non-GAAP operating income to be in the range of $438 million to $443 million.

Speaker Change: Our outlook for non-GAAP earnings per share is a dollar in 2009 to $1 31 based on approximately 314 million shares outstanding.

Speaker Change: We are pleased that we beat our top line and profitability guidance in Q2. Here are a few achievements from the quarter. First, Zoom AI Canyon reached approximately 1.2 million accounts enabled as of the end of Q2.

Speaker Change: Second, we saw amazing traction with WorkVivo as we reached 69 customers with over $100,000 in ARR, roughly doubling year-over-year.

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 63 to $4 $64 billion.

Speaker Change: Which at the midpoint represents approximately two 4% year over year growth.

Speaker Change: We expect our non-GAAP operating income to be in the range of $1 $791 8 billion.

Speaker Change: Representing an operating margin of 38, 7% at the midpoint.

Speaker Change: Our outlook for non-GAAP earnings per share for FY 'twenty five is $5 in 2009 to $5 32 based on approximately 316 million shares outstanding.

Speaker Change: With the strength and free cash flow in the first half and increased outlook operating income in FY 'twenty five we now expect free cash flow to be in the range of 158 to $1 62 billion for the full year.

Speaker Change: And finally, we surpassed 1,100 Zoom Contact Center customers, representing more than 100% year-over-year growth.

Speaker Change: Now let's dive into the financial results. In Q2, total revenue came in at $1.163 billion, up 2% year-over-year. This result was approximately $13 million above the high end of our guidance. Our enterprise revenue grew 4% year-over-year and represented 59% of total revenue, up from 58% a year ago.

Speaker Change: Thank you to the entire <unk> team, our customers our community and our investors for your ongoing trust and support.

Speaker Change: Online average monthly churn came in at 2.9% down from 3.2% in Q2 of FY21. This is the lowest rate we have ever reported.

Speaker Change: We saw 7% year-over-year growth in the up market as we ended the quarter with 3,933 customers contributing more than $100,000 in trailing 12-months revenue. These customers represent 31% of revenue, up from 29% in Q2 of FY24.

Speaker Change: Our trailing 12-month net dollar expansion rate for enterprise customers in Q2 came in at 98%. The number of enterprise customers at the end of Q2 was approximately 191,600.

Speaker Change: Please note, this metric has diminished in value over time as we focus on upselling existing customers and landing larger prospects with Zoom Phone, Zoom Contact Center, and other new products. Our Americas revenue grew 3% year-over-year, while EMEA was flat and APAC declined by 2%. On a constant currency basis, APAC grew 1% and EMEA declined 1% year-over-year.

Speaker Change: David Please queue up our first question.

Speaker Change: Thank you Kelly, we will now move into the Q&A session. When I call. Your name. Please turn on your video and on mute as a reminder, in an effort to hear from everyone. Please limit yourself to one question and our first question will come from meta Marshall with Morgan Stanley Nida.

Speaker Change: Moving to our non-GAAP results, which exclude stock-based compensation expense and associated payroll taxes, acquisition-related expenses, net gains on strategic investments, net litigation settlements, and all associated tax effects. Non-GAAP gross margin in Q2 was 78.6%, as compared to 80.3% in Q2 of last year, mainly due to investments in AI as well as upgrades to our data center backbone.

Speaker Change: For the full year of FY25, we continue to expect our gross margin will be approximately 79% before improving towards our long-term target of 80%.

Speaker Change: Non-GAAP income from operations came in at $456 million, exceeding the high end of our guidance of $420 million. This translates to a 39.2% non-GAAP operating margin for Q2, as compared to 40.5% in Q2 of last year. Non-GAAP diluted net income per share in Q2 was $1.39 on approximately 314 million non-GAAP, diluted weighted average shares outstanding. This result was 18 cents above the high end of our guidance and 5 cents higher than Q2, of last year.

Speaker Change: Turning to the balance sheet, deferred revenue at the end of the period grew 3% year over, year to $1.41 billion. The growth was roughly 2 percentage points higher than the gross rate provided last quarter, partially due to the continued refinement of discounting practices as well as lengthening billing terms.

Speaker Change: For Q3, we expect deferred revenue to be up approximately 5% year over year. Looking at both our billed and unbilled contracts, our RPO increased 8% year over year to approximately, $3.78 billion. We expect to recognize approximately 60% of the total RPO as revenue over the next 12, months, up from 59% in Q2 of last year.

Speaker Change: Operating cash flow in the quarter grew 34% year over year to $449 million. Free cash flow grew 26% year over year to $365 million. Our operating cash flow and free cash flow margins expanded to 38.7% and 31.4% respectively. The year over year improvement in our cash flow metrics was due to higher collections, and increased billings, higher interest incomes, and a prior year legal settlement.

Speaker Change: We ended the quarter with approximately $7.5 billion in cash, cash equivalents, and marketable, securities, excluding restricted cash. For the $1.5 billion share buyback plan, in Q2, we purchased 4.8 million shares for, $288 million. This was up from 2.4 million shares for $150 million in Q1.

Speaker Change: Turning to guidance.

Speaker Change: For Q3, we expect revenue to be in the range of $1.16 to $1.165 billion, which at the midpoint, represents approximately 2.3% year over year growth. We expect non-GAAP operating income to be in the range of $438 to $443 million. Our outlook for non-GAAP earnings per share is $1.29 to $1.31 based on approximately 314, million shares outstanding.

Speaker Change: We are pleased to raise our top line end profitability outlook for the full year of FY25. We now expect revenue to be in the range of $4.63 to $4.64 billion, which at the midpoint, represents approximately 2.4% year over year growth. We expect our non-GAAP operating income to be in the range of $1.79 to $1.8 billion, representing an operating margin of 38.7% at the midpoint. Our outlook for non-GAAP earnings per share for FY25 is $5.29 to $5.32 based on approximately, 316 million shares outstanding.

Speaker Change: With the strength in free cash flow in the first half and increased outlook for operating, income in FY25, we now expect free cash flow to be in the range of $1.58 to $1.62 billion for the full year.

Nita Marshall: Great. Thanks, so much maybe just a quick question for Eric just where.

Nida Marshall: Where are you seeing kind of the most interest in the AI companion products are kind of the most usage and just how does it inform how you're kind of looking to invest going forward. Thank you.

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

Nida Marshall: David, please queue up our first question.

Nida Marshall: Thank you, Kelly.

Eric: We will now move into the Q&A session.

Eric: When I call your name, please turn on your video and unmute.

Eric: As a reminder, in an effort to hear from everyone, please limit yourself to one question.

Eric: A question I think first of all I want to share with you and our customers really like Zoom Air campaign first of all it works so well secondly at no additional cost knowledge.

Speaker Change: When there is Angola charter customer a lot and <unk> is a part of our package. So intermodal feature set and we've introduced a companion or.

Speaker Change: A while back so I think I look at almost every product and zoom meetings formed human Chad a viable everywhere right. So empowered by AI compiler looked at.

Speaker Change: Each product and they take a meeting for example by for sure. The number I used case like in meeting summary.

Speaker Change: And if we can keep improving data quality Leica in atom and median summary.

Speaker Change: Getting better at a better like in July we had another upgrade and pollo wise in <unk>.

Speaker Change: The previous deliveries right.

Speaker Change: And also and we also leveraged our AI component to it.

Speaker Change: Power, our brand and the services take a contact Center Center for example, I'll just give you a few features.

Speaker Change: Delivered in Q2, and a lack of elaborate AI into two folks on export a fixed and a few features.

Speaker Change: Like up automatically and engage them in a disposition.

Speaker Change: And automatically today Rep hop notes.

And also in our foil next exane as well all of those AI features.

Speaker Change: Powering our opinion services I should use against us at cognizant as one example, right. So we look at our <unk> service area features think about how to leverage the AI component to improve our product strength. That's why we're very excited and a lot of Ah.

Speaker Change: New features and also.

Speaker Change: We will be available in next few months and quarters and also October we have as <unk>, we are going to announce a bunch of AI on pioneering enhancements.

Speaker Change: And our first question will come from Mita Marshall with Morgan Stanley.

Speaker Change: Great. Thanks looking forward to it thank.

Speaker Change: Mita?

Speaker Change: Thank you.

Arun <unk>: Okay. Our next question comes from Arun <unk> with William Blair.

Arun <unk>: Great.

Arun <unk>: Hi, This is Chris on for origin and thanks for taking my question.

Chris: Real quick on a similar vein I wanted to get a better understanding of what's helping drive some of the strong adoption you've seen recently in work BMO, where customers see the most value with them.

Chris: Thanks so much.

Chris: Maybe just a quick question for Eric.

Speaker Change: Thank you.

So into muscle work available a single first of all it's really help employee engagement in particular, given the flexible work.

Similarly, engaging your employees no matter, where the art and it's very important.

Speaker Change: You cannot level meeting cell phone much attitude Nino to do that you have would have a new service. That's the reason why we acquired a walk away or and if default rate and is that a social works well a lot of our companies specify where a lot of inbred customers realize that the body.

Right and.

Speaker Change: The expense was <unk>, whereas we have formed a UI and Anoro Commission recently meta decided to retire there the platform and zoom is the lumi platform. This part of the pump or migration.

Speaker Change: For the <unk> like necessity and cosmological zoom platform on the web communication on offhand collaboration at a same time engaging many become more and more important as the reason why workflow what can people is of such a pivotal. So we closed a lot of new logos in Q2 and are quite a few very large deals also in the pipeline as well so we're.

Speaker Change: Very excited about the work of Weibo platform.

Speaker Change: By the way internally, we are also using <unk> for any announcement and in use employee just go to the work we will interface rather than go to the E mails or chatter messages is really not a scalable not afraid of it either.

Speaker Change: Okay. Our next question comes from William Power with Bert Liang.

William Power: Okay, great. Thanks.

William Power: Where are you seeing kind of the most interest in the AI companion products or kind of the, most usage?

William Power: Kelly Thanks for all the help here over over the years. So it will still help us a little while ago.

William Power: And just how does it inform how you're kind of looking to invest going forward?

Which is great.

William Power: Wanted to start I guess on.

Speaker Change: Macro that's still kind of center stage, then can renew concerns over the health of the consumer and so I guess I wonder.

