Q1 2027 Zoom Video Communications Inc Earnings Call

May 21, 2026

Speaker #1: You have joined the meeting as an attendee and will be muted throughout the meeting.

Speaker #2: Hello everyone, we'll get started in just a moment. Hello and welcome to Zoom's Q1 FY2027 Earnings Release Webinar. I will now hand things over to Charles Eveslage, Head of Investor Relations.

Operator: Hello, everyone. We'll get started in just a moment. Hello, and welcome to Zoom's Q1 FY 2027 Earnings Release Webinar. I will now hand things over to Charles Eveslage, Head of Investor Relations. Charles, over to you.

Speaker #2: Charles, over to you.

Speaker #3: Thank you, Catherine. Hello, everyone, and welcome to Zoom's earnings webinar for the first quarter of fiscal year 2027. I'm joined today by Zoom's founder and CEO, Eric Yuan, and Zoom's CFO, Michelle Chang.

Charles Eveslage: Thank you, Catherine. Hello, everyone, and welcome to Zoom's earnings webinar for the Q1 of fiscal year 2027. I'm joined today by Zoom's founder and CEO, Eric Yuan, and Zoom's CFO, Michelle Chang. Our earnings release was issued today after the market closed and may be downloaded from the investor relations page at investors.zoom.com.

Charles Eveslage: Thank you, Catherine. Hello, everyone, and welcome to Zoom's earnings webinar for the Q1 of fiscal year 2027. I'm joined today by Zoom's Founder and CEO, Eric Yuan, and Zoom's CFO, Michelle Chang. Our earnings release was issued today after the market closed and may be downloaded from the investor relations page at investors.zoom.com.

Speaker #3: Our earnings release was issued today after the market closed and may be downloaded from the Investor Relations page at investors.zoom.com. 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.

Charles Eveslage: 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. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP.

Speaker #3: These measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. During this call, we will make forward-looking statements, including statements regarding our financial outlook for the second quarter and full fiscal year 2027, our expectations regarding financial and business trends, impacts from the macroeconomic environment, our market position, stock repurchase program, opportunities, go-to-market initiatives, growth strategy and business aspirations, and product initiatives, including future product and feature releases and the expected benefits of such initiatives.

Charles Eveslage: During this call, we will make forward-looking statements, including statements regarding our financial outlook for Q2 and full fiscal year 2027, our expectations regarding financial and business trends, impacts from the macroeconomic environment, our market position, stock repurchase program, opportunities, go-to-market initiatives, growth strategy, and business aspirations, and product initiatives, including future product and feature releases and the expected benefits of such initiatives.

Speaker #3: 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 our 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.

Charles Eveslage: These statements are only predictions that are based on what we believe today. Actual results may differ materially. These forward-looking statements are subject to risks and other factors that could affect our performance and our 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. Zoom assumes no obligation to update any forward-looking statements we may make today on today's webinar.

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

Speaker #3: Zoom assumes no obligation to update any forward-looking statements we may make today on today's webinar. And with that, let me turn the discussion over to Eric, who is giving his prepared remarks via Zoom custom avatar.

Charles Eveslage: With that, let me turn the discussion over to Eric, who is giving his prepared remarks via Zoom custom avatar.

Speaker #4: Thank you, Charles. FY27 is off to a good start, continuing the momentum from FY26. Q1 revenue grew 5.5%, exceeding the high end of our guidance and marking one of our best growth rates in recent years.

Eric Yuan: Thank you, Charles. FY27 is off to a good start, continuing the momentum from FY26. Q1 revenue grew 5.5%, exceeding the high end of our guidance and among our best growth rates in recent years. This progress underscores the increasing value of our system of action for modern work. To help accelerate that vision, we appointed Russell Dicker as Chief Product Officer. Russell brings more than 25 years of product leadership experience across Microsoft, Google, and Amazon, including leading Microsoft Teams product and data science teams. He will help drive our AI-first roadmap as we connect conversations, workflows, and outcomes through our system of action. The foundation of our system of action is Zoom Workplace, where context is created across the full meetings and work life cycle. With AI Companion, that context becomes actionable, helping customers drive productivity, automate follow-through, and turn everyday collaboration into measurable business value.

Eric Yuan: Thank you, Charles. FY 2027 is off to a good start, continuing the momentum from FY 2026. Q1 revenue grew 5.5%, exceeding the high end of our guidance and among our best growth rates in recent years. This progress underscores the increasing value of our system of action for modern work. To help accelerate that vision, we appointed Russell Dicker as Chief Product Officer. Russell brings more than 25 years of product leadership experience across Microsoft, Google, and Amazon, including leading Microsoft Teams product and data science teams.

Speaker #4: This progress underscores the increasing value of our system of action for modern work. To help accelerate that vision, we appointed Russell Dicker as Chief Product Officer; Russell brings more than 25 years of product leadership experience across Microsoft, Google, and Amazon, including leading Microsoft Teams product and data science teams.

Speaker #4: He will help drive our AI-first roadmap as we connect conversations, workflows, and outcomes through our system of action. The foundation of our system of action is Zoom Workplace, where context is created across the full meetings and work lifecycle.

Eric Yuan: He will help drive our AI-first roadmap as we connect conversations, workflows, and outcomes through our system of action. The foundation of our system of action is Zoom Workplace, where context is created across the full meetings and work life cycle. With AI Companion, that context becomes actionable, helping customers drive productivity, automate follow-through, and turn everyday collaboration into measurable business value.

Speaker #4: With AI Companion, that context becomes actionable, helping customers drive productivity, automate follow-through, and turn everyday collaboration into measurable business value. In Q1, AI Companion usage continued to scale, with paid MAUs growing 184% year over year, driven by strong early adoption of AI Companion 3.0 capabilities.

Eric Yuan: In Q1, AI Companion usage continued to scale, with paid MAUs growing 184% year over year, driven by strong early adoption of AI Companion 3.0 capabilities. My Notes has quickly emerged as a breakout product, surpassing 1.5 million monthly active users, excluding trial users just four months after launch. It gives users a personal AI note taker that captures context across Zoom, in-person, and third-party meetings, helping them stay present while turning conversations into organized takeaways, action items, and follow-through. Altogether, AI Companion 3.0 brings agentic retrieval across Zoom and connected work sources, extending AI Companion beyond meeting summaries into a broader workflow layer that turns conversations into action. This AI momentum is also reinforcing the strength of our core business.

Eric Yuan: In Q1, AI Companion usage continued to scale, with paid MAUs growing 184% year-over-year, driven by strong early adoption of AI Companion 3.0 capabilities. My Notes has quickly emerged as a breakout product, surpassing 1.5 million monthly active users, excluding trial users just four months after launch. It gives users a personal AI note taker that captures context across Zoom, in-person, and third-party meetings, helping them stay present while turning conversations into organized takeaways, action items, and follow-through.

Speaker #4: My Notes has quickly emerged as a breakout product, surpassing 1.5 million monthly active users—excluding trial users—just four months after launch. It gives users a personal AI note-taker that captures context across Zoom, in-person, and turns conversations into organized takeaways, action items, and follow-through.

Speaker #4: Altogether, AI Companion 3.0 brings agentic retrieval across Zoom and connected work sources, extending AI Companion beyond meeting summaries into a broader workflow layer that turns conversations into action.

Eric Yuan: Altogether, AI Companion 3.0 brings agentic retrieval across Zoom and connected work sources, extending AI Companion beyond meeting summaries into a broader workflow layer that turns conversations into action. This AI momentum is also reinforcing the strength of our core business.

Speaker #4: This AI momentum is also reinforcing the strength of our core business. In Q1, 15 of our top 20 wins included Zoom Workplace or Zoom Phone, as customers increasingly choose Zoom for secure, AI-first communications that improve productivity, reduce complexity, and turn conversations into action.

Eric Yuan: In Q1, 15 of our top 20 wins included Zoom Workplace or Zoom Phone, as customers increasingly choose Zoom for secure AI-first communications that improve productivity, reduce complexity, and turn conversations into action. Zoom Workplace continues to win on product quality, platform breadth, and security. In Q1, a major government contractor came back to Zoom for the full suite of Zoom Workplace, Phone, Events, and Webinars in a seven-figure ARR deal, displacing Teams and Cisco Calling. The customer chose Zoom to meet stringent government security requirements, and unlock insights from live communications data to support its broader AI workflows. Zoom Phone continued to grow ARR in the mid-teens, taking share as customers modernize voice on our reliable, flexible platform that integrates with their existing workflows and extends AI into everyday communications.

Speaker #4: Zoom Workplace continues to win on product quality, platform breadth, and security. In Q1, a major government contractor came back to Zoom for the full suite of Zoom Workplace, Phone, Events, and Webinars in a seven-figure ARR deal, displacing Teams and Cisco Calling.

Speaker #4: The customer chose Zoom to meet stringent government security requirements and unlock insights from live communications data to support its broader AI workflows. Zoom Phone continued to grow ARR in the mid-teens, taking share as customers modernized voice on our reliable, flexible platform that integrates with their existing workflows and extends AI into everyday communications.

Eric Yuan: The customer chose Zoom to meet stringent government security requirements, and unlock insights from live communications data to support its broader AI workflows. Zoom Phone continued to grow ARR in the mid-teens, taking share as customers modernize voice on our reliable, flexible platform that integrates with their existing workflows and extends AI into everyday communications. A great example of this is Baptist Health in Jacksonville, Florida, who in Q1 chose Zoom Phone to support 16,000 workers across more than 200 points of care in a seven-figure ARR deal.

Speaker #4: A great example of this is Baptist Health in Jacksonville, Florida, who in Q1 chose Zoom Phone to support 16,000 workers across more than 200 points of care in a seven-figure ARR deal.

Eric Yuan: A great example of this is Baptist Health in Jacksonville, Florida, who in Q1 chose Zoom Phone to support 16,000 workers across more than 200 points of care in a seven-figure ARR deal. Baptist Health selected Zoom Phone because of its reliability, hybrid flexibility, and industry-specific integrations. Taken together, these wins show a consistent pattern. Customers are choosing Zoom as a secure, integrated multi-product platform, often displacing multiple vendors and expanding over time as AI becomes embedded in their workflows. This reinforces our confidence in Zoom's ability to turn conversations into action, and drive durable platform expansion. Our progress elevating Workplace with AI sets the foundation for our second priority, driving growth in new AI revenue streams.