Speaker Change: The online segment, if you could comment on expectations, there and kind of what youre seeing real time in the market and the churn rate.

Speaker Change: Suggests that things are going relatively.

Speaker Change: Relatively well there Polish okay.

Speaker Change: Kind of what's baked in from a consumer macro standpoint.

Speaker Change: And then the other side of that is just be great to kind of here.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: But you are seeing on enterprise in terms of exercise totals down styles.

Speaker Change: Great question.

Speaker Change: So one of the things I want to share with you, and our customers really like Zoom AI, Companion. First of all, it works so well.

Speaker Change: On the video front Jonathan Thanks.

Speaker Change: Secondly, at no additional cost.

Speaker Change: Not like some of our other vendors, they go to the target customer a lot.

Speaker Change: And in our case, this is part of our package.

Speaker Change: Eric do you want anything generally.

Speaker Change: David just to go ahead.

David: So in terms of enterprise, we continue to see growth there and that you can see that reflected in our guidance for the year.

Speaker Change: We had a lot of stability, ensuring our retention rates and this is going to show up essentially in our in our net dollar expansion that we expect to start to reaccelerate its come to like the middle of next year and.

Speaker Change: When you have a chance to really look at the guidance right Youll see that we are forecasting as we said that <unk> would be the low point of share in terms of your Brooks and we which are simply accelerating and thats whats reflected in our guidance.

Speaker Change: So in terms of the feature set, and we introduced the AI Companion a while back, right?

Speaker Change: So I think that look at almost every product in the Zoom meetings, phone, team chat, or, wherever, everywhere, right?

Speaker Change: Which we're all very excited about in terms of online as you noted.

Speaker Change: So empowered by AI Companion.

Speaker Change: Look at each product.

Speaker Change: You take a meeting, for example, right?

Speaker Change: E <unk>.

Speaker Change: Ongoing improvement in our retention rate, there, which I think is reflective about all the great progress, we're making in the platform, including all of the <unk> and companion features that Eric just talked about which are included for our online customers as well theyre paying and so.

Speaker Change: For sure, the number one use case, like a meeting summary, right?

Speaker Change: So that's been really great to see I would say the one area that we've seen some headwinds which is consistent with peers is in SMB and likes us the small customers. We've certainly seen some seeing some overall concern about the economy there.

Speaker Change: But.

Speaker Change: It's pretty.

Speaker Change: Pretty close to being in line with what we were originally forecasting for the full year. So we're just keeping a very close watch on that.

Speaker Change: And we keep improving that quality, like in the action item and meeting summary are getting, better and better.

Speaker Change: Okay. Thank you yes.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay. Thank you. Our next question comes from <unk> <unk> with Mizuho.

Speaker Change: Okay.

Speaker Change: Hi.

Speaker Change: Can you hear me.

Speaker Change: Like in July, we had another upgrade quality-wise, even better than previous deliveries, right?

Speaker Change: Hi team.

Okay, great great. Thanks for taking my question and Kelly of Great working with you.

Speaker Change: So my question our contact center.

Speaker Change: Good to see some traction in the contact center side, but what we're hearing from your peers about the macro pressure they are seeing.

Speaker Change: This market. So how do you see this zoom contact center features and capabilities compared to your comfort to just like what's helping you win against them and then the question really went through we expect contact center to be a material revenue contributor.

Speaker Change: Okay.

Speaker Change: Yeah, I can start with kind of feel free to chime in I think first of all <unk>.

Speaker Change: You look at it.

Speaker Change: The key wins in Q2, right and are closer to the single largest deal in Q2 right look at it over the past few quarters. So we're making very good progress with kind of larger deals like in Q1.

Speaker Change: Correctly, we closed around at 99.

Speaker Change: And then Q2 will close with our goal of 117 and the large deals right and the reason why our customer.

Speaker Change: Truly chaucer's zoom, because some customer of.

Our customer for a long time and then they know we wanted to innovate together with our customers like our innovation speed and like all of those features in particular some of the features AI features with deliver much faster than any of our competitors.

Speaker Change: And also in not only just the core Carnegie Center offering but also we also came up with was our came up with our own workforce management quality management and knowledge from other vendors the attitude.

Speaker Change: And <unk>.

Speaker Change: We sell other solutions and the integration of auto stimulus right from a cartoon respected realized well, we're very serious about a corner center unofficial set is great and also the integration with our other.

Speaker Change: UC platform also is very similar and plus and the feedback, especially if a customer did a PUC. After the test zoom corner center realized Wow. It worked so well and so powerful and this reason why we're gaining momentum and I think of it almost figure that we can and will.

Speaker Change: We have high confidence, we do not lose the customers because fisher's Axel.

Speaker Change: And remember even now with our new pricing tiers that we've added and we are still very very price competitive against everyone else in the market. So from a total cost of ownership perspective, when you look at it combined with this modern the most modern architecture out there I think it's a belly very compelling.

Speaker Change: The reason for our customers to switch.

Speaker Change: And also another thing is every time, we made a commitment we did it deliver that's another we debuted a trustworthy confetti rap in Q2 and.

Speaker Change: And the PCI compliance and so on sportswear.

Speaker Change: We did deliver so.

Speaker Change: Okay. Thank you. Thank you.

Speaker Change: Thank you <unk>.

Speaker Change: Our next question comes from Ryan Macwilliams with Barclays Brian.

Ryan Macwilliams: Hey, Thanks for taking the question.

Ryan Macwilliams: Now that you are seeing more adoption to gilead.

Ryan Macwilliams: In companion, how do you think about the costs of providing these generate AI features capabilities and do you think zoom create eventually charge on a usage basis or power users of the generic I can probably just trying to weight cost per script opportunities here.

Speaker Change: So that's a good question and our philosophy is we always look at servicing from our customers' perspective.

Speaker Change: Especially for given the macroeconomic environment. So every kilometer tried to save the money and consolidated a cost and so on I think I do not Englishman retarder customer for a combined.

Speaker Change: And we also leveraged our AI Companion, right, to empower our business services.

Speaker Change: Take a contact center, for example.

And we when we launched the air companion right. So we already announced.

Speaker Change: I just gave a few features we delivered in Q2.

Speaker Change: We do not have charter Cosmos, however, let's for workplace before the opinions of services like our Carnegie Center, all those and new offering and I think for sure we are going to monetize.

Speaker Change: You know, like we leveraged AI to focus on expert assist.

Speaker Change: You know, a few features, you know, like automatically and engagement disposition, and automatically, wrap up notes.

Speaker Change: And also, you know, for your next action as well, all those AI features are empowering, our business services.

Speaker Change: As I mentioned in the previous earning cost by new new solutions or the billion in services in our AIC think of we are going to chop are combined for our workplace and our core UC offering and a collaboration offering we do not want the chalk.

Speaker Change: I just use, again, use the contact center as an example, right?

Speaker Change: So we look at all of your service, every feature, think about how to leverage AI Companion to, improve our product strengths.

Speaker Change: That's why we're very excited and a lot of new features and also, you know, will be available, in the next few months and quarters.

Speaker Change: I wanted to.

Speaker Change: Really appreciate our AI team's grid effort by and.

Speaker Change: Folks on a call a day was on a cost reduction resource for US I think that's the reason why some customer Luca our often look at a total cost of ownership in terms of support cost AI cost and also in the product interest also realize wow is better double down on zoom and a deployment.

Speaker Change: And also, in October, we have Zoomtopia.

Speaker Change: We are going to announce a bunch of AI Companion enhancements.

Speaker Change: Great.

Speaker Change: And that's the reason why we're going through.

Speaker Change: Going to continue continue of winning so.

Speaker Change: And then Kelly, maybe just on gross margins.

Kelly: The impact of generic.

Kelly: And what you can do to alleviate some of that's up there.

Kelly: Yeah.

Speaker Change: Mining to 79% for this year, which we build.

Speaker Change: Reflects the prioritization of AI, but also the very strong discipline that we continue to apply.

Speaker Change: And we are holding to our long term target for gross margins of 80% but of course, we think at this point in time, it's very important prioritizes investments as they really.

Speaker Change: Set us up for future growth.

Speaker Change: I definitely think it makes sense to focus on about first excellent. Thanks, guys. Yeah. Just one more thing I also wanted to give them a credit for our Dev ops team on the right hand for sure we're going to buy multiple Gpus right and also leverage that.

Speaker Change: Our team and try to save the money from other areas in a fully automated and a source of phosphate. So that's another way for us to shape the cost too.

Speaker Change: Thanks.

Make some room for error.

Speaker Change: Okay. Thank you. Thank you thanks Ryan.

Speaker Change: Okay. Our next question comes from Tyler Radke with Citi Hi, Larry.

Speaker Change: Looking forward to it.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Our next question comes from Arun Bahatia with William Blair.

Tyler Radke: Hi, this is Chris on for Arjun, and thanks for taking my question.

Tyler Radke: Real quick, in a similar vein, I wanted to get a better understanding of what's helping, drive some of the strong adoption you've seen recently in WorkVivo.

Tyler Radke: Hello are you there yes.

Larry: Yes can you can you hear me, Okay, Yes, hi, Tyler yeah.

Larry: Where are customers seeing the most value with that?

Tyler Radke: Hey, Hey, good to see you thanks for taking the question.

Tyler Radke: Thank you.

Kelly: So in terms of WorkVivo, I think, first of all, it's really helped employee engagement. In particular, you know, given the flexible work, you know, how to seamlessly, you know, engage your employees, no matter where they are, this is very important, right?

Kelly: You know, you cannot leverage meetings or phone or chat, you know, to do that.

Kelly: Kelly I I'm wondering if you could just it was great to see the stabilization or actually that the record high in terms of the the online renewal rate.

Speaker Change: I'm curious if you could speak to the new business side of the equation and I know Wendy and team had been doing some some initiatives to drive it.

Speaker Change: <unk>, there, but how do you sort of see the new business side of the equation relative to how you were thinking about it.

Speaker Change: Couple of quarters ago.

Speaker Change: Yeah, so when either team continue to do a great job of adding features looking for additional offerings.

Speaker Change: We continue to expand our growth there.

Speaker Change: I think in terms of our quarter.