Speaker #4: Baptist Health selected Zoom Phone because of its reliability, hybrid flexibility, and industry-specific integrations. Taken together, these wins show a consistent pattern. Customers are choosing Zoom as a secure, integrated, multi-product platform, often displacing multiple vendors and expanding over time as AI becomes embedded in their workflows.

Eric Yuan: Baptist Health selected Zoom Phone because of its reliability, hybrid flexibility, and industry-specific integrations. Taken together, these wins show a consistent pattern. Customers are choosing Zoom as a secure, integrated multi-product platform, often displacing multiple vendors and expanding over time as AI becomes embedded in their workflows. This reinforces our confidence in Zoom's ability to turn conversations into action, and drive durable platform expansion. Our progress elevating Workplace with AI sets the foundation for our second priority, driving growth in new AI revenue streams.

Speaker #4: This reinforces our confidence in Zoom's ability to turn conversations into action and drive durable platform expansion. Our progress elevating Workplace with AI sets the foundation for our second priority: driving growth in new AI revenue streams.

Speaker #4: As customers experience the value of AI Companion in Zoom Workplace, Custom AI Companion is the natural next step that takes them from conversation to action by unlocking agentic search, customization, and agentic workflows.

Eric Yuan: As customers experience the value of AI Companion in Zoom Workplace, Custom AI Companion is the natural next step that takes them from conversation to action by unlocking agentic search, customization, and agentic workflows. Raymond James is a strong example of this expansion motion. After adopting AI Companion for meeting summaries, they expanded in Q1 to Custom AI Companion across approximately 10,000 seats, giving wealth advisors more tailored AI workflows and customized summaries with the security, compliance, and centralized oversight required in financial services. Custom AI Companion also wins on its ability to support agentic workflows. In Q1, as part of MongoDB's upgrade to Zoom Workplace Enterprise Plus, Zoom Contact Center, and ZVA, they chose Custom AI Companion to translate live conversations into completed actions across their IT ticketing, customer relationship management, and other third-party systems.

Speaker #4: Raymond James is a strong example of this expansion motion. After adopting AI Companion for meeting summaries, they expanded in Q1 to custom AI Companion across approximately 10,000 seats, giving wealth advisors more tailored AI workflows and customized summaries with the security, compliance, and centralized oversight required in financial services.

Speaker #4: Custom AI Companion also wins on its ability to support agentic workflows. In Q1, as part of MongoDB's upgrade to Zoom Workplace Enterprise Plus, Zoom Contact Center, and ZVA, they chose Custom AI Companion to translate live conversations into completed actions across their IT ticketing, customer relationship management, and other third-party systems.

Eric Yuan: Custom AI Companion also wins on its ability to support agentic workflows. In Q1, as part of MongoDB's upgrade to Zoom Workplace Enterprise Plus, Zoom Contact Center, and ZVA, they chose Custom AI Companion to translate live conversations into completed actions across their IT ticketing, customer relationship management, and other third-party systems. Just as Custom AI Companion creates an AI monetization path within Zoom Workplace, ZVA Receptionist represents an important new monetization layer for Zoom Phone.

Speaker #4: Just as custom AI Companion creates an AI monetization path within Zoom Workplace, ZVA Receptionist represents an important new monetization layer for Zoom Phone. ZVA Receptionist turns Zoom Phone into an AI-powered front door for the business, helping customers qualify callers, capture context, answer common questions, and route requests to the right person or team.

Eric Yuan: Just as Custom AI Companion creates an AI monetization path within Zoom Workplace, ZVA Receptionist represents an important new monetization layer for Zoom Phone. ZVA Receptionist turns Zoom Phone into an AI-powered front door for the business, helping customers qualify callers, capture context, answer common questions, and route requests to the right person or team. In Q1, we saw it deliver real business value across a variety of customers, including an industry association improving lead capture and lowering costs, an insurance firm automating after-hours and overflow calls, and a law firm managing high call volume by filtering unsupported requests so staff can focus on actionable cases. We also added AI innovation to employee experience with the launch of Seer by Workvivo, expanding from employee communications into AI-powered people intelligence, and creating another path for AI monetization.

Eric Yuan: ZVA Receptionist turns Zoom Phone into an AI-powered front door for the business, helping customers qualify callers, capture context, answer common questions, and route requests to the right person or team. In Q1, we saw it deliver real business value across a variety of customers, including an industry association improving lead capture and lowering costs, an insurance firm automating after-hours and overflow calls, and a law firm managing high call volume by filtering unsupported requests so staff can focus on actionable cases.

Speaker #4: In Q1, we saw Zoom deliver real business value across a variety of customers, including an industry association improving lead capture and lowering costs, an insurance firm automating after-hours and overflow calls, and a law firm managing high call volume by filtering on supported requests so staff can focus on actionable cases.

Speaker #4: We also added AI innovation to employee experience with the launch of Seerby Workvivo, expanding from employee communications into AI-powered people intelligence and creating another path for AI monetization.

Eric Yuan: We also added AI innovation to employee experience with the launch of Seer by Workvivo, expanding from employee communications into AI-powered people intelligence, and creating another path for AI monetization. Seer helps leaders listen to employee feedback, measure engagement, understand sentiment with AI, act through built-in communication tools, and track progress in real time. Beyond these application-level AI monetization layers, Zoom AI Services opens our core AI technologies to customers and developers.

Eric Yuan: Seer helps leaders listen to employee feedback, measure engagement, understand sentiment with AI, act through built-in communication tools, and track progress in real time. Beyond these application-level AI monetization layers, Zoom AI Services opens our core AI technologies to customers and developers. Launched in March, Zoom AI Services extends our speech recognition advantage, honed across countless daily meetings, and ranked among the top models on the Hugging Face Open ASR leaderboard. Its Scribe API gives customers and developers high-quality, flexible speech-to-text across platforms, with early adoption from BPOs like InflectionCX, validating the real-world value of our ASR technology. We are also extending AI into high-value vertical workflows.

Speaker #4: Seer helps leaders listen to employee feedback, measure engagement, understand sentiment with AI, act through built-in communication tools, and track progress in real time. Beyond these application-level AI monetization layers, Zoom AI Services opens our core AI technologies to customers and developers.

Speaker #4: Launched in March, Zoom AI Services extends our speech recognition advantage, honed across countless daily meetings and ranked among the top models on the Hugging Face Open ASR leaderboard.

Eric Yuan: Launched in March, Zoom AI Services extends our speech recognition advantage, honed across countless daily meetings, and ranked among the top models on the Hugging Face Open ASR leaderboard. Its Scribe API gives customers and developers high-quality, flexible speech-to-text across platforms, with early adoption from BPOs like InflectionCX, validating the real-world value of our ASR technology. We are also extending AI into high-value vertical workflows.

Speaker #4: Its Scribe API gives customers and developers high-quality, flexible speech-to-text across platforms, with early adoption from BPOs like Inflection CX validating the real-world value of our ASR technology.

Speaker #4: We are also extending AI into high-value vertical workflows. BrightHire, which brings conversational AI to recruiting and hiring, had a strong quarter with continued momentum in tech and other sectors.

Eric Yuan: BrightHire, which brings conversational AI to recruiting and hiring, had a strong quarter, with continued momentum in tech and other sectors. In Q1, BrightHire landed Figma on its core product to help support consistent, objective, and calibrated hiring decisions, and expanded with HubSpot from its core interview intelligence product into BrightHire Screen, its AI interviewer, to support go-to market hiring. Taken together, these examples show how we are extending Zoom AI beyond core collaboration into a broader monetization engine across workplace, AI services, and vertical workflows. The same combination of AI context and workflow orchestration is also driving our third priority, scaling AI-first customer experience. The same AI-first platform that powers Zoom Workplace and Zoom Phone also extends to customer engagement. This is a true point of differentiation. Zoom is one of the few scaled companies with a native platform that bridges UC and CX.

Speaker #4: In Q1, BrightHire landed Figma on its core product to help support consistent, objective, and calibrated hiring decisions, and expanded with HubSpot from its core interview intelligence product into BrightHire Screen, its AI interviewer, to support go-to-market hiring.

Speaker #4: Taken together, these examples show how we are extending Zoom AI beyond core collaboration into a broader monetization engine across Workplace, AI services, and vertical workflows.

Speaker #4: The same combination of AI, context, and workflow orchestration is also driving our third priority: scaling AI-first customer experience. The same AI-first platform that powers Zoom Workplace and Phone also extends to customer engagement.

Eric Yuan: The same combination of AI context and workflow orchestration is also driving our third priority, scaling AI-first customer experience. The same AI-first platform that powers Zoom Workplace and Zoom Phone also extends to customer engagement. This is a true point of differentiation. Zoom is one of the few scaled companies with a native platform that bridges UC and CX.

Speaker #4: This is a true point of differentiation. Zoom is one of the few scaled companies with a native platform that bridges UC and CX. By connecting collaboration, voice, contact center, virtual agents, expert assist, and more, we help customers carry context across teams, channels, and systems—moving from reactive service to faster, more intelligent resolution and measurable business value.

Eric Yuan: By connecting collaboration, voice, contact center, virtual agents, expert assist, and more, we help customers carry context across teams, channels, and systems, moving from reactive service to faster, more intelligent resolution, and measurable business value. To further bolster the suite, in March, we introduced CX Insights, a new SKU within ZCX that gives business and CX leaders a natural language way to analyze CX data across contact center, workforce management, quality management, and virtual agent. We also announced AI Expert Assist 3.0, customer workflow orchestration, advanced quality management for virtual agent, and new workforce management capabilities to help organizations deliver better outcomes with greater efficiency. Zoom customer experience continued to accelerate in Q1 with high double-digit growth driven by paid AI in nine of the top 10 ZCX deals, showing that customers are increasingly turning to Zoom to automate service, empower agents, and improve resolution.