Speaker Change: Certainly saw growth and are very pleased to be able to raise our guidance across the board. The one area that we have seen some headwinds in saying, it's very consistent with what youre hearing from carriers is in that the SMB in the really small.

Speaker Change: Business area, because everybody is concerned about the future of the economy and being very thoughtful about buying decisions.

Speaker Change: With that said it is.

Speaker Change: It's roughly in line with where we were expecting coming in to the year, which is why you've seen us continue to execute against our guidance and be able to raise going forwards.

Speaker Change: You have to have a new service.

Speaker Change: The reason why we acquired WorkVivo and before, right, and that solution works very well.

Speaker Change: Thank you Kelly and best of luck.

Kelly: A lot of companies, especially for very large enterprise customers, realize the value, right?

Kelly: Thank you.

Kelly: Okay. Our next question comes from Parker Lane with Stifel Parker.

Kelly: And you know, the experience works so well, whereas the forward UI, and in order to mention, you know, recently, Meta, right, they decided to retire their, you know, the platform, you know, and Zoom is the only platform they supported for migration and for the hybrid apps, right?

Kelly: Yeah, Hi, this is Jack on for Parker.

Jack: So essentially, when customers look at the Zoom platform, on the one hand, communication, on the other hand, collaboration, at the same time, engagement has become more and more important.

Jack: Congrats on the nice quarter.

Speaker Change: I wanted to touch on the large win in the contact center.

Speaker Change: What kind of initiatives was this customer looking to accomplish and what they ultimately choose whom thanks.

Speaker Change: But I think for sure that this customer.

Speaker Change: Value added.

Speaker Change #100: Multiple and a cornerstone of offerings in the market and really want to in a standard roadmap and architecture, especially your AI initiatives right.

Anna: So Anna.

Speaker Change #102: Given that the PUC that you've added a multiple solutions and zoom zoom itself and Ada commscope comparing against the other and Windows feature side.

Speaker Change #103: And is it a price and you know that the brand recognition and also against the reader trials our team.

Speaker Change #104: <unk> inhibitor together with our customers and this has happened before like the zoom phone as well and ultimately Boston Boston for the trust. They know actually we can't innovate to foster Mccann innovative together and and you know given all the features and we promised the market before we did it deliver.

Speaker Change #105: And the reader ichor.

Speaker Change #105: That's the reason why WorkVivo is putting out such a bigger role.

Zoom Carnegie Center in all like other legacy solutions, right and were slow to move versus losing Bristol.

Speaker Change #105: So we closed a lot of new logos in Q2 and acquired a few very large deals also in the, pipeline as well.

Speaker Change #105: So we're very excited about the WorkVivo platform.

Speaker Change #105: Unknown Speaker By the way, internally, we're also using, WorkVivo for any announcement, any news, you know, employees just go to the WorkVivo interface rather than go to the emails or chat messages is really not scalable, not friendly either.

Speaker Change #105: We built a new solution with a modern architecture is much better experience, so and why not if so and if you zoom so yeah.

Speaker Change #105: Unknown Speaker Okay, our next question comes from William, Power with Bayard, William.

Speaker Change #106: Okay. Thank you.

Speaker Change #105: Our next question comes from Michael Funk with Bank of America Michael.

Speaker Change #107: Hi, Good evening. Thank you for the questions and Cowboy pack you again, probably help corporates are part of the year and I'll see you next quarter as well.

Michael Funk: Question on contacts in our pipeline and as a clarification.

Speaker Change #109: The recent wins remain more skewed towards internal or external contact center.

Speaker Change #109: Unknown Speaker Okay, great.

Speaker Change #109: Thanks.

Speaker Change #110: So meaning employees risks.

Speaker Change #111: Kelly, thanks for all the great help here over over the years.

Speaker Change #111: So we'll still have a little while though, which is great.

Speaker Change #111: For <unk>, primarily excellent all right they use that to.

Speaker Change #111: I you know, I want to start, I guess on or macro, right?

Speaker Change #111: To engage with their customers and their partners right. When we launched many quarters ago right. Some of the customer uses of our Carnegie Center for internal it.

Speaker Change #111: I mean, that's still kind of center stage have been kind of a new concerns over the, health of the consumer.

Speaker Change #111: And so I guess I wonder, you know, within the online segment, if you could comment on, expectations and kind of what you're seeing real time in the market, I mean, the churn rate suggests that, you know, things are going, you know, relatively well, they're always okay.

Speaker Change #111: <unk> desk by now.

Georgia: But, you know, we're kind of what's baked in, you know, from a consumer macro standpoint.

Georgia: Georgia, just before the the excellent efficacy and for the support team customer engagement team. So.

Kelly: That's very helpful. Thank you, Eric and then and then Kelly I think you mentioned an order this year, where I met with you at your expected contact center growth to ramp similar to filing growth.

Speaker Change #113: That was a good precedent.

Kelly: For our growth expectation.

Speaker Change #114: Are you growing above those expectations for contact center we're in line.

Speaker Change #114: And then the other side of that is just be great to kind of hear, you know, what you're, seeing on the enterprise, you know, in terms of sales cycles, downsells, on the video front down the center.

Speaker Change #114: We're in line with that so it hasn't changed dramatically I mean, we're very pleased with how both phone and contact center are continuing to drive growth.

Speaker Change #114: Thanks.

Speaker Change #114: Unknown Speaker Eric, do you want to say anything generally, first?

Speaker Change #114: It is more in line with what we had expected.

Speaker Change #116: Go ahead.

Speaker Change #115: Great. Thank you both.

Speaker Change #116: Yes. Thank you.

Speaker Change #116: Thank you. Our next question comes from Mark Murphy with J P. Morgan.

Speaker Change #116: Yeah.

Speaker Change #116: Thank you.

Hey, Thanks for taking my question.

Speaker Change #117: Are you on here for Mark Murphy and Kelly. Thanks for all the help you provided us.

Speaker Change #117: So in terms of enterprise, you know, we continue to see growth there.

One question I have is when you kind of zoom AI companion and we've heard a lot of great things in the field it from from customers kind of comparing it to them.

Speaker Change #118: Other products that are offered out there can you kind of remind us about how you guys think about tracking successful products internally given that you don't kind of charge per directly.

Speaker Change #119: Beyond having got millions of people are using it or is there any way you can kind of track it whether it's utilization improvement in retention anything along those lines.

Speaker Change #120: Yes, I mean, what are the metrics that we've been talking about on here is account activation. So looking at how many not not individual users. It's actual customer accounts that have activated it and or you can imagine for larger enterprises. There is usually an approval process that we go through they go through but we watch.

Speaker Change #120: That and then internally.

David: We're watching things like the number of meeting summaries for David So some of the other like usage metrics is how where we're evaluating usage and success.

Speaker Change #121: So we're often we never have in <unk> is that with our customers and also the share the stories via <unk> Zoom way a companion algorithms were exited a summary action items are having their.

David: Employee productivity as well and yeah. So a lot of very positive feedback about adopting assume are combined.

Speaker Change #122: That's great to hear thank you. Thank you.

Speaker Change #122: Okay. Our next question comes from James Fish with Piper Sandler James.

James Fish: Hey, guys.

James Fish: Kelly, it's been great working with you.

James Fish: My question is more directed at you.

James Fish: You had mentioned here, we're talking about 98% of trailing 12 month retention rate and it sounds as if.

Speaker Change #124: Starting to see the bottom of that and in fact, our math would imply actually above 100% today.

Speaker Change #125: The in period. So can you break down what you are getting a cross expansion mix between upsell seats or if you are starting to see upsell seats again.

Speaker Change #126: Across meetings or other products any pricing changes adoption of other products like foundry or contact center at this point in terms of how it's impacting net expansion and I get rounding is involved but should we not be interpreting that that upmarket is accelerating at this point, but similar to what we saw.

Speaker Change #127: From a dollar perspective, because if you run the math there would suggest like 9% potentially could just views the absolute number.

Speaker Change #128: Yeah. So.

Speaker Change #127: <unk>.

Speaker Change #129: When you when you think about the way that we're thinking about looking forward certainly the growth for the back half of this year and into next year is being driven by the market very specifically, our direct segment, but even within that segment. The upmarket portion of it if you look at the growth rate of our metrics customer.

Speaker Change #129: And that's, you can see that reflected in our guidance for the year, we've had a lot, of stability in terms of our retention rate. And this is going to show up eventually in our in our net dollar expansion that we expect, to start to reaccelerate as we come to, like the middle of next year.

Hoffmann: With greater than 100, Kt <unk> Hoffmann.

Hoffmann: See that's growing 7% year over year.

Hoffmann: Get them higher than our overall revenue growth rate, which is a good indicator of that.

<unk>.

Hoffmann: What we see is similar to what we do the important calculation starting to see stabilization in our net dollar expansion and we know that grinds ahead, our excellent report metric and Thats why its kind of middle of next year, we expect that to start re accelerating again and that's being driven by ongoing perform.

Speaker Change #131: Oh contact center, obviously, where vivo.

Speaker Change #131: Is sometimes an add on sometimes those are brand new customers that are coming in.

Speaker Change #132: And I would say I don't know that.

Speaker Change #132: I mentioned earlier, we've seen stabilization in our retention rates in enterprise as well. So that's good in terms of even.

Speaker Change #132: Even if these aren't being added for meetings that we're starting to see some stabilization there in terms of renewal rates from customers.

Speaker Change #133: Helpful. Thanks again.

Speaker Change #132: Yeah.

Speaker Change #132: Okay. Our next question comes from Peter We'd with Bernstein Peter.

Thank you.

Peter We'd: Oil because it's not going to be very prudent about that.

Speaker Change #132: Yeah.

[laughter].

Okay.

Speaker Change #132: No.

Speaker Change #132: Yeah.

Speaker Change #132: There we go.

You should have in a normal mode.

Speaker Change #132: Yeah.

Speaker Change #135: Alright, Thank you very much I appreciate it.

Speaker Change #135: And Kelly, we will Miss you I mean, you've been very open and honest with us over time and it's been very helpful.

Speaker Change #136: I want to follow up that last question.

Speaker Change #135: <unk>.

Speaker Change #137: Expansion and I think you've been talking about.

Kelly: Getting to stabilization about now.

Speaker Change #138: And kind of when we unpack that number at least in our model. It does look like on a quarter over quarter basis. The upmarket definitely saw some strength.

Speaker Change #138: Whereas the kind of down market.

Speaker Change #138: Little bit flatter, which historically has always been the case because there was a little bit of cannibalization that comes out of that going into the upmarket.

Speaker Change #138: When you look forward from here.

Speaker Change #139: Where are you seeing I guess, so it does kind of early kind of acceleration is going on and how do you think about those kind of.

Escalating over the coming quarters is it the type of thing where like we can start to see this building on itself by quarter over quarter or you just said middle of next year, which makes it seem like this is like one step up and then you expect it to be flat.

Speaker Change #140: How is that kind of shaping up let.

Speaker Change #141: Let me so let me clarify a couple of things so what is going to stabilize and start to grow again next in the middle of next year is the net dollar expansion rate very specifically, that's because we're on a trailing 12 month metric what we're seeing in terms of revenue. When you look at the guidance is Q2 was as as we forecast the low point in year over year.

Speaker Change #141: So if you, when you have a chance to really look at the guidance, right, you'll see that, we are forecasting, as we said, that Q2 would be the low point this year in terms of your your growth, and we would start to reaccelerate in Q3.

Speaker Change #141: And now given the strong contribution we're seeing from contact center from phone work vivo, we are guiding Q re accelerating growth in starting in Q3 and that combined with the stabilization in our retention rate.

Speaker Change #141: And that's what's reflected in our guidance, which we're all very excited about.

Speaker Change #141: In enterprise and ongoing improvements and online all of that of what's leading to the <unk> service and the strength that we see in the future.

Speaker Change #141: And when you kind of look at the kind of underlying components, there that are kind of <unk>.

Speaker Change #141: Driving that strength.

Speaker Change #141:

Speaker Change #142: I guess, it's probably not seats. It's many of these additional.

Speaker Change #143: I guess both products in inversions.

Speaker Change #143: Pushing on the market when you think about the balance between those getting people to sign up for.

Speaker Change #143: In terms of online, as you noted, we see, you know, ongoing improvement in our retention, rate there, which I think is reflected about all the great progress we're making in the platform, including all of the Zoom AI companion features that Eric just talked about, which are included for our online customers as well that are paying.

Speaker Change #143: And so that's been really great to see. I would say the one area that we've seen some headwinds, which is consistent with peers, is in SMB and like the small customers, we've certainly seen some, I think some overall concern about the economy there, but, you know, it's, I think, pretty close to being in line with what we were originally forecasting for the full year.

Speaker Change #143: So we're just keeping a very close watch on that.

Speaker Change #143: One versus adding a contact center or these types of things.

Speaker Change #144: Give us some color on the contribution of both of those is this kind of acceleration kind of moves forward.

Speaker Change #145: Thank you.

Speaker Change #145: Yeah, we do see expansion land and expand being a motion that we see of course historically its been the most of the team for meeting, but we also see it for phone we see it for contact center as well as especially as we keep adding more Eric touched on this as the right. We've really expanded the features and functionality on <unk>.

Speaker Change #146: <unk> centre that allow us to really serve externally so things like PCI compliance and third ramp and all the social integrations, which are a necessary component for any company to talk to its external customer base and that's what's really led to some of the acceleration that we're seeing in contact center.

Speaker Change #146: Yeah.

Speaker Change #146: Okay.

Speaker Change #146: I appreciate the additional detail. Thank you Tim thank.

Tim: Thank you.

Tim: Okay. Our next question comes from Peter Levine with Evercore, Peter Peter Alright, Thanks, Eric.

Peter: Eric Thank you for taking my question, maybe just on capital allocation.

Peter: Eric or even Kelly you think about think about strategy.

Speaker Change #149: You want to retain your competitive advantage you have seven 5 billion in cash you've seen them move into contact center phone.

Speaker Change #150: Productivity apps as well, what's the best way for investors to think about how you plan for point of our capital you have the buyback in place.

Speaker Change #150: Thank you.

Speaker Change #149: But it was part of the.

Speaker Change #151: It's been a while since we've seen any larger activity, but maybe help us understand the strategy in terms of what youre thinking in terms of to help Reaccelerate top line, if it's new product as a tack just maybe help us understand how you're thinking about that.

Speaker Change #151: Our next question comes from CT Panagrahi with Mizzouho.

Speaker Change #151: Hi.

Speaker Change #152: Yes, so from a high level. So we look at everything from a cost perspective, but often when we talk about innovating together right and sometimes customer they really Nevada. This feature in a take a walk Bureau for example by customers say, yes, I realize employee engagement tools. We know we can on a bureau that Tom.

Speaker Change #151: Any manner.

Speaker Change #152: Have to go through the M&A.

Speaker Change #153: As we look at our platform play and also a class AI process billions of services.

Speaker Change #154: So many opportunities are there.

Speaker Change #155: I do not think what computer servicing organically, even if we want to write the saltwater culture before but now we are more aggressive golar to hey, all too quickly and added those new services or features to beef up our existing offering and this is kind of a wall of hardness and adhere well.

Speaker Change #156: And of course, especially given the AI era, right and you have to move faster I think in my view is more like a loss of M&A opportunities down the road, so and that's kind of.

Speaker Change #155: Our strategy so.

Speaker Change #155: Kelly.

Kelly: Willing to share a number with contact center can you share at a revenue number or at least the target in terms of because portfolio, 10% you gave us that milestone.

Kelly: Milestone is there an internal plan on when you think <unk>.

Kelly: Contact center will hit 10%.

Speaker Change #157: When we hit 10% that we of course will start disclosing it but remember if it was in like.

Speaker Change #158: Fifth year of its life I think before it hit that metric and contact center is what in its second year of life. So while we're thrilled with its performance.

Speaker Change #158: Arent quite yeah, there's going to be a while before it comes to a stage, where we will be disclosing the percentage of revenue that's why.

Speaker Change #158: For now, we're just closing customer accounts and giving you other metrics around like the top 10 being displacement is trying to give you color about what we're seeing in the market, but it'll be a little bit before we get to that metric specifically.

Speaker Change #159: Thank you very much.

Speaker Change #159: Yes.

Speaker Change #159: Okay. Our next question comes from Rich Magnus with Wolfe Research Rich Hey, guys. Its rich on for Alex just wanted to come back to the large customer adds for contact center you were highlighting in the top 10 wins being displacements you said, 40% were from legacy migrations. So.

Speaker Change #160: Of the six that were not replacing the first Gen solutions what were the biggest drivers of those wins was it pricing.

Speaker Change #161: Functionality or something else that we're missing.

Speaker Change #162: I just wanted to be Super fair that for a second so the top 10.

Speaker Change #163: Wins, all were displacements six of them were replacing on Prem existing legacy and four were replacing other cloud.

Speaker Change #163: So I think again all of them I mean, Eric you feel free to chime in now, but it just highlights the modern architecture that context, that's built with AI at its core from the very beginning.

Eric: And also.

Rich Magnus: So rich believe it or not actually.

Rich Magnus: Quite often and customer mission.

Speaker Change #165: The ability also the player also plays a very important role.

Rich Magnus: Because it comes with Congress and it's very important of a constantly engaging with their customers you have been very stable right and some of <unk> customers latest number I think they just do not like that stability from other solutions.

Rich Magnus: And thus neither they know actually zoom always delivers our stable service with a scalable architecture and so on and so forth and that's also put it that that also plays a role as well right I think everything together I think it's stability modern architecture pricing.

Rich Magnus: And and foster innovation I think ultimately it together.

Rich Magnus: So.

Rich Magnus: Okay.

Catherine <unk>: Okay. Thank you. Our next question comes from Catherine <unk> with Rosenblatt Securities Kathryn.

Kathryn: I'm always late sorry to guide them anyway.

Speaker Change #168: Good to see it though.

My question has to do with contact center, bringing central Maine Central Nice just released their five dollar phone and I was wondering when you talk about contact center, it's pretty much in that bucket, but whats your pipeline.

Speaker Change #168: When looking for UC and contact center.

Speaker Change #168: <unk> progressing.

Speaker Change #169: Carrying for Ya.

Speaker Change #169: Free to chime in I can comment on their UC offering. So why don't you do that first seats.

Speaker Change #168: Yes.

Speaker Change #168: Again.

Speaker Change #168: It's hard to comment on our competitors move right into the UC and the timing of Intel <unk>.

Speaker Change #168: As I presented in a mistake.

Speaker Change #171: Got hope really compete compete against others like zoom and others, while we had so many years' experience with a grid of our scalable architecture.

Speaker Change #171: Part of being able to have you win.

Speaker Change #171: And so I'd be wrong, but I know I have a high confidence they are not going to win usage space. So because a lot of.

Speaker Change #172: Investment had been audited features integration and scalability stability.

Again, I do know that so.

Speaker Change #173: Yeah, and we used to see contact center driving new leads for contact center driving need and desire for the bone and we see it come the other way as well.

Speaker Change #174: I think we talked about this in the prepared remarks about this better together and that is really inherent with what we're seeing across the platform and zoom AI companion being able to leverage all of that across the entire platform just brings so much power to it that.

Speaker Change #174: I think you're going to continue to see the ongoing combination of those two products in the rest of the platform be very strong.

Speaker Change #175: So just in essence back because the AUC piece, there was no disruption whatsoever, even now $5 price.

Speaker Change #176: You had a falloff.

Ian: Ian for Latino approximately one one or before that.

Speaker Change #178: Why do I want to take a risk people or something new and it's more like today, you ought to have a iPhone and Android phone and you want to introduce a new from who is going to deploy that who is going to buy that so that might be.

Speaker Change #178: Can you hear me?

Speaker Change #178: Yeah.

Speaker Change #178: Had to ask the question. Thank you yeah. Great question. Thank you. Thank you Catherine.

Okay. Thank you. Our next question comes from Matthew Van Vliet with BP.

Speaker Change #178: Matthew.

Speaker Change #179: Hey, guys can you hear me.

Speaker Change #179: Yeah, Hey, Spencer on for Matt. Thank you for taking my question and congrats on the quarter.