Speaker #4: To further bolster the suite in March, we introduced CX Insights, a new SKU within ZCX that gives business and CX leaders a natural language way to analyze CX data across contact center, workforce management, quality management, and virtual agent.

Speaker #4: We also announced AI Expert Assist 3.0, customer workflow orchestration, advanced quality management for virtual agent, and new workforce management capabilities to help organizations deliver better outcomes with greater efficiency.

Eric Yuan: We also announced AI Expert Assist 3.0, customer workflow orchestration, advanced quality management for virtual agent, and new workforce management capabilities to help organizations deliver better outcomes with greater efficiency. Zoom customer experience continued to accelerate in Q1 with high double-digit growth driven by paid AI in nine of the top 10 ZCX deals, showing that customers are increasingly turning to Zoom to automate service, empower agents, and improve resolution.

Speaker #4: Zoom Customer Experience continued to accelerate in Q1 with high double-digit growth driven by paid AI in 9 of the top 10 ZCX deals, showing that customers are increasingly turning to Zoom to automate service, empower agents, and improve resolution.

Speaker #4: Zoom Customer Experience is emerging as a key growth driver and represents the strategic expansion of our platform into mission-critical customer operations. We are increasingly winning competitive displacements and larger deals as customers look to consolidate contact center and UC systems with a unified AI workflow and analytics platform that works across all channels.

Eric Yuan: Zoom customer experience is emerging as a key growth driver and represents the strategic expansion of our platform into mission-critical customer operations. We are increasingly winning competitive displacements and larger deals as customers look to consolidate contact center and UC systems with a unified AI, workflow, and analytics platform that works across all channels. Let me bring this to life with a couple of customer wins. Showcasing the strength of our full system of action, we landed Chelsea FC, one of the world's most recognized football clubs. They selected Zoom Phone, ZCC Elite, and ZVA Chat to modernize fan engagement across touchpoints. Zoom will help the club deliver faster, more personalized experiences while creating a connected data foundation to improve insight, efficiency, and long-term growth.

Speaker #4: Let me bring this to life with a win. Showcasing the strength of our full system of action, we landed Chelsea FC, one of the world's most recognized football clubs.

Speaker #4: They selected Zoom Phone, ZCC Elite, and ZVA Chat to modernize fan engagement across touchpoints. Zoom will help the club deliver faster, more personalized experiences while creating a connected data foundation to improve insight, efficiency, and long-term growth.

Eric Yuan: They selected Zoom Phone, ZCC Elite, and ZVA Chat to modernize fan engagement across touchpoints. Zoom will help the club deliver faster, more personalized experiences while creating a connected data foundation to improve insight, efficiency, and long-term growth. Also in Q1, Caliber Collision, a leading automobile repair provider, chose to deploy Zoom Phone with ZCC Elite in order to streamline their customer experience across more than 1,800 repair centers and their central contact center, eliminate the cold call experience for customers, and provide unified CX analytics for end-to-end visibility.

Speaker #4: Also in Q1, Caliber Collision, a leading automobile repair provider, chose to deploy Zoom Phone with ZCC Elite in order to streamline their customer experience across more than 1,800 repair centers and their central contact center.

Eric Yuan: Also in Q1, Caliber Collision, a leading automobile repair provider, chose to deploy Zoom Phone with ZCC Elite in order to streamline their customer experience across more than 1,800 repair centers and their central contact center, eliminate the cold call experience for customers, and provide unified CX analytics for end-to-end visibility. We also saw a strong full CX platform win in Japan with Renesas, who selected Zoom Virtual Agent, Agentless Dialer, and ZCC Elite to modernize high-volume customer interactions. They chose Zoom for the flexibility and automation capabilities of the platform and are using Zoom Virtual Agent in a differentiated way for outbound engagement, including pre-confirmation calls tied to electricity and gas connections, which helps free teams for higher value sales activity. Taken together, our progress across our three priorities gives us confidence in the opportunity ahead.

Speaker #4: Eliminate the cold call experience for customers and provide unified CX analytics for end-to-end visibility. We also saw a strong full CX platform win in Japan, with Renza, who selected ZCC Elite to modernize high-volume customer interactions.

Eric Yuan: We also saw a strong full CX platform win in Japan with Renesas, who selected Zoom Virtual Agent, Agentless Dialer, and ZCC Elite to modernize high-volume customer interactions. They chose Zoom for the flexibility and automation capabilities of the platform and are using Zoom Virtual Agent in a differentiated way for outbound engagement, including pre-confirmation calls tied to electricity and gas connections, which helps free teams for higher value sales activity. Taken together, our progress across our three priorities gives us confidence in the opportunity ahead.

Speaker #4: They chose Zoom for the flexibility and automation capabilities of the platform and are using Zoom Virtual Agent in a differentiated way for outbound engagement, including pre-confirmation calls tied to electricity and gas connections, which helps free teams for higher-value sales activity.

Speaker #4: Taken together, our progress across our three priorities gives us confidence in the opportunity ahead. As customers increasingly adopt Zoom as an AI-powered system of action, we are excited to turn that momentum into durable growth and long-term value.

Eric Yuan: As customers increasingly adopt Zoom as an AI-powered system of action, we are excited to turn that momentum into durable growth and long-term value. Michelle will now take us through our Q1 financial results. Michelle?

Speaker #4: Michelle will now take us through our Q1 financial results. Michelle, thank you, Eric, and hello, everyone. I'm excited to be here with you today to share Zoom's Q1 FY27 performance.

Michelle Chang: Thank you, Eric, and hello, everyone. I'm excited to be here with you today to share Zoom's Q1 FY 2027 performance. In Q1, total revenue grew 5.5% year over year to $1.24 billion, or 4.6% in constant currency. This result was $14 million above the high end of our guidance. Our enterprise business continues to be strong, with revenue growing 7.2% year over year, representing 61% of our total revenue, up 1 point year over year. In our online business, Q1 average monthly churn was 3%, as compared to 2.8% in Q1 of FY 2026. Within our enterprise business, we saw 8% year over year growth in the number of customers contributing more than $100,000 in trailing 12-month revenue. These customers now make up 33% of our total revenue, up 1 point year over year. Our trailing 12-month net dollar expansion rate for enterprise customers in Q1 improved to 99%.

Michelle Chang: Thank you, Eric, and hello, everyone. I'm excited to be here with you today to share Zoom's Q1 FY 2027 performance. In Q1, total revenue grew 5.5% year-over-year to $1.24 billion, or 4.6% in constant currency. This result was $14 million above the high end of our guidance. Our enterprise business continues to be strong, with revenue growing 7.2% year-over-year, representing 61% of our total revenue, up 1 point year-over-year. In our online business, Q1 average monthly churn was 3%, as compared to 2.8% in Q1 of FY 2026.

Speaker #4: In Q1, total revenue grew 5.5% year over year to $1.24 billion, or 4.6% in constant currency. This result was $14 million above the high end of our guidance.

Speaker #4: Our enterprise business continues to be strong, with revenue growing 7.2% year over year, representing 61% of our total revenue, up 1 point year over year.

Speaker #4: In our online business, Q1 average monthly churn was 3%, as compared to 2.8% in Q1 of FY26. Within our enterprise business, we saw an 8% year-over-year growth in the number of customers contributing more than $100,000 in trailing 12-month revenue.

Michelle Chang: Within our enterprise business, we saw 8% year-over-year growth in the number of customers contributing more than $100,000 in trailing 12-month revenue. These customers now make up 33% of our total revenue, up 1 point year-over-year. Our trailing 12-month net dollar expansion rate for enterprise customers in Q1 improved to 99%. Looking at our international growth, our Americas revenue and EMEA revenue both grew 5% year-over-year, while APAC grew 6%. The EMEA growth rate was predominantly driven by year-over-year changes in foreign exchange rates.

Speaker #4: These customers now make up 33% of our total revenue, up 1 point year over year. Our trailing 12-month net dollar expansion rate for enterprise customers in Q1 improved to 99%.

Speaker #4: Looking at our international growth, our Americas revenue and EMEA revenue both grew 5% year over year, while APAC grew 6%. The EMEA growth rate was predominantly driven by year-over-year changes in foreign exchange rates.

Michelle Chang: Looking at our international growth, our Americas revenue and EMEA revenue both grew 5% year over year, while APAC grew 6%. The EMEA growth rate was predominantly driven by year over year changes in foreign exchange rates. Moving to our non-GAAP results, which as a reminder exclude stock-based compensation expenses and associated payroll taxes, acquisition-related expenses, net gains or losses on strategic investments, and all associated tax effects. Non-GAAP gross margin in Q1 was 79.9%, up 70 basis points from Q1 of last year, primarily due to our continued cost optimization efforts aligned with our long-term target of 80%. Our non-GAAP income from operations grew 9% year over year to $509 million, exceeding the high end of our guidance by $17 million. Non-GAAP operating margin for Q1 was 41.1%, up 130 basis points from Q1 of last year.

Speaker #4: Moving to our non-GAAP results, which, as a reminder, exclude stock-based compensation expenses and associated payroll taxes, acquisition-related expenses, net gains or losses on strategic investments, and all associated tax effects.

Michelle Chang: Moving to our non-GAAP results, which as a reminder exclude stock-based compensation expenses and associated payroll taxes, acquisition-related expenses, net gains or losses on strategic investments, and all associated tax effects. Non-GAAP gross margin in Q1 was 79.9%, up 70 basis points from Q1 of last year, primarily due to our continued cost optimization efforts aligned with our long-term target of 80%. Our non-GAAP income from operations grew 9% year-over-year to $509 million, exceeding the high end of our guidance by $17 million.

Speaker #4: Non-GAAP gross margin in Q1 was 79.9%, up 70 basis points from Q1 of last year, primarily due to our continued cost optimization efforts, aligned with our long-term target of 80%.

Speaker #4: Our non-GAAP income from operations grew 9% year over year, to $509 million, exceeding the high end of our guidance by $17 million.

Michelle Chang: Non-GAAP operating margin for Q1 was 41.1%, up 130 basis points from Q1 of last year. The operating margin improvement was primarily driven by the accounting amortization change we discussed last quarter and our gross margin improvements. This was partially offset by the second year of our shift from SBC to cash bonus compensation. Non-GAAP diluted net income per share in Q1 increased to $1.55 on approximately 300 million non-GAAP diluted weighted average shares outstanding.

Speaker #4: Non-GAAP operating margin for Q1 was 41.1%, up 130 basis points from Q1 of last year. The operating margin improvement was primarily driven by the accounting quarter and our gross margin improvements.

Michelle Chang: The operating margin improvement was primarily driven by the accounting amortization change we discussed last quarter and our gross margin improvements. This was partially offset by the second year of our shift from SBC to cash bonus compensation. Non-GAAP diluted net income per share in Q1 increased to $1.55 on approximately 300 million non-GAAP diluted weighted average shares outstanding. This result was $0.13 above the high end of our guidance and $0.12 higher than Q1 of last year. The EPS growth reflects strong business performance, effective cost management, as well as anti-dilution efforts across our buyback program and stock compensation management. Turning to the balance sheet. Deferred revenue at the end of Q1 grew 5% year over year to $1.49 billion, above the high end of our previously provided range of 1% to 2%.

Speaker #4: This was partially offset by the second year of our shift from SBC to cash bonus compensation. Non-GAAP diluted net income per share in Q1 increased to $1.55, on approximately 300 million non-GAAP diluted weighted average shares outstanding.

Speaker #4: This result was $0.13 above the high end of our guidance, and $0.12 higher than Q1 of last year. The EPS growth reflects strong business performance, effective cost management, as well as anti-dilution efforts across our buyback program and stock compensation management.

Michelle Chang: This result was $0.13 above the high end of our guidance and $0.12 higher than Q1 of last year. The EPS growth reflects strong business performance, effective cost management, as well as anti-dilution efforts across our buyback program and stock compensation management. Turning to the balance sheet. Deferred revenue at the end of Q1 grew 5% year-over-year to $1.49 billion, above the high end of our previously provided range of 1% to 2%. For Q2, we expect deferred revenue to be up 2% to 3% year-over-year.

Speaker #4: Turning to the balance sheet, deferred revenue at the end of Q1 grew 5% year over year, to $1.49 billion, above the high end of our previously provided range of 1 to 2 percent.

Speaker #4: For Q2, we expect deferred revenue to be up 2% to 3% year over year. As we discussed last quarter, larger and longer-duration competitive takeouts in Phone and Contact Center can include grace periods that affect deferred revenue timing.

Michelle Chang: For Q2, we expect deferred revenue to be up 2% to 3% year over year. As we discussed last quarter, larger and longer duration competitive takeouts in phone and contact center can include grace periods that affect deferred revenue timing. In Q1, fewer contracts than expected required such terms. We continue to expect some quarter-to-quarter variability based on the timing and the structure of larger deals. Looking at both our billed and unbilled contracts, our RPO increased 11% year over year to approximately $4.3 billion, driven by non-current RPO growth of 19%. The strong growth in non-current RPO reflects our continued success landing larger, longer-term, multi-product platform deals. In Q1, operating cash flow grew 7% year over year to $522 million, representing an operating cash flow margin of 42.1%, up 50 basis points year over year.

Michelle Chang: As we discussed last quarter, larger and longer duration competitive takeouts in phone and contact center can include grace periods that affect deferred revenue timing. In Q1, fewer contracts than expected required such terms. We continue to expect some quarter-to-quarter variability based on the timing and the structure of larger deals. Looking at both our billed and unbilled contracts, our RPO increased 11% year-over-year to approximately $4.3 billion, driven by non-current RPO growth of 19%.

Speaker #4: In Q1, fewer contracts than expected required such terms. We continue to expect some quarter-to-quarter variability based on the timing and the structure of larger deals.

Speaker #4: Looking at both our build and unbuild contracts, our RPO increased 11% year over year, to approximately $4.3 billion, driven by non-current RPO growth of 19%.

Michelle Chang: The strong growth in non-current RPO reflects our continued success landing larger, longer-term, multi-product platform deals. In Q1, operating cash flow grew 7% year-over-year to $522 million, representing an operating cash flow margin of 42.1%, up 50 basis points year-over-year. Free cash flow in the quarter grew 8% year-over-year to $500 million, representing a free cash flow margin of 40.4%, up 100 basis points year-over-year. We ended the quarter with $7.7 billion in cash equivalents, marketable securities, excluding restricted cash.

Speaker #4: The strong growth in non-current RPO reflects our continued success landing larger, longer-term, multi-product platform deals. In Q1, operating cash flow grew 7% year over year, to $522 million, representing an operating cash flow margin of 42.1%, up 50 basis points year over year.

Michelle Chang: Free cash flow in the quarter grew 8% year over year to $500 million, representing a free cash flow margin of 40.4%, up 100 basis points year over year. We ended the quarter with $7.7 billion in cash equivalents, marketable securities, excluding restricted cash. In Q1, we repurchased 4.2 million shares for $362 million across the preexisting $3.7 billion share repurchase plan. We have repurchased a total of 40.4 million shares for $3.1 billion. Turning to the guidance. For Q2, we expect revenue to be in the range of $1.265 to $1.27 billion, representing 4.1% year over year growth at the midpoint. We expect non-GAAP operating income to be in the range of $508 to $513 million, representing an operating margin of 40.3% at the midpoint. Our outlook for non-GAAP earnings per share is $1.45 to $1.47 based on approximately 304 million shares outstanding.

Speaker #4: Free cash flow in the quarter grew 8% year over year to $500 million, representing a free cash flow margin of 40.4%, up 100 basis points year over year.

Speaker #4: We ended the quarter with $7.7 billion in cash, cash equivalents, and marketable securities, excluding restricted cash. In Q1, we repurchased 4.2 million shares for $362 million, across the pre-existing $3.7 billion share repurchase plan.

Michelle Chang: In Q1, we repurchased 4.2 million shares for $362 million across the preexisting $3.7 billion share repurchase plan. We have repurchased a total of 40.4 million shares for $3.1 billion. Turning to the guidance. For Q2, we expect revenue to be in the range of $1.265 to $1.27 billion, representing 4.1% year-over-year growth at the midpoint. We expect non-GAAP operating income to be in the range of $508 to $513 million, representing an operating margin of 40.3% at the midpoint. Our outlook for non-GAAP earnings per share is $1.45 to $1.47 based on approximately 304 million shares outstanding.

Speaker #4: We've repurchased a total of 40.4 million shares for $3.1 billion. Turning to the guidance, for Q2, we expect revenue to be in the range of $1.265 to $1.27 billion, representing 4.1% year-over-year growth at the midpoint.

Speaker #4: We expect non-GAAP operating income to be in the range of $508 to $513 million, representing an operating margin of 40.3% at the midpoint.

Speaker #4: Our outlook for non-GAAP earnings per share is $1.45 to $1.47, based on approximately 304 million shares outstanding. For the full year for FY27, we're pleased to raise both our revenue and profitability guidance.

Michelle Chang: For the full year for FY27, we're pleased to raise both our revenue and profitability guidance. We now expect revenue to be in the range of $5.08 to $5.09 billion, which at the midpoint represents 4.4% year over year growth. We expect our non-GAAP operating income to be in the range of $2.065 to $2.075 billion, representing an operating margin of 40.7% at the midpoint. In addition, our outlook for non-GAAP earnings per share in FY27 is increasing to $5.96 to $6 based on approximately 304 million shares outstanding. As a reminder, future share repurchases are not reflected in share count in EPS guidance. We continue to expect free cash flows for FY27 to be in the range of $1.7 to $1.74 billion. As indicated in our press release today, we are excited to announce our board has authorized an incremental $1 billion share repurchase.

Michelle Chang: For the full year for FY 2027, we're pleased to raise both our revenue and profitability guidance. We now expect revenue to be in the range of $5.08 to $5.09 billion, which at the midpoint represents 4.4% year-over-year growth. We expect our non-GAAP operating income to be in the range of $2.065 to $2.075 billion, representing an operating margin of 40.7% at the midpoint. In addition, our outlook for non-GAAP earnings per share in FY 2027 is increasing to $5.96 to $6 based on approximately 304 million shares outstanding.

Speaker #4: We now expect revenue to be in the range of $5.08 to $5.09 billion, which, at the midpoint, represents 4.4% year-over-year growth.

Speaker #4: We expect our non-GAAP operating income to be in the range of $2.065 to $2.075 billion, representing an operating margin of 40.7% at the midpoint.

Speaker #4: In addition, our outlook for non-GAAP earnings per share in FY27 is increasing to $5.96 to $6.00, based on approximately 304 million shares outstanding. As a reminder, future share repurchases are not reflected in the share count in EPS guidance.

Michelle Chang: As a reminder, future share repurchases are not reflected in share count in EPS guidance. We continue to expect free cash flows for FY 2027 to be in the range of $1.7 to $1.74 billion. As indicated in our press release today, we are excited to announce our board has authorized an incremental $1 billion share repurchase. This reinforces our board and management team's confidence in Zoom as we continue to leverage our strong cash flow and balance sheet to drive shareholder value.

Speaker #4: We continue to expect free cash flows for FY27 to be in the range of $1.7 to $1.74 billion. As indicated in our release today, we are excited to announce our board has authorized an incremental $1 billion share repurchase.

Michelle Chang: This reinforces our board and management team's confidence in Zoom as we continue to leverage our strong cash flow and balance sheet to drive shareholder value. In closing, Q1 was a strong start to FY2027, with continued execution across our three priorities and growing adoption of Zoom as an AI-first system of action. We are encouraged by progress scaling customer experience and the early momentum across new AI revenue streams. We remain on track to surpass $5 billion in revenue this year while maintaining our focus on profitability, cash flow generation, and shareholder returns. Thank you to our customers, investors, and of course, the entire Zoom team for your trust and support. With that, Catherine, please queue up the first question.