Speaker Change #180: I apologize if this was already asked but.

Speaker Change #181: How how are the AI products key functionality strong expansion with existing customers how.

Speaker Change #182: How much of it is like premium tiers or upselling to premium tiers of the existing footprint versus selling to new phones contact centers or just other cross selling products. Thank you.

Speaker Change #182: Thank you.

Speaker Change #182: The current existing.

Speaker Change #183: It looks like installed base for the workplace customers, they're looking at a value.

Speaker Change #184: The audio zoom for longhorn likely experience, we keep adding more and more value to the customers I guess, what I don't know what additional costs. You know this is Saturday will be the long term it fast the new assumed the contrast, right and all like some other windows. He uses our free service I guess, what are obvious talking without a platform, we're going to increase price with all the features.

Speaker Change #185: That's not our philosophy.

Speaker Change #186: Alright, so thats for workplace part.

Speaker Change #186: Premium services and all that again take a contact center for example, AI.

Speaker Change #187: Combining is a key differentiation.

Speaker Change #187: Cause the customer trusts, our AI features that I mentioned.

Speaker Change #187: Every quarter, we will release, some features and I'll add into two.

Speaker Change #188: Great.

Speaker Change #188: Kind of.

Speaker Change #189: On the innovate right and I think of that apart and all free.

Speaker Change #189: Im going to chop as well right.

Speaker Change #189: Although my hand, we wanted to add more value to existing customers on all hands. We can charter customer with some features 4 billion services because those features customer really need and also the parallel.

Speaker Change #189: Thanks for taking my question.

Speaker Change #189: And Kelly, it's great working with you.

Speaker Change #189: So my question about contact center, you know, it's good to see some traction in the contact, center side, but we're hearing from your peers about the macro pressure they are seeing in this market.

Speaker Change #189: <unk> as well.

Speaker Change #190: So how do you see this Zoom contact center, you know, features and capabilities compared, to your competitors?

Speaker Change #190: Thank you guys. Thank you. Thank you.

Speaker Change #190: Our next question comes from Samad Samana with Jefferies.

Speaker Change #190: Okay.

Hi, good evening and thanks for taking my question so.

Samad Samana: First just on <unk> can you give us in terms of the mix of those 1100 customers how many of those or maybe like 100, plus seat deployment versus under that just any sense of SMB versus enterprise that makes there and kind of related what's the attach rate of free cash into the 100 K plus installed base.

The company has.

Samad Samana: Hum.

Samad Samana: Yeah.

Speaker Change #192: Anything about this.

Speaker Change #193: We've certainly seen no growth in.

Speaker Change #193: Undertake customers for a contact center, we're up to 117 that we disclose so you can see that there they are moving into that realm for sure and we've been working.

Speaker Change #193: And it's in the channel and working with partners to also think about how we help customers with their digital transformation in terms of the disbursement across that.

Speaker Change #193: The size of our deals what I would say is they are definitely getting larger they're getting larger for a couple of reasons because as we've talked about this added functionality, allowing them to use it externally as well as we talked about this either last quarter the quarter before that with the introduction of the pricing tiers.

Speaker Change #193: If you remember we started with one pricing here, we actually added two more in.

Speaker Change #193: Well the agent just like Eric was speaking about earlier is in the highest tier we actually saw our asp's for contact center almost double.

Eric: Per quarter, because it's such a premium feature and when I look at the Q2 deals.

Speaker Change #194: The majority of them were purchasing in one of the top two tiers. So all of that is contributing to what I would say is not only expansion in terms of that expanded it in term of value being derived from them.

Got you and then maybe just on the online retention, it's great to see that that improvement there I'm curious how much of that is due to either the new features that you released versus moving further away from the tightening of the Grace period, and and it's even better than it was before that slight uptick last quarter.

Speaker Change #194: Right.

Speaker Change #195: Is this like the new durable assumption that we should make of that pretty reasonable or just how are you thinking through that yeah. So.

Speaker Change #196: I mean this is a great question and I guess, especially all the time, where I can share and keep getting better I will tell you that we are modeling it to stay at about 3% I think that's a really positive right now.

Speaker Change #196: But we continue to see improvements on the platform and I think thats, what youre seeing in this quarter.

Speaker Change #196: Because we did see a little bit of the pull forward if you will.

Speaker Change #197: Last for the change in the dining period as you mentioned.

Speaker Change #197: But this is a clean water right, meaning that it should really reflect and if you remember historically Q2 is a larger typically a larger seasonally high churn period because of summer holidays typically per online, we see higher churn rates in Q2 and in Q4 because of summer.

Speaker Change #198: And holiday breaks winter holiday breaks and we don't quit friction in the cancellation cyclone because we want customers to use the product as they need so I think it's very positive to see this down.

Speaker Change #198: Record low churn rate in a seasonally high quarter.

Speaker Change #199: Great. Thank you so much yeah. Thank you.

Speaker Change #199: Our next question comes from Matthew Harrigan with benchmark Matthew.

Matthew Harrigan: Thank you are you seeing anything in the broad sweep of AI regulation in the U S or Europe that you think can be open innovation. It sounds like you've modulators of your dataset.

Speaker Change #201: Are there any activity in Europe in response system.

Speaker Change #202: Political concerns, but what's your view there.

I think of it.

Speaker Change #203: Entercom E R M.

Speaker Change #204: We took a we are taking a very sparse.

Speaker Change #205: Sponsors save approach right. This reason why when we launched the EI companion Gordon mentioned, we are not going to use any of our customer data to trim, our AI modules right a material customer data very very seriously and as a customer they know that they trust our brands and trusted water, we're doing and so far I do not see any.

Speaker Change #205: Impact into <unk> regulation and again this is AI is moving rapidly almost.

Speaker Change #205: EMEA up here.

Speaker Change #206: And we all look at the potential regulation about the sofa impact actually is in Ottawa to our business.

Speaker Change #206: <unk> limited so you know like a meeting in summary, and as a very important feature a customer like that I think that we do not use our company data debacle air module.

Speaker Change #207: Like what's helping you win against them?

Speaker Change #207: I don't why not keep you usually had a feature I think of it as we impact so far.

Speaker Change #208: Great. Thanks, Sir one more.

Speaker Change #208: Right.

Matthew Harrigan: Yeah. Thank you Matthew.

Speaker Change #209: Our next question comes from Patrick while Ravenswood JMP Securities.

Speaker Change #209: And then a question like, when should we expect contact center to be a material revenue contributor?

Patrick: Unknown Speaker Yeah, I can start with Kelly, feel free to, tell me.

Patrick: Hey, this is obstacle on for contract, but just wanted to.

Patrick: I think, you know, first of all, you know, you look at the, you know, the, you know, the key wins in Q2, right?

Patrick: Touch on international with them.

Kelly: And of course, the single largest deal in Q2, right?

Kelly: Domestic and Kelly, you mentioned EMEA shrank, 1% in constant currency and those revenues declined last year as well.

Patrick: And if I just look at where we're at this year looking like may be on track to shrink again, just wondering if you could talk about what what youre presences, there and kind of how you're seeing demand in those international regions.

Speaker Change #211: Yes, we've certainly seen the economy in EMEA, especially continued to be impacted by the ongoing wars that are happening in that that continents and.

Speaker Change #211: Look at all the past few quarters, right?

Speaker Change #211: So we're making very good progress.

Speaker Change #211: Look at, a lot of deals like in Q1, if I recall correctly, we closed around 90, you know, and then Q2 was like 117, and a lot of deals, right?

Speaker Change #211: And the reason why a customer, they truly trusted Zoom, because, you know, some customer, they already, you know, our customer for a long time, and they know we want to innovate together with our customers, like our innovation speed, and like all those features, in particular, some of the features, AI features, we deliver much faster than any of our competitors.

Speaker Change #211: And also, not only just the core content and offering, but also, we also came up with our own workforce management, you know, quality management, and not like some other vendors, they had to, you know, and resell other solutions in the integration order stimulus, right?

Speaker Change #211: From a customer perspective, realize, we're very, very serious about a content center.

Speaker Change #211: So that in general I think all of our peers are facing as well.

Speaker Change #211: And the feature set is great.

Speaker Change #211: And also the integration with our, you know, other, you know, the UC platform also is very similar.

Speaker Change #211: And plus, and the feedback, especially for a customer, they did a POC, after they test Zoom content center, realize, wow, it works so well.

Speaker Change #211: We are.

Speaker Change #211: We have been in the process, we have a new leadership team that's coming into place. There. So looking forward to that and we also are really focused on investing in the region. We just last quarter opened up our London Executive briefing Center, which is amazing, it's a great opportunity to bring customers and partners and prospects altogether.

Speaker Change #211: And it's so powerful.

Speaker Change #211: And that's the reason why we're gaining momentum.

Speaker Change #211: And I think in terms of feature set, we can, you know, we have high confidence, you know, we do not lose the customers because of feature set, so.

Speaker Change #211: And remember, even now with our new pricing tiers that we've added in, we are still very, very price competitive against everyone else in the market.

Speaker Change #211: So, from a total positive ownership perspective, when you look at it, combined with this modern, the most modern architecture out there, I think it's a very compelling reason for our customers to switch.

Speaker Change #211: And also another thing is every time we made a commitment, we did a deliver.

Speaker Change #211: That's another, way to build a trust, with that confetti wrap, Q2, and, you know, and the PCI compliance and so on and so forth, right?

Speaker Change #211: You know, we did a deliver, so.

Speaker Change #211: Okay, thank you.

Speaker Change #211: Thank you, Cindy.

Speaker Change #211: Our next question comes from Ryan McWilliams with Barclays.

Speaker Change #211: Ryan?

Speaker Change #211: Hey, thanks for taking the question.

Speaker Change #211: And really.

Speaker Change #211: So, now that you're seeing more adoptions, Michele, as a companion, how do you think about the cost of providing these generative AI features and capabilities?

Speaker Change #211: And do you think Zoom could eventually charge on the usage basis for power users of these generative AI capabilities, trying to weigh cost versus revenue opportunities here?

Speaker Change #211: See the entire expanded.

Speaker Change #211: Thank you.

Speaker Change #211: So, that's a great question.