Speaker #4: This reinforces our board and management team's confidence in Zoom as we continue to leverage our strong cash flow and balance sheet to drive shareholder value.

Michelle Chang: In closing, Q1 was a strong start to FY2027, with continued execution across our three priorities and growing adoption of Zoom as an AI-first system of action. We are encouraged by progress scaling customer experience and the early momentum across new AI revenue streams. We remain on track to surpass $5 billion in revenue this year while maintaining our focus on profitability, cash flow generation, and shareholder returns. Thank you to our customers, investors, and of course, the entire Zoom team for your trust and support. With that, Catherine, please queue up the first question.

Speaker #4: In closing, Q1 was a strong start to FY27. With continued execution across our three priorities, and growing adoption of Zoom as an AI-first system of action.

Speaker #4: We are encouraged by progress, scaling customer experience, and the early momentum across new AI revenue streams. We remain on track to surpass $5 billion in revenue this year, while maintaining our focus on profitability, cash flow generation, and shareholder returns.

Speaker #4: Thank you to our customers, investors, and of course, the entire Zoom team for your trust and support. With that, Catherine, please cue up the first question.

Speaker #1: Thank you, Michelle. We will now begin the Q&A portion of the call. When I read your name, please turn on your video and unmute.

[Company Representative] (Zoom): Thank you, Michelle. We will now begin the Q&A portion of the call. When I read your name, please turn on your video and unmute. As a reminder, in an effort to hear from everyone, please limit yourself to one question. Our first question will come from Alex Zukin with Wolfe Research.

Operator: Thank you, Michelle. We will now begin the Q&A portion of the call. When I read your name, please turn on your video and unmute. As a reminder, in an effort to hear from everyone, please limit yourself to one question. Our first question will come from Alex Zukin with Wolfe Research.

Speaker #1: As a reminder, in an effort to hear from everyone, please limit yourself to one question. Our first question will come from Alex Zukin with Wolf Research.

Alex Zukin: Hey, guys. Thanks for taking the time and taking the question. Congrats on a really solid quarter. I guess maybe, Eric, first one for you, when you think about the execution that you're seeing, particularly both on the AI products and particularly on ZCX, which sounds like it didn't need as much discounting or flexibility in terms of billings terms as before. Maybe what are you seeing in the pull-through from some of your AI solutions, and how much incremental expansion of your wallet within customers is that driving? Michelle, I've got a quick follow-up for you.

Speaker #3: Hey guys, thanks for taking the time and taking the question. And congrats on a really solid quarter. I guess maybe, Eric, first one for you: When you think about the execution that you're seeing, particularly both on the AI products and particularly on ZCX—which sounds like it didn't need as much discounting or flexibility in terms of billing terms as before—maybe, what are you seeing in the pull-through from some of your AI solutions?

Speaker #3: And how much incremental expansion of your wallet within customers is that driving? And Michelle, I've got a quick follow-up for you.

Eric Yuan: Yeah. Alex, that's a good question. Speaking of ZCX, right? You look at the net out of top 10 deals, paid AI was involved, right? It's meaning AI has really helped our ZCX. Also look at the top 10 ZCX deals, 4 of them also includes ZVA as well, right? As we further improve our ZCX product, specifically doubling down on AI, our pricing model is getting more and more flexible. For now, you take ZCX, for example, is usage-based. Very soon we are going to introduce outcome-based, right? Some customers like outcome-based, some customers like a prepaid usage-based, right? We are very flexible, right? We co-innovate with the customer in terms of product innovation, AI features, and also the business model as well. That's why we have high confidence. ZVA is just one example.

Speaker #4: Yeah, so Alex, that's a good question. And so, speaking of ZCX, right, you look at the 9 out of the top 10 deals—paid AI was involved, right?

Speaker #4: And its meaning, AI is really helping our ZCX. And also, look at the top 10 ZCX deals—four of them also include ZVA as well.

Speaker #4: Right? So as we further improve our ZCX product, specifically doubling down on AI, our pricing model is getting more and more flexible. For now, you take ZCX, for example, it is usage-based. Very soon, we are going to introduce all-account-based, right?

Speaker #4: Some customers like all-account-based, some customers like prepaid, usage-based, right? So we are very flexible, right? We could innovate with the customer in terms of product innovation, AI features, and also the business model as well.

Eric Yuan: We are very flexible, right? We co-innovate with the customer in terms of product innovation, AI features, and also the business model as well. That's why we have high confidence. ZVA is just one example. ZRA, all those vertical AI products, we are taking the same approach.

Speaker #4: That's why we have high confidence. ZVA is just one example. ZRA, all those vertical AI products—we are taking the same approach.

Eric Yuan: ZRA, all those vertical AI products, we are taking the same approach.

Alex Zukin: Excellent. Michelle, kind of maybe just a two-parter for you. Really strong execution on billings. I think some of your best outperformance that we've seen.

Alex Zukin: Excellent. Michelle, kind of maybe just a two-parter for you. Really strong execution on billings. I think some of your best outperformance that we've seen. For you guys in a while. Maybe what drove that? You referenced, I think, some of it in the script, but maybe just how much of it was better execution and demand environment versus maybe some other stuff? Online, maybe a little higher churn than we've seen in some time.

Speaker #3: Excellent. And then, Michelle, kind of maybe just a two-parter for you. Really strong execution on billings—I think some of your best outperformance that we’ve seen for you guys in a while.

Alex Zukin: for you guys in a while. Maybe what drove that? You referenced, I think, some of it in the script, but maybe just how much of it was better execution and demand environment versus maybe some other stuff? Online, maybe a little higher churn than we've seen in some time.

Speaker #3: Maybe what drove that? You referenced, I think, some of it in the script, but maybe just how much of it was better execution and demand environment versus maybe some other stuff?

Speaker #3: And then, online, maybe a little higher churn than we've seen in some time—kind of maybe a little bit of a tale of two cities.

Michelle Chang: Yeah.

Alex Zukin: Kind of maybe a little bit of a tale of two cities. I'm curious if you can just unpack both of those dynamics.

Speaker #3: I'm curious if you can just unpack both of those dynamics in the board.

Michelle Chang: Yeah

Alex Zukin: for me.

Speaker #1: Yeah. And your question is, in part, sort of what changed on the deferred revenue, as well as just broadly what we're seeing kind of in enterprise billing?

Michelle Chang: Your question is in part, sort of what changed on the deferred revenue as well as just broadly what we're seeing kind of in enterprise billings?

Speaker #3: Mm-hmm.

Michelle Chang: Okay. Look, in enterprise billings, Alex, it's exactly what we've been talking to investors. We're diversifying our product set. We're working on churn. Churn year-over-year continued its trend of going down. We're working on AI monetization. Look, I think you can see that across the three parties that we talk about, right? Much progress from now going up 184% and additional customer references and even new products coming in on AI. Certainly Eric covered a lot of the Zoom Contact Center. Maybe I'll add in my favorites of high double digits that now for the Q2 in a row has even increased on top of that. Look, broadly the answer is durable revenue from the enterprise that's driving it. With respect to the sort of deferred revenue, maybe I'll add a mechanical element.

Alex Zukin: Hmmm.

Speaker #1: Okay. So look, in enterprise billings, Alex, it’s exactly what we’ve been talking to investors about—that we’re diversifying our products. We’re working on churn.

Speaker #1: Churn, year over year, continued its trend of going down. And we're working on AI monetization. And look, I think you can see that across the three parties that we talk about, right?

Speaker #1: So much progress from now, going up 184% to additional customer references and even new products coming in, in AI. And then certainly, Eric covered a lot of the contact center.

Michelle Chang: Maybe I'll add in my favorites of high double digits that now for the Q2 in a row has even increased on top of that. Look, broadly the answer is durable revenue from the enterprise that's driving it. With respect to the sort of deferred revenue, maybe I'll add a mechanical element. Look, because I think for investors we may see more variability in this. We saw a 5% growth versus the sort of 1 to 2 that we guided at, because we just didn't see the need with the nature of the customer contract to kind of leverage those early grace periods that I mentioned in February.

Speaker #1: Maybe I'll add in my favorites of high double digits that now, for the second quarter in a row, has even increased. On top of that.

Speaker #1: So, look, broadly, the answer is durable revenue from the enterprise that's driving it. With respect to the sort of deferred revenue, maybe I'll add a mechanical element.

Speaker #1: Look, I think, because I think for investors, we may see more variability in this. We saw a 5% growth versus the sort of 1 to 2 that we guided at.

Michelle Chang: Look, because I think for investors we may see more variability in this. We saw a 5% growth versus the sort of 1 to 2 that we guided at, because we just didn't see the need with the nature of the customer contract to kind of leverage those early grace periods that I mentioned in February. Look, those grace periods are great for Zoom. They come with less discount, longer-term deals. They ease our customers into large competitive wins. Look, if we don't need them in a quarter, we won't take them. Second question on churn. Look, I would say we saw a nominal uptick in churn in online. I really don't read too much into it. It's been a long-term low churn for us. I think we're making progress.

Speaker #1: Because we just didn’t see the need, with the nature of the customer contracts, to kind of leverage those early grace periods that I mentioned in February.

Speaker #1: And look, those grace periods are great for Zoom. They come with less discount, longer-term deals. They ease our customers into large competitive wins. And look, if we don't need them in a quarter, we won't take them.

Michelle Chang: Look, those grace periods are great for Zoom. They come with less discount, longer-term deals. They ease our customers into large competitive wins. Look, if we don't need them in a quarter, we won't take them. Second question on churn. Look, I would say we saw a nominal uptick in churn in online. I really don't read too much into it. It's been a long-term low churn for us. I think we're making progress.

Speaker #1: Second question, on churn. Look, I would say we saw a nominal uptick in churn, and, honestly, I really don't read too much into it.

Speaker #1: It's been a long-term low churn for us. I think we're making progress, as investors can see. We said we would stabilize our business in online, and we've done that, both in terms of revenue as well as just in the nature of our online business—it's far more stable.

Michelle Chang: As investors can see, we said we would stabilize our business in online, we've done that, both in terms of revenue as well as just in the nature of our online business is far more stable. Look, it's a nominal uptick in churn in online.

Speaker #1: And look, it's a nominal uptick in churn in online.

Speaker #3: Thank you, guys.

Alex Zukin: Thank you, guys.

Michelle Chang: Okay.

Speaker #1: Okay. Our next question comes from Citi Panagrahi from Mizuho.

[Company Representative] (Zoom): Our next question comes from Siti Panigrahi from Mizuho.

Operator: Our next question comes from Siti Panigrahi from Mizuho.

Siti Panigrahi: All right. Thanks for taking my question. Continue the Alex question. Your revenue accelerated 5.5% this quarter. That's one of the best growth rate we have seen in recent years. You talked about some of this AI monetization pitch to you in My Notes. How much of that acceleration is attributable to this AI monetization versus broader enterprise deal activity that you saw? How should we think about the durability of that pace in H2 of fiscal 2027, given your guidance implies some kind of deceleration in H2?

Speaker #3: All right. Thanks for taking my question. Just to continue Alex's question, your revenue accelerated 5.5% this quarter. I think that's one of the best growth traits we have seen in recent years.

Speaker #3: And you talked about some of this AI monetization, paid SKU, in my notes. So, how much of that acceleration is attributable to this AI monetization?

Speaker #3: Versus broader enterprise deal activity that you saw? And how should we think about the durability of that pace in the back half of fiscal '27, given your guidance implies some kind of deceleration in the second half?

Michelle Chang: Yeah. Perfect. I'll go ahead and take that one. Look, 5.5% growth, we're super pleased to your comment. It's among our highest, and a beat of high guide. Look, it's important to note that some of that was FX driven, so in terms of like modeling and thinking about future going forward. Maybe let me break it down by enterprise and online. From an enterprise perspective, what we're seeing is very durable growth and the drivers, many of which I touched on in the Alex answer, but let me add a few here. We saw 7.2% revenue growth in enterprise, up from 7.1% in Q4, but that's with a 60 BPS impact of that white label churn, right. Clearly product diversification, AI monetization, moving up market, moving into new channels, all the things that we've said, and working on churn as well.

Speaker #1: Yeah, perfect. I'll go ahead and take that one. So, look, 5.5% growth—we're super pleased. To your comment, it's among our highest, and a beat of high guide.

Speaker #1: Look, it's important to note that some of that was FX-driven. So in terms of life modeling and thinking about the future going forward—and so then, maybe let me break it down by Enterprise and Online.

Speaker #1: From an enterprise perspective, what we're seeing is very durable growth and the drivers, many of which I touched on in the Alex answer, but let me add a few here.

Michelle Chang: We saw 7.2% revenue growth in enterprise, up from 7.1% in Q4, but that's with a 60 BPS impact of that white label churn, right. Clearly product diversification, AI monetization, moving up market, moving into new channels, all the things that we've said, and working on churn as well. All the things that we've said would be sort of durable elements with investors, we're seeing the fruits of.

Speaker #1: We saw 7.2% revenue growth in enterprise, up from 7.1% in Q4. But that's with a 60 bps impact from that white label churn. Right?

Speaker #1: So, clearly, product diversification, AI monetization, moving upmarket, moving into new channels—all the things that we said—and working on churn as well.

Speaker #1: All the things that we said would be sort of durable elements with investors, we're seeing the fruits of. From an online perspective, that we saw a little bit—so mechanically, for investors modeling, you do see a little bit more of the FX impact in online, just because it's a little bit more international-based.

Michelle Chang: All the things that we've said would be sort of durable elements with investors, we're seeing the fruits of. From an online perspective, we saw a little bit, so mechanically for investors modeling, you do see a little bit more of the FX impact in online, just because it's a little bit more international based, and we faced an easier comparable with no price increase in the prior Q1, but we'll have it here. You will see we're still projecting online to be a slight growth on the full year, but you will see some detail in the growth rate, in Q2 through Q4.

Michelle Chang: From an online perspective, we saw a little bit, so mechanically for investors modeling, you do see a little bit more of the FX impact in online, just because it's a little bit more international based, and we faced an easier comparable with no price increase in the prior Q1, but we'll have it here. You will see we're still projecting online to be a slight growth on the full year, but you will see some detail in the growth rate, in Q2 through Q4.

Speaker #1: And we faced an easier comparable with no price increase in the prior Q1, but we'll have it here. So, you will see we're still projecting online to be a slight growth for the full year.

Speaker #1: But you will see some detail in the growth rate in Q2 through Q4.

Eric Yuan: Okay, great. Thank you.

Speaker #3: Okay. Great. Thank you.

Michelle Chang: All right.

Speaker #1: All right. Our next question comes from Josh Baer with Morgan Stanley.

[Company Representative] (Zoom): Our next question comes from Josh Baer with Morgan Stanley.

Operator: Our next question comes from Josh Baer with Morgan Stanley.

Josh Baer: Excellent. Thanks for the question. I wanted to ask about Custom AI Companion, a little bit more about the path to conversion. Just what are some of the features or the use cases in Custom that are really key to that conversion? Then also wondering what can be done from an in-product perspective or from a sales perspective to help to drive that conversion.

Speaker #5: Excellent, thanks for the question. I wanted to ask about custom AI Companion—a little bit more about the path to conversion. What are some of the features or the use cases in Custom that are really key to that conversion?

Speaker #5: And then also wondering, what can be done from an in-product perspective or from a sales perspective to help to drive that conversion?

Eric Yuan: Yeah. Josh, this is a great question. When it comes to Custom AI Companion, we have a few key features like enterprise agentic retrieval and also the workflow builder and also the agentic builder as well. Some customer like workflow or agent or enterprise such, all three are part of the key features of a Custom AI Companion. Speaking of how to leverage Custom AI Companion to either product usage or maybe when the customer use the product to discover the Custom AI Companion, I'll give one example. Today, when you schedule a Zoom call, right, you can attach a meeting with a workflow. Meaning during the meeting, we generate My Notes. After the meeting is over, a workflow will automatically take over to get something done for you. Customer really like that vision, focus on the conversation to completion. Right?

Speaker #2: Yeah, so Josh, this is a great question. So Intercoms will customize AI Companion. We have a few key features, like enterprise agentic retrieval and also the workflow builder.

Speaker #2: And also the agentic builder as well. Customers—some customers—like workflow, or agent, or enterprise search. All three are part of the key features for customer AI company.

Speaker #2: And speaking of how to leverage customer AI Companion driver product usage, or maybe when the customer uses a product, to discover that the customer AI Companion, Zoom call, right?

Eric Yuan: Today, when you schedule a Zoom call, right, you can attach a meeting with a workflow. Meaning during the meeting, we generate My Notes. After the meeting is over, a workflow will automatically take over to get something done for you. Customer really like that vision, focus on the conversation to completion. Right? Without a Custom AI Companion, we really cannot transform our business from conversation-centric business to completion-centric. That's why Custom AI Companion is this great part of that vision.

Speaker #2: You can attach a meeting with a workflow. So, meaning during the meeting, we generate my notes. After the meeting is over, a workflow will automatically take over to get something done for you.

Speaker #2: Customers really like that vision: focusing on the conversation through to completion, right? Without a customer AI companion, we really cannot transform our business from a conversation-centric business to a completion-centric one.

Eric Yuan: Without a Custom AI Companion, we really cannot transform our business from conversation-centric business to completion-centric. That's why Custom AI Companion is this great part of that vision.

Speaker #2: That's why Customer AI Companion is a great part of that vision. So

Josh Baer: Excellent. Thanks, Eric. Maybe a quick one for Michelle. I mean, low 40% operating margins and free cash flow margins are obviously excellent. I am just wondering from here, where can margins go? If they can expand, what are the largest sources of leverage?

Speaker #5: Excellent, thanks, Eric. And maybe a quick one from Michelle. I mean, low-40s operating margins and free cash flow margins are obviously excellent. I'm just wondering, from here, where can margins go?

Speaker #5: And if they can expand, what are the largest sources of leverage?

Speaker #1: Yeah, I mean, I think first of all, just to give credit—maybe I'll even add one in there—we're super pleased with our free cash flow generation; had a strong Q1 in regards to that.

Michelle Chang: Yeah. I think, first of all, just to give credit, maybe I'll even add one in there. We're super pleased with our pre-cash flow generation, had a strong Q1 in regards to that. Operating margins plus 40, busting costs, as you note. Worth noting that our GAAP margins are equally important. Look, we're going to keep working at that. Maybe I'd say, on the cost front, we continue to make sure that we've got an always-on kind of efficiency. As the AI costs spike in a good way, with usage, we've got offsetting measures against it. I would say a lot of internal capital allocation, making sure that every dollar and head count that we deploy is sort of to its best ROI, and is oriented around those three priorities of growth that we talk about with investors.

Speaker #1: Operating margins plus 40, best in class, as you know. Also worth noting that our GAAP margins are equally important. So, look, we're going to keep working at that.

Speaker #1: Maybe I'd say, on the COGS front, we continue to make sure that we've got an always-on kind of efficiency. So, as the AI costs spike—in a good way, with usage—we've got offsetting measures against it.

Michelle Chang: As the AI costs spike in a good way, with usage, we've got offsetting measures against it. I would say a lot of internal capital allocation, making sure that every dollar and head count that we deploy is sort of to its best ROI, and is oriented around those three priorities of growth that we talk about with investors. It is not just a frame to talk to you guys, it is how we run the company internally. Look, I would say broadly AI. Super excited at what Custom AI Companion has done even in the finance team to reinvent things.

Speaker #1: I would say a lot of internal capital allocation—making sure that every dollar and headcount that we deploy is, sort of, to its best ROI.

Speaker #1: And is oriented around those three priorities of growth that we talked about with investors. It's not just a frame to talk to you guys.

Michelle Chang: It is not just a frame to talk to you guys, it is how we run the company internally. Look, I would say broadly AI. Super excited at what Custom AI Companion has done even in the finance team to reinvent things. Look, we are our own customer zero, and my favorite example is in Contact Center. We have been able to remove costs out of our own customer support organization at the same time that we also raised our customer CSAT and improved our response time. Making sure we are using each dollar to its best purpose, being our first own users of AI, and then continuing to kind of work on margins.