Speaker Change #211: Zoom Ciudadano story in a beautiful place and it's really leading I think it's an area that we're really focused on investing and re accelerating.

Speaker Change #211: And our philosophy is we always look at everything from a customer's, perspective, right?

Speaker Change #211: Especially for, you know, given the macroeconomic environment, right?

Speaker Change #211: So, every company tried to save the money, consolidate the cost, and so on and so forth.

Speaker Change #211: Yeah, just one more thing.

Speaker Change #211: I think we, I do not think we should charge a customer for AI companion.

Speaker Change #211: I also want to give a credit to our DevOps team.

Speaker Change #211: I mean, you know, when we launched AI companion, right, so we already announced, you know, we do not want to charge a customer.

Speaker Change #211: On the one hand, for sure, we are going to buy more and more GPUs, right?

Speaker Change #211: However, that's for the workplace.

Speaker Change #211: And also, our team tried to save money from other areas, you know, fully automated and, so on and so forth, right?

Speaker Change #211: For the business services like a contact center, all those new offerings, and I think for sure we are going to monetize.

Speaker Change #211: So that's another way for us to save the cost, right, to, you know, make some room for AI.

Speaker Change #211: You know, as I mentioned in the previous, you know, earning calls, the new solutions, or the business services, you know, I think we are going to charge AI companion, right?

Speaker Change #211: So.

Speaker Change #212: For the workplace, you know, and, you know, our call, you see offering and collaboration, offering, we do not want to charge.

Speaker Change #212: Very good.

Speaker Change #212: You know, I want to say, you know, really appreciate our AI team's great effort, right?

Speaker Change #212: Thank you.

Speaker Change #211: And, you know, focus on the quality, focus on the cost reduction and so on and so forth.

Speaker Change #211: Thanks, Ryan.

Speaker Change #212: Great. Thank you.

Speaker Change #211: I think, you know, that's the reason why some customers look at our offering, look at the total cost of ownership in terms of support cost, AI cost, and also in the product experience, customers realize, wow, it's better double down on Zoom, you know, deployment.

Speaker Change #211: Okay, our next question comes from Tyler Radke with Citi.

Speaker Change #211: And that's the reason why, you know, we are going to continue winning.

Speaker Change #211: Tyler?

Speaker Change #211: No.

Speaker Change #211: That's very helpful.

Speaker Change #211: Kelly, maybe just on gross margins, like, you know, the impact of AI and what you can, do to alleviate some of that stuff there.

Speaker Change #211: Tyler, are you there?

Speaker Change #211: Thank you, Eric.

Speaker Change #211: Yeah, I mean, we're diving to 79% for this year, which we feel reflects the prioritization, of AI, but also the very strong discipline that we continue to apply.

Speaker Change #211: Yes.

Speaker Change #211: This concludes today's earnings release.

Speaker Change #211: Okay. Thank you so much everyone. This concludes our Q&A session I will now pass it back to Eric for closing comments, Eric Yes first of all thank you all for asking about all of those greater crisis were very very critical.

Speaker Change #211: And then, Kelly, I think you mentioned earlier this year when I met with you that you expected, contact center growth to ramp similar to phone growth, that that was a good precedent for growth expectation.

Speaker Change #211: And we are holding to our long term target for gross margins of 80%.

Speaker Change #211: Can you hear me okay?

Speaker Change #211: Are you growing above those expectations for contact center or in line?

Speaker Change #211: But of course, we think at this point in time, it's very important to prioritize these, investments as they really, you know, set us up for future growth.

Speaker Change #211: Yeah.

Speaker Change #211: We're in line with that.

Speaker Change #211: I definitely think it makes sense to focus on that first.

Speaker Change #211: Hi, Tyler.

Speaker Change #211: So, it hasn't changed dramatically.

Speaker Change #211: Excellent.

Speaker Change #211: Yeah.

Speaker Change #211: I mean, we're very pleased with, how both phone and contact center are continuing to drive growth.

Speaker Change #211: Thanks, guys.

Speaker Change #211: Hey, good to see you.

Speaker Change #211: But it's more in line with what we had expected.

Speaker Change #211: We thank you all for your participation.

Speaker Change #211: Good to see you.

Speaker Change #211: Great.

Speaker Change #211: Thanks for taking the question.

Speaker Change #211: Thank you both.

Speaker Change #211: Enjoy the rest of your evening.

Speaker Change #211: Kelly, I'm wondering if you could just, it was great to see the stabilization, or actually, the record high in terms of the online renewal rate.

Speaker Change #211: Yeah, thank you.

Speaker Change #211: I'm curious if you could speak to the new business side of the equation.

Speaker Change #211: Thank you.

Speaker Change #211: And I know Wendy and team have been doing some initiatives to drive improvements there.

Speaker Change #211: Our next question comes from Mark Murphy with JP Morgan.

Speaker Change #211: But how do you sort of see the new business side of the equation relative to how you were, thinking about it, you know, a couple quarters ago?

Speaker Change #211: Hey, thanks for taking my question.

Eric: Yeah, so Wendy and her team continue to do a great job of adding features, looking for, additional offerings to continue to expand our growth there.

Eric: I'm already on here for Mark Murphy.

Eric: I think in terms of our quarter, you know, we certainly saw growth and are very pleased, to be able to raise our guidance across the board.

Eric: And Kelly, thanks for all the help you provided us.

Eric: The one area that we have seen some headwinds, which I think is very consistent with what, you're hearing from peers is in the SMB and the really small business area, because everybody is concerned about the future of the economy and being very thoughtful about buying decisions.

Eric: One question I have is when you're, looking at Zoom AI companion, we've heard a lot of great things in the field from customers kind of comparing it to other products that are offered out there.

Eric: And also thank you for Airbus Zumiez, how to work and we're going to continue to innovate and thank you all for your trust and see you all next quarter. Thank you.

Eric: You know, with that said, it's roughly in line with where we were expecting coming in, to the year, which is why, you know, you see this continue to execute against our guidance and be able to raise going forward.

Eric: Can you kind of remind us about how you guys think about tracking success with a product internally, given that you don't kind of charge for it directly, you know, beyond having, you know, millions of people using it?

Eric: Thank you, Kelly, and best of luck.

Eric: Is there any way you kind of track it, whether it's utilization, improvement and retention, anything along those lines?

Eric: Thank you.

Eric: Yeah, I mean, one of the metrics that we've been talking about on here is account activation. So, looking at how many, it's not individual users, it's actual customer accounts that have activated it.

Eric: Okay.

Eric: And for, you can imagine for larger enterprises, there's usually an approval process that we go through, they go through, but we watch that.

Eric: Our next question comes from Parker Lane with Stiefel.

Eric: And then internally, we're watching things like the number of meeting summaries produced. So, some of the other, like usage metrics is how we're evaluating usage and success.

Eric: Parker?

Eric: And also, very often, we never have EBCs with our customers.

Eric: Yeah, guys.

Eric: And also, they share the stories, like how Zoom AI companion, like those very accurate summary action items are helping their employees productivity as well.

Eric: Hi, this is Jack on for Parker.

Speaker Change #213: And yeah, so a lot of very positive feedback about adopting Zoom AI companion.

Speaker Change #213: Congrats on the nice quarter.

Speaker Change #213: That's great to hear.

Speaker Change #213: I wanted to touch on that large win in the contact center.

Speaker Change #213: Thank you.

Speaker Change #214: What kind of initiatives was this customer looking to accomplish and why did they ultimately, choose Zoom?

Speaker Change #213: Hi, everybody.

Speaker Change #214: Thank you.

Speaker Change #214: Thanks.

Speaker Change #214: Okay.

Speaker Change #214: But I think, for sure, this customer, they evaluated, you know, multiple contact center, offerings in the market and, you know, they really want to understand the roadmap and architecture, especially your AI initiative, right?

Speaker Change #214: Our next question comes from James Fish with Piper Sandler.

Speaker Change #214: This concludes todays earnings release, we thank you all for your participation enjoy the rest of your evening.

Speaker Change #214: And so, you know, given the PUC, right, they evaluated multiple solutions and Zoom excels.

Speaker Change #214: James.

Speaker Change #214: And it comes to comparing against the other vendors, feature side, AI, and the price and, you know, the brand recognition.

Speaker Change #214: Hey, guys.

Speaker Change #214: And also, again, they really trust our team.

Speaker Change #214: Kelly, it's been great working with you.

Speaker Change #214: You know, we always innovate together with the customers.

Speaker Change #213: And my question is more directed at you.

Speaker Change #213: And this happened before, like the Zoom phone as well.

Speaker Change #213: You know, you had mentioned here, we're talking about 98% trailing 12-month retention rate.

Speaker Change #213: And ultimately, it boils down to the trust.

Speaker Change #213: And, it sounds as if, you know, we're starting to see the bottom of that.

Speaker Change #213: They know, actually, we can innovate, we innovate faster, we can innovate together.

Speaker Change #213: Thank you.

Speaker Change #213: In fact, you know, our math would imply actually above 100% today on the end period.

Speaker Change #213: And, you know, given all the features, we promised, like before, we did deliver.

Speaker Change #213: So can you break down what you're getting across expansion mix between upsell of seats, if you are starting to see upsell of seats, again, across, you know, meetings or other products, you know, any pricing changes, adoption of other products like phone or contact center at this point in terms of how it's impacting that expansion?

Speaker Change #213: And it's really like, you know, the Zoom contact center.

Speaker Change #213: And I get, you know, rounding is involved, but should we not be interpreting that that upmarket is accelerating at this point, but similar to what we saw from a dollar perspective, because if you run the math, there would suggest like 9%, potentially if you just use the absolute number.

Speaker Change #213: It's not like other legacy solutions, right?

Speaker Change #213: Yeah.

Speaker Change #213: It's very slow to move, very slow to increase the AI.

Speaker Change #213: So when you, when you think about the way that we're thinking about looking forward, certainly the growth for the back half of this year and into next year is being driven by the upmarket, you know, very specifically our direct segment, but even within that segment, the, the upmarket portion of it, you know, if you look at the growth rate of our metrics with customers with greater than 100K trailing 12 months, that, you know, you see that's growing at 7% year over year, which is higher than our overall revenue growth rate, which is a good indicator of that.