Speaker #1: It's how we run the company, internally. And then, look, I would say broadly, AI—super excited at what Custom AI Companion has done, even in the finance team, to reinvent things.

Speaker #1: And look, we are our own customer zero. And my favorite example is in contact center. We've been able to remove costs out of our own customer support organization at the same time that we also raised our customer CSAT and improved our response time.

Michelle Chang: Look, we are our own customer zero, and my favorite example is in Contact Center. We have been able to remove costs out of our own customer support organization at the same time that we also raised our customer CSAT and improved our response time. Making sure we are using each dollar to its best purpose, being our first own users of AI, and then continuing to kind of work on margins.

Speaker #1: So making sure we're using each dollar to its best purpose, being our first own users of AI, and then continuing to kind of work on margins.

Josh Baer: Great.

Speaker #5: Great, thank you. Congrats on the consistency.

Michelle Chang: Yeah.

Speaker #1: Yeah.

Josh Baer: Thank you. Congrats on the consistent-

Eric Yuan: Thank you, Josh.

Speaker #2: Thank you, Josh.

[Company Representative] (Zoom): Our next question comes from James Fish with Piper Sandler.

Operator: Our next question comes from James Fish with Piper Sandler.

Speaker #1: Our next question comes from James Fish with Piper Sandler.

Eric Yuan: James, sorry, you are muted.

Speaker #4: Jim, sorry, you are muted.

James Fish: Yeah. Hey, thanks for the question here. Maybe on the CX side, you guys talked about some strength here, and Salesforce launched their own native voice within CX. I guess, how are you thinking about the impact on Zoom CX in terms of kind of where you guys typically compete, what you're seeing competitively in that space, granted it's early days, but they do have a large agent force and general CRM install base, overall, and it seemed like you guys also highlighted a few boomerang deals more so. Is there something incremental you're trying to call out here or what's the causation? Thanks, guys.

Speaker #3: Yeah, hey, thanks for the question here. So maybe on the CX side, you guys talked about some strength here. And Salesforce launched their own native voice within CX.

Speaker #3: So I guess, how are you thinking about the impact on Zoom CX in terms of kind of where you guys typically compete? What you're seeing competitively in that space?

Speaker #3: Granted, it's early days, but they do have a large agent force and general CRM install base. Overall, it seemed like you guys also highlighted a few boomerang deals more so.

Speaker #3: Is there something incremental you're trying to call out here, or what's the causation? Thanks, guys.

Eric Yuan: Yeah. Salesforce is a great customer and partner, we are entering into this market from different angle. Their strength is really about CRM and the marketing cloud and so on and so forth. We entered into this market based on our customer feedback, because many customer already deploy our UC solutions, our meeting solutions. Naturally, the next step, read about a contact center, right? You look at a contact center, it's more of a conversation centric, right? Rather than the system record centric, right? That's our key differentiation. Plus, we have an infrastructure layer. When customer call the agent, the infrastructure layer also our UC system. Quite often, if agent want to turn on the video, that's also our strength as well, right? With AI combining or customer combining, I think we offer a very differentiated CX solution.

Speaker #2: Yeah, so yeah, Salesforce is a great customer and a partner, and we are entering into this market from different angles. Their strength is really about CRM and Marketing Cloud, and so on and so forth.

Speaker #2: We entered into this market based on our customer feedback. Many customers already deployed our UC solutions, our meeting solutions. Naturally, the next step is really about the contact center.

Speaker #2: Right? It's more like a you look at the contact center. It's more like a conversation-centric. Right? Rather than the system record-centric. Right? That's kind of our key differentiation.

Speaker #2: And plus, we have an infrastructure leader. When customers call, the agent, the infrastructure leader, also our UC system. And quite often, if an agent wants to turn on the video, that's also our strength as well.

Eric Yuan: Plus, we have an infrastructure layer. When customer call the agent, the infrastructure layer also our UC system. Quite often, if agent want to turn on the video, that's also our strength as well, right? With AI combining or customer combining, I think we offer a very differentiated CX solution. Plus ZVA and also Zoom CX Insights, a lot of AI innovations. That's the reason why customer trust us.

Speaker #2: Right? And with AI company or customer AI company, I think we are very—I think we offer a very differentiated CS solution. And plus, ZVE and also CX Insight, a lot of AI innovations.

Eric Yuan: Plus ZVA and also Zoom CX Insights, a lot of AI innovations. That's the reason why customer trust us.

Speaker #2: That's the reason why customers trust us. So

Speaker #1: And then, James, on your comment or question around the winbacks, I think a lot of them are because of this sort of 'better together' across the Contact Center back into Zoom Workplace.

Michelle Chang: James, on your comment or question around the win backs, I think a lot of them are because of this sort of better together across the contact center back into Zoom Workplace. That differentiated approach versus we're also seeing a lot of on-prem displacement. Rather than something in the quarter, I think we've been highlighting more and more of those increasingly, and so it's something we see because of our differentiated position inside and outside of the company. I think just times are changing and more of that on-prem base is being unseated.

Speaker #1: That differentiated approach versus—we're also seeing a lot of on-prem displacement. So rather than something in the quarter, I think we've been highlighting more of those increasingly.

Speaker #1: And so it's something we see because of our differentiated kind of position inside and outside of the company. And I think just times are changing, and more of that on-prem base is being unseated.

James Fish: Got it. Thanks, Eric. Thanks, Michelle.

Speaker #3: Got it. Thanks, Eric. Thanks, Michelle.

Eric Yuan: Thank you.

Speaker #2: Thank you.

[Company Representative] (Zoom): Next, we have a question from Michael Funk with Bank of America.

Operator: Next, we have a question from Michael Funk with Bank of America.

Speaker #1: Next, we have a question from Michael Funk with Bank of America.

Michael Funk: Sorry, guys, give me one second here.

Speaker #5: All right, guys. Give me one second here.

Michelle Chang: No worries.

Speaker #1: No worries.

Michael Funk: Yeah, a little.

Speaker #5: Yeah. A little

Michelle Chang: It happens even on earnings calls and every day out there.

Speaker #1: It happens even on earnings calls and every day.

Michael Funk: There we go. Yeah. Thank you all for that. Couple questions for me. You already touched on it briefly, Michelle, but wanted to hear more about your success moving up market in contact center and how you're being more successful in winning those deals from more established providers, functionality or even bidding process. Another one just on use of cash. I know you get asked all the time on this, but Eric, love to hear from you on how you think about capability to grow AI organically versus potential to maybe acquire some interesting capabilities or platforms.

Speaker #5: There we go. There we go. Yeah. Thank you all for that. So, a couple of questions from me. You already touched on it briefly, Michelle.

Speaker #5: But I wanted to hear more about your success moving upmarket in contact center, and how you're being more successful and winning those deals over more established providers.

Speaker #5: Functionality, or even bidding process. And then another one, just on use of cash. I know you get asked all the time on this. But Eric, love to hear from you on how you think about capability to grow AI organically versus potential to maybe acquire some interesting capabilities through platforms.

Speaker #2: Yep. So maybe, Michelle, feel free to chime in. Maybe I'll address the CX. So we built a very scalable—and the CX platform, right?

Eric Yuan: Yeah. Michelle, feel free to chime in. Maybe I address the CX. We built a very scalable CX platform, right? Because quite often a lot of customer, they want to deploy CX, they would like to leverage the channel partners. You look at our top 10 deals, 10 out of 10 are channel-driven deals to sell enterprise, meaning from go-to-market side, it's already scalable. Our channel partners, they know how to pitch our story, how to sell to our enterprise customers. Also look at our top 10 deals. In 8 out of 10 deals, we're replacing some other CCaaS vendors. Look at the entire CCaaS market is pretty big, and we're replacing almost everyone of them. Because of our product, rich feature and innovation, and also the AI, and plus our UC and CC combining the story.

Speaker #2: And because quite often, a lot of interview customers, they want to deploy the CX. They would like to leverage the channel partners. So you look at our top 10 deals.

Speaker #2: 10 out of 10 are channel-driven. Deals to sell enterprise. Meaning from the go-to-market side, it's already scalable. Our channel partners, they know how to pitch our story, how to sell to our enterprise customers.

Speaker #2: And also, you look at our top 10 deals. Eight out of 10 deals were replacing some other CCaaS vendors. So, meaning, look at the entire CCaaS market—it's pretty big.

Eric Yuan: Also look at our top 10 deals. In 8 out of 10 deals, we're replacing some other CCaaS vendors. Look at the entire CCaaS market is pretty big, and we're replacing almost everyone of them. Because of our product, rich feature and innovation, and also the AI, and plus our UC and CC combining the story. That's the reason why we're winning. You look at top 10 CX deals, four out of the 10 also include CX as well. That's a UC and a CC combination also are helping us a lot.

Speaker #2: And we're replacing almost every one of them. So, because of our product—a feature-rich feature—and innovation, and also the AI, and plus our UC and CC combined in the story.

Speaker #2: And that's the reason why we are winning. You look at the top 10 ZX deals—4 out of 10 also included—and look at the top 10 phone deals.

Eric Yuan: That's the reason why we're winning. You look at top 10 CX deals, four out of the 10 also include CX as well. That's a UC and a CC combination also are helping us a lot. In terms of organic growth to build AI or the acquisition, first of all, we look at everything from customer perspective, what kind of services or features they want us to innovate together with them. Like a search, like a generic workflow, right? We want to build up ourself. However, if there are any other innovative startup companies, we are willing to. We're also very disciplined, and make sure either the technology or the customer and some of the services we cannot build, we are going to leverage the acquisition. Again, look at our R&D, 26%, right? In terms of revenue, the percentage is pretty large spending, right?

Speaker #2: Four out of the ten also included the CS as well. There's a UC and a CC combination also helping us a lot. So, in terms of organic growth, to build the AI, all the acquisition, first of all, we look at everything from a customer perspective.