Speaker Change #213: We built a new solution with a modern architecture. It's a much better experience.

Speaker Change #213: And so what we see is similar to when we do the end quarter calculation, we started to see stabilization in our net dollar expansion.

Speaker Change #213: And why not?

Speaker Change #213: And we know that runs ahead of our external reported metric.

Speaker Change #213: And pick up Zoom.

Speaker Change #213: And that's why I said kind of middle of next year, we expect that to start reaccelerating again. And that's being driven by the ongoing performance of Zoom Phone, Contact Center, obviously WorkVivo is sometimes an add-on, sometimes those are brand new customers that are coming in.

Speaker Change #213: So, yeah.

Speaker Change #213: And I would say, I don't know that what we've, I mentioned earlier, we've seen stabilization in our retention rates in enterprise as well. So that's good in terms of even if seats aren't being added for meetings that we're starting to see some stabilization there in terms of renewal rates and customers.

Speaker Change #213: Okay, thank you.

Speaker Change #213: Oh, well, thanks again.

Speaker Change #213: Our next question comes from Michael Funk with Think of America.

Speaker Change #213: Yes.

Speaker Change #213: Michael?

Speaker Change #213: Okay, our next question comes from Peter Weed with Bernstein.

Speaker Change #213: Hi, good evening.

Speaker Change #213: Peter.

Speaker Change #213: Thank you for the questions.

Speaker Change #213: Thank you.

Speaker Change #213: And Kelly, thank you again for all, the help over the years.

Speaker Change #213: Oh, boy, this is not going to be very pretty if I'm on that.

Speaker Change #213: I know I'll see you next quarter as well.

Speaker Change #213: There you go.

Speaker Change #213: Another question on contact center, if I can, is clarification.

Speaker Change #213: There we go.

Speaker Change #213: The recent wins, they were skewed towards internal or external contact center. So, meaning employees versus customers? For external, primarily external, right?

Speaker Change #213: Now, you should have me in a normal mode on my camera. Yeah, you look great.

Speaker Change #213: They use that, you know, to engage with their customers and their partners, right?

Speaker Change #213: Hey, thank you very much.

Speaker Change #213: When we launched, you know, many quarters ago, right, some of the customer use our contact center for internal, you know, IT help desk.

Speaker Change #213: I appreciate it.

Speaker Change #213: But now, you know, majority just for the external office and for the support team, customer engagement team, so.

Speaker Change #213: And Kelly, we will miss you.

Speaker Change #213: I mean, you've been, very open and honest with us over time, and it's been very helpful.

Speaker Change #213: I'd love to follow up that last question on expansion.

Speaker Change #213: And I think you've been talking about getting to stabilization about now.

Speaker Change #213: And kind of when we unpack that number, at least in our model, it does look like on a quarter-over-quarter basis, the up market definitely saw some strength.

Speaker Change #213: Whereas, the kind of down market was a little bit flatter, which I think historically has always been the case because there's a little bit of cannibalization that comes out of that going into the up market.

Speaker Change #213: When you look forward from here, when you look forward from here, Where are you seeing, I guess, those kind of early kind of accelerations going on?

Speaker Change #213: And how do you think about those kind of escalating over the coming quarters?

Speaker Change #213: Is it the type of thing where like, we can start to see this building on itself, like quarter over quarter?

Speaker Change #213: Or you just said middle of next year, which makes it seem like this is like one step up, and then you expect it to be flat?

Speaker Change #213: Like, how is that kind of shaping up?

Speaker Change #213: we are guiding to reaccelerating growth in, you know, starting in Q3. And that combined with this stabilization in our retention rate in enterprise, and ongoing improvement in online, all of that is what's leading to this, this reacceleration strength that we see in the future.

Speaker Change #213: And when you kind of look at the kind of underlying components, then that are kind of driving that strength, you know, I guess, it's probably not seats, it's many of these additional, you know, I guess, both products and versions that push into the market, when you think about the balance between those, you know, getting people to sign up for, you know, one versus, you know, adding a contact, center, these types of things, give us some color on the contribution of both of those as this kind of acceleration kind of moves forward.

Speaker Change #213: Yeah, you know, we do see expansion, you know, land and expand being a motion that we see, of course, historically, it's been the motion we've seen for meetings, but we also see it for phone, we see it for contact center as well.

Speaker Change #213: And especially as we keep adding more Eric, touched on this, but right, we've really expanded the features and functionality on contact center that allow it to really serve externally.

Speaker Change #213: So things like PCI compliance, and FedRAMP, and all the social integrations, which are a necessary component for any company to talk to an external customer base.

Speaker Change #213: And that's what's really led to some of the acceleration that we're seeing in contact center.

Speaker Change #213: I appreciate the additional detail.

Speaker Change #213: Thank you, Kelly.

Speaker Change #213: Thank you.

Speaker Change #213: Okay, our next question comes from Peter Levine with Evercore.

Speaker Change #213: Peter?

Speaker Change #213: Hi, Eric, thanks for taking my question.

Speaker Change #213: You know, maybe just some capital allocation.

Speaker Change #213: You know, Eric, or even Kelly, you think about sit down and think about strategy, like, and you want to retain your competitive advantage, you know, you have seven and a half billion cash, you've seen you move into contact center phone, you know, your productivity apps as well.

Speaker Change #213: What's the best way for investors, to think about how you plan on deploying that capital, you have to buy back in place.

Speaker Change #213: But you know, it's been, you know, it's been a while since we've seen any larger activity, but maybe help us understand the strategy in terms of, you know, what you're thinking in terms of to help reaccelerate top line, if it's new product, is it tech, just maybe help us understand how you're thinking about that.

Speaker Change #213: Yes, so from a high level, so we look at everything from a customer perspective, right?

Speaker Change #213: Quite often, when we talk about innovating together, right, and sometimes, you know, customer, they really, the value of this feature, you know, take a work vehicle, for example, right?

Speaker Change #213: Customers say, yeah, I really like employee engagement tools.

Speaker Change #213: We know we cannot build that, you know, in a timely manner, you know, we have to go through, the M&A.

Speaker Change #213: And as we look at our platform play, and also plus AI, plus a billion services, there's, so many opportunities out there.

Speaker Change #213: I do not think we can build everything organically, even if you want to, right, to sort of what, a culture before, but now we are more aggressive, go to, hey, I'll do quickly.

Speaker Change #213: And you know, add those new services or features, right, to beef up our existing offering.

Speaker Change #213: And that's just kind of one of the top priorities, you know, here, you know, we're working on.

Speaker Change #213: And because especially given the AI era, right, and you have to move faster.

Speaker Change #213: I think, in my view, it's more like a loss of M&A opportunities down the road.

Speaker Change #213: So and that's kind of, you know, our strategy.

Speaker Change #213: So Kelly, if you're willing to share a number with contact center, can you share like a, revenue number or at least the target in terms of because when phone hit 10%, you gave us that that milestone.

Speaker Change #213: Is there an internal plan on when you think contact center will hit 10%?

Speaker Change #213: When we hit 10%, we of course, we'll start disclosing it.

Speaker Change #213: But remember, it was in like doing phones fifth year of its life, I think before it, hit that metric.

Speaker Change #213: And contact center is what in its second year of life.

Speaker Change #213: So while we're thrilled with its performance, we aren't quite yet, it's going to be a while, before it comes to a stage where we will be disclosing the percentage of revenue.

Speaker Change #213: That's why, you know, for now, we're disclosing customer accounts and giving you other metrics, around like the top 10 being displacements, trying to give you color about what we're seeing in the market.

Speaker Change #213: But it'll be a little bit before we get to that metric specifically.

Speaker Change #213: Thank you very much.

Speaker Change #213: Yep.

Speaker Change #213: Okay, our next question comes from Rich Magnus with Wolf Research.

Speaker Change #213: Rich?

Speaker Change #213: Hey, guys, it's Rich on for Alex.

Speaker Change #213: Just wanted to come back to the large customer ads for contact center you were highlighting, and the top 10 wins being displacements. You said 40% were from legacy migrations.

Speaker Change #213: So of the six that were not replacing the first gen solutions, what were the biggest, drivers of those wins?

Speaker Change #213: Was it pricing, AI functionality or something else that we're missing?

Speaker Change #213: Thanks.

Speaker Change #213: So I just want to be super fair about it for a second. So of the top 10 wins, all were displacements, six of them were replacing on-prem existing, legacy and four were replacing other cloud providers.

Speaker Change #213: So I think against all of them, I mean, Eric, you feel free to chime in now, but it just, highlights the modern architecture, the contact center that's built with AI at its core from the very beginning.

Speaker Change #213: And also, so Rich, believe it or not, actually, quite often customers mention the stability, also plays a very important role.

Speaker Change #213: Because when it comes to contact center, it's very important when customers engage with, their customers, you have to be very stable, right?

Speaker Change #213: And some of the customers, they just do not like the stability from other solutions, right?

Speaker Change #213: And they know actually Zoom always delivers a very stable service with a scalable architecture, and so on and so forth. And that also plays a role as well, right?

Speaker Change #213: I think everything together, I think it's stability, modern architecture, pricing, AI, and fast innovation, I think ultimately together, we are winning.

Speaker Change #213: Okay, thank you.

Speaker Change #213: Our next question comes from Catharine Trebnick with Rosenblatt Securities.

Speaker Change #213: I'm always late.

Speaker Change #213: Sorry, you guys.

Speaker Change #213: Good to see you both.

Speaker Change #213: So my question has to do with Contact, Center.

Speaker Change #213: RingCentral, not RingCentral, Nice just released their $5 phone.

Speaker Change #213: And I was wondering, you know, when you talk about Contact Center, it's pretty much in this bucket.

Speaker Change #213: But what's your pipeline looking for UC and Contact Center?

Speaker Change #213: How is that progressing?

Speaker Change #213: Kelly, feel free to tell me.

Speaker Change #213: I can comment on their UC offering.

Speaker Change #213: Yeah, why don't you do that first, please?

Speaker Change #213: Yeah, so again, you know, it's hard to comment on our competitors move right into the UC.

Speaker Change #213: And the timing will tell.

Speaker Change #213: In my view, that's absolutely a mistake.

Speaker Change #213: You know, because how, could they compete against the others like Zoom and others, right?

Speaker Change #213: We had so many years experience with a great scalable architecture.

Speaker Change #213: This is hard to believe they're going to win in UC space.

Speaker Change #213: And so I could be wrong, but I know I have a high confidence they are not going to win in UC, space.

Speaker Change #213: So because a lot of, you know, investment in technology features, integration, and scalability, stability.

Speaker Change #213: Again, I don't agree with that.

Speaker Change #213: Yeah, and we see Contact Center driving, you know, newly for Contact Center driving, need and desire for Zoom phone.

Speaker Change #213: And we see it come the other way as well.

Speaker Change #213: Zoom phone driving.

Speaker Change #213: We talked about this in the prepared remarks about this better together.

Speaker Change #213: And that is really, inherent with what we're seeing across the platform.

Speaker Change #213: And Zoom AI companion, being able to leverage all of that across the entire platform just brings so much power to it that I think you're going to continue to see the ongoing, you know, combination of those two products and the rest of the platform be very strong.

Speaker Change #213: So just in essence, back to the UC piece, there is no disruption whatsoever, even though it was a $5 price.

Speaker Change #213: Even for $4, why do you want to deploy that?

Speaker Change #213: You know, why do I want to take a risk, deploy something new?

Speaker Change #213: And it's more like today, you already have an iPhone and an Android phone, you want to introduce a new phone, who's going to deploy that?

Speaker Change #213: Who's going to buy that?

Speaker Change #213: So that's my opinion.

Speaker Change #213: No, I had to ask the question.

Speaker Change #213: Thank you.

Speaker Change #213: Yeah, great question.

Speaker Change #213: Thank you.

Speaker Change #213: Thank you, Catherine.

Speaker Change #213: Okay, thank you.

Speaker Change #213: Our next question comes from Matthew Van Vliet with BTIG.

Speaker Change #213: Matthew.

Speaker Change #213: Hey, guys, can you hear me?

Speaker Change #213: Yeah.

Speaker Change #213: Hey, it's Spencer on for Matt.

Speaker Change #213: Thank you for taking our question and congrats on the quarter.

Speaker Change #213: I apologize if this was already asked, but how are the AI products and the key functionalities, driving expansion with existing customers?

Speaker Change #213: How much of it is like premium tiers or upselling the premium tiers of the existing footprint versus selling to new phones, contact centers, or just other cross-selling products?

Speaker Change #213: Thank you.

Speaker Change #213: I think if you look at an existing, you know, look at an installer base, right, for the workplace customers, they look at the value.

Speaker Change #213: They see they already use Zoom for a long time, like experience.

Speaker Change #213: We keep adding more and more value to customers.

Speaker Change #213: Guess what?

Speaker Change #213: And no additional cost.

Speaker Change #213: You know, this is essentially, you know, with a long-term trust.

Speaker Change #213: They know Zoom, they can trust, right?

Speaker Change #213: And not like some other vendors, hey, you use our free service.

Speaker Change #213: Guess what?

Speaker Change #213: If you're stuck, with that platform, they are going to increase price with all the features.

Speaker Change #213: That's not our philosophy, right?

Speaker Change #213: So that's for workplace part.

Speaker Change #213: On business services, you know, again, take a contact center, for example, right?

Speaker Change #213: AI, you know, compiling is a key differentiation because the customer trusts our AI feature set as a mission, right?

Speaker Change #213: You know, every quarter we release some AI features, you know, and to kind of, you know, innovate, right?

Speaker Change #213: And I think that part is not free.

Speaker Change #213: We are going to charge as well, right?

Speaker Change #213: On the one hand, we wanted to add more value to existing customers.

Speaker Change #213: On the other hand, we can charge the customer with some, you know, features for bringing services because those features customers really need and also the customer is open as well.

Speaker Change #213: Thank you guys.

Speaker Change #213: Thank you.

Speaker Change #213: Thank you.

Speaker Change #213: Our next question comes from Samad Samana with, Jeffries.

Speaker Change #213: Samad?

Speaker Change #213: Hi, good evening, and thanks for taking my question.

Speaker Change #213: So maybe first, just on CCAS, is there anything you can give us in terms of the mix of those 1,100 customers?

Speaker Change #213: How many of those are maybe like 100 plus seat deployments versus under that?

Speaker Change #213: Just any, sense of SMB versus enterprise in the mix there and kind of related, what's the attachment of CCAS into the 100k plus install base that the company has?

Speaker Change #213: Let me think about this.

Speaker Change #213: So we've certainly seen, you know, growth in the 100k customers, for contact center, we're up to 117 that we disclosed.

Speaker Change #213: So you can see that they're they're moving into that realm, for sure.

Speaker Change #213: And we've been working, you know, in the in the channel, I'm working with partners to also think about how we help these customers with their digital transformation.

Speaker Change #213: In terms of the disbursement across that, the size of our deals, what I would say is they are definitely getting larger, they're getting larger for a couple of reasons.

Speaker Change #213: Because as we talked about this added functionality, allowing them to use it externally, as well as we talked about this, either last quarter the quarter before, that was the introduction of the pricing tier. Remember, we started with one pricing tier, we eventually added two more.

Speaker Change #213: And the AI agencies like the Eric was speaking about earlier is in the highest tier, we actually saw our ASPs for contact center almost double for over a quarter, because it's such a premium feature.

Speaker Change #213: And when I look at the Q2 deals, the majority of them were purchasing in one of the top two tiers.

Speaker Change #213: So all of that is contributing to what I would say is not only expansion in terms of C-count, but expansion in terms of value being derived from the product.

Speaker Change #213: Gotcha.

Speaker Change #213: And then maybe just on the online retention, it's great to see that improvement, there.

Speaker Change #213: I'm curious how much of that is due to either the new features that you released versus moving further away from the tightening of the grace period.

Speaker Change #213: And it's even better than it was before that slight uptick last quarter, right?

Speaker Change #213: So is this like the new durable assumption that we should make?

Speaker Change #213: Is that pretty reasonable?

Speaker Change #213: Or just how are you thinking through that?

Speaker Change #213: Yeah.

Speaker Change #213: So I mean, this is a great question.

Speaker Change #213: I get this question all the time, right?

Speaker Change #213: Concerns keep, getting better.

Speaker Change #213: I will tell you that we are modeling it to stay at about 3%.

Speaker Change #213: I think that's a really positive rate.

Speaker Change #213: But we continue to see improvements on the platform.

Speaker Change #213: And I think that's what you're seeing in this quarter. Because we did see a little bit of the pull forward, if you will, last quarter for the change in the dunning period, as you mentioned.

Speaker Change #213: But this is a clean quarter, right?

Speaker Change #213: Meaning that it should really reflect.

Speaker Change #213: And if you remember, historically, Q2 is a larger, typically a larger seasonally high churn period because of summer holidays. Typically for online, we see higher churn rates in Q2 and in Q4 because of summer and holiday breaks, winter holiday breaks.

Speaker Change #213: And we don't put friction in the cancellation cycle because we want customers to use the product as they need.

Speaker Change #213: So I think it's very positive to see this down, this record low churn rate in a seasonally high quarter.

Speaker Change #213: Matthew Harrigan, Benchmark, I think when it comes to AI, we are taking a very responsive approach, right?

Speaker Change #213: That's the reason why when we launched the AI company, we already mentioned, we are not going to use any of our customer data to train our AI models, right?

Speaker Change #213: And we take customer data very, very seriously, right?

Speaker Change #213: And as a customer, they know that, they trust our brand, and trust what we're doing.

Speaker Change #213: And so far, I did not see any impact in terms of regulation.

Speaker Change #213: And again, this AI is moving rapidly, right?

Speaker Change #213: So almost, you know, the email here, you know, and we all look at the potential regulation, but so far impact actually is, you know, to us, to our business, I think is extremely limited.

Speaker Change #213: So you know, like a meeting summary, and it's a very important feature, customer like that.

Speaker Change #213: I think we do not use our customer data to train our AI model.

Speaker Change #213: And why not keep using that feature?

Speaker Change #213: I think there's no impact so far.

Speaker Change #213: Great.

Speaker Change #213: Thanks, Sarah.

Speaker Change #213: I guess one more real implementation to, come from you, Kelly.

Speaker Change #213: Yeah, thank you, Matthew.

Speaker Change #213: Our next question comes from Patrick Wallravens with JMP, Securities.

Speaker Change #213: Patrick.

Speaker Change #213: Hey, this is Austin Cole on for ONCPAT.

Speaker Change #213: Just wanted to touch on, international, if I'm not mistaken, Kelly mentioned EMEA shrank 1% in constant currency, and those revenues declined last year as well.

Speaker Change #213: And if I just look at where we're at this year, looking like maybe on track to shrink again, just wondering if you could talk about what what your presence is there and kind of how you're seeing demand in those international regions.

Speaker Change #213: Yeah, we've certainly seen the economy and EMEA especially, continue to be impacted by the ongoing wars that are happening in that that continent.

Speaker Change #213: And so that in general, I think all of our peers are facing as well.

Speaker Change #213: We are, we have been in the process, we have a new leadership team that's coming into place there.

Speaker Change #213: So looking forward to that.

Speaker Change #213: And we also are really focused on investing in the region.

Speaker Change #213: We just last quarter opened up our London Executive Briefing Center, which is amazing. It's a great opportunity to bring customers and partners and prospects all together, and really see the entire expanded, you know, Zoom 2.0 story in a beautiful place.

Speaker Change #213: And it's really leading.

Speaker Change #213: I think it's an area that we're really, focused on investing and reaccelerating growth.

Speaker Change #213: Great, thank you.

Speaker Change #213: Okay, thank you so much, everyone.

Speaker Change #213: This concludes our Q&A, session.

Speaker Change #213: I'll now pass it back to Eric for closing comments, Eric.

Speaker Change #213: Yeah, first of all, thank you all for asking about all those, great questions.

Speaker Change #213: We are very, very grateful.

Speaker Change #213: And also thank you for every Zoomies hard work, and we are going to continue to innovate.

Speaker Change #213: And thank you all for your trust.

Speaker Change #213: And I'll see you all next quarter.

Speaker Change #213: Thank you.