Eric Yuan: In terms of organic growth to build AI or the acquisition, first of all, we look at everything from customer perspective, what kind of services or features they want us to innovate together with them. Like a search, like a generic workflow, right? We want to build up ourself. However, if there are any other innovative startup companies, we are willing to. We're also very disciplined, and make sure either the technology or the customer and some of the services we cannot build, we are going to leverage the acquisition.

Speaker #2: What kind of services or features do they want us to innovate together with them? And like a search, like agentic workflow, right? We want to build that up ourselves.

Speaker #2: However, if there are any other innovative startup companies, we are willing to. But we're also very disciplined. I make sure either the technology or the customer, and some services we cannot build, we are going to leverage the acquisition.

Eric Yuan: Again, look at our R&D, 26%, right? In terms of revenue, the percentage is pretty large spending, right? We have so many great top talents. We have a high confidence we can build a lot of innovations. At the same time, see, Michael, if you know of any great startup companies with great technology, we are very open-minded.

Speaker #2: Again, look at our R&D—26%, right? And in terms of revenue, the percentage is pretty large spending, right? We have so many great top talents; we have high confidence we can build a lot of innovations.

Eric Yuan: We have so many great top talents. We have a high confidence we can build a lot of innovations. At the same time, see, Michael, if you know of any great startup companies with great technology, we are very open-minded.

Speaker #2: At the same time, see, Michael, if you know of any great startup companies with great technology, we are very open-minded.

Michael Funk: Of course. Very nice quarter, guys.

Speaker #5: Of course. Very nice quarter, guys.

Speaker #2: Thank you. Appreciate it.

Eric Yuan: Thank you. Appreciate it.

[Company Representative] (Zoom): Up next, we have a question from Jackson Ader with KeyBanc.

Operator: Up next, we have a question from Jackson Ader with KeyBanc.

Speaker #1: Up next, we have a question from Jackson Ader with KeyBank.

Jackson Ader: Great. Hey, guys. Good to see you. The question I had was on the online segment, Michelle.

Jackson Ader: Great. Hey, guys. Good to see you. The question I had was on the online segment, Michelle. With churn just kind of ticking up a little bit, but also revenue accelerating, that kind of suggests to me that maybe net new customers or either customer additions or ARPU for the net new customers is healthier than maybe you'd expect. Can you just talk about maybe the dynamics of the online net new customer adds you're seeing?

Speaker #4: Great. Hey, guys. Good to see you. The question I had was on the online segment, Michelle. With churn just kind of ticking up a little bit, but also revenue accelerating, that kind of suggests to me that maybe net new customers, or either customer additions or ARPU for the net new customers, is healthier than maybe you'd expect.

Jackson Ader: With churn just kind of ticking up a little bit, but also revenue accelerating, that kind of suggests to me that maybe net new customers or either customer additions or ARPU for the net new customers is healthier than maybe you'd expect. Can you just talk about maybe the dynamics of the online net new customer adds you're seeing?

Speaker #4: Can you just talk about maybe the dynamics of the online net new customer adds you're seeing?

Speaker #1: Yeah, let me kind of attack it from a revenue perspective. I think it may be a little easier to digest. So, our Q1 revenue went up 2.8% in Q1.

Michelle Chang: Yeah, let me kind of attack it from a revenue perspective. I think it may be a little easier to digest. Our Q1 revenue went up 2.8% in Q1. Really important to bring in my comments earlier on FX, which lifted the total number, will have a sort of disproportionate impact to online, as well as we lapped a quarter prior where we didn't have the impact of a price increase. Let me pivot and kind of talk about what I think we're seeing more broadly in the online revenue and kind of how to think about it going forward. Look, we saw some continued progress with low churn. It's a very different space than sort of what we had in the pandemic. You can see that, I think, in so many ways.

Speaker #1: Really important to bring in my comments earlier on FX, which lifted the total number. We'll have a sort of disproportionate impact to online, as well as we lapsed a quarter prior where we didn't have sort of the impact of a price increase.

Speaker #1: But then let me pivot and kind of talk about what I think we're seeing more broadly in online revenue, and kind of how to think about it going forward.

Speaker #1: So, look, we saw some continued progress with low churn. It's a very different base than, sort of, what we had in the pandemic. You can see that, I think, in so many ways.

Michelle Chang: Look, we saw some continued progress with low churn. It's a very different space than sort of what we had in the pandemic. You can see that, I think, in so many ways. Then I think we're getting more of a frame on sort of how to land and expand within that, bringing down customer or products, excuse me, the tenants in enterprise where they make sense for our online customers, bringing new paths to AI monetization, My Notes being a great example of that.

Speaker #1: And then I think we're getting more of a frame of, sort of, how to land and expand within that—bringing down customer or products, excuse me, that hunt in enterprise where they make sense for online customers.

Michelle Chang: Then I think we're getting more of a frame on sort of how to land and expand within that, bringing down customer or products, excuse me, the tenants in enterprise where they make sense for our online customers, bringing new paths to AI monetization, My Notes being a great example of that. Then certainly, new products and acquisitions, since Eric just mentioned them, we did welcome Bonsai. I think that's sort of it's the dynamic sort of popping up Q1. Then look, there is durable and strength in our online business, and that's why we continue to think that it will grow slightly in FY 2027.

Speaker #1: Bringing new paths to AI monetization—my Notes being a great example of that. And then, certainly, new products in the acquisition, since Eric just mentioned them. We did welcome Bonsai.

Michelle Chang: Then certainly, new products and acquisitions, since Eric just mentioned them, we did welcome Bonsai. I think that's sort of it's the dynamic sort of popping up Q1. Then look, there is durable and strength in our online business, and that's why we continue to think that it will grow slightly in FY 2027.

Speaker #1: But I think that's sort of it; it's the dynamic sort of popping up Q1. And then, look, there's durable strength in our online business.

Speaker #1: And that's why we continue to think that it will grow slightly in the upper 27s.

Jackson Ader: Great. A real quick follow-up. If we continue to kind of see this non-current RPO-

Speaker #4: Right. And then a real quick follow-up. If we continue to kind of see this non-current RPO downstream or outgrow current RPO, is this customer-led? Are customers looking for longer-term deals?

Michelle Chang: Yeah

Jackson Ader: or outgrow current RPO. Is it customer-led? Are customers looking for longer-term deals? Is Zoom really kind of pushing longer-term deals? Just curious about the push and pull there.

Speaker #4: Is Zoom really kind of pushing longer-term deals? Just curious about the push and pull there.

Michelle Chang: Yeah. What we're seeing there is just a reflection of what we've been talking about. If you think about our levers for growth, kind of growth inflection are changing more into Zoom Phone, more into Zoom Contact Center, more into AI. Zoom Contact Center in particular comes with longer-term deals than maybe a traditional Zoom Meetings, that's really what you're seeing there. Look, we're pleased that it went up even versus Q4, which tends to be our biggest selling quarter. Look too, I might throw in deals over $1 million was one of the strongest that we've seen, even in a Q1. I think it's something that really just reflects more where our business is going.

Speaker #1: Yeah, what we're seeing there is just a reflection of what we've been talking about. If you think about our levers for growth, and kind of growth inflection, are changing.

Speaker #1: More into the phone, more into Contact Center, more into AI. And Contact Center in particular comes with longer-term deals than maybe a traditional Zoom Meetings.

Speaker #1: And so that's really what you're seeing there. And look, we're pleased that Q4, which tends to be our biggest selling quarter— and look, too, I might throw in, deals over a million dollars was one of the strongest that we've seen.

Michelle Chang: Look too, I might throw in deals over $1 million was one of the strongest that we've seen, even in a Q1. I think it's something that really just reflects more where our business is going.

Speaker #1: Even in a Q1. So I think it's something that really just reflects more where our business is going.

Jackson Ader: Got it. Thanks, guys.

Speaker #4: Got it. Thanks, guys.

Eric Yuan: Thank you.

Speaker #2: Thank you.

[Company Representative] (Zoom): Up next, we have a question from William Power with Baird.

Operator: Up next, we have a question from William Power with Baird.

Speaker #1: Up next, we have a question from William Power with Baird.

Speaker #6: Great, thanks. Yanni Samolis on for Will Power tonight. Good to see the enterprise in our ARCTIC higher. I was hoping you could just talk a bit about that inflection, and then more broadly, maybe a bit about how conversations are going with your enterprise customers that are up for renewal.

Yanni Sammoilis: Great, thanks. Yanni Sammoilis in for William Power tonight. Good to see the enterprise NRR tick higher. I was hoping you could just talk a bit about that inflection and then more broadly, maybe a bit about how conversations are going with your enterprise customers, their renewal. I know there's some headlines out there about seat counts, but wondering if there's anything you'd call out there if that's still maybe status quo. You already talked a little bit about discounting, but just how you're thinking about discipline there, given the value of the platform, and the AI products that you're offering. Thanks.

Yanni Samoilis: Great, thanks. Yanni Sammoilis in for William Power tonight. Good to see the enterprise NRR tick higher. I was hoping you could just talk a bit about that inflection and then more broadly, maybe a bit about how conversations are going with your enterprise customers, their renewal. I know there's some headlines out there about seat counts, but wondering if there's anything you'd call out there if that's still maybe status quo. You already talked a little bit about discounting, but just how you're thinking about discipline there, given the value of the platform, and the AI products that you're offering. Thanks.

Speaker #6: I know there are some headlines out there about seat counts, but I'm wondering if there's anything you would call out there, or if that's still maybe status quo.

Speaker #6: And then you already talked a little bit about discounting, but just how you're thinking about discipline there, given the value of the platform and the AI products that you're offering.

Speaker #6: Thanks.

Michelle Chang: I'll try and take those in order. That's all expansion. Look, we've been saying to investors that the intent would be to inflect on, and we were pleased to see in this quarter a modest improvement. Most of that, just to avoid repeating myself, is the same durable thing that we've been talking about, AI monetization, product diversification. The intent in the fullness of time is that thing would continue to grow off those dynamics. We will have a little bit of the white label churn that we mentioned going forward. To your second question, which I took to be kind of the macro nature, look, we continue to see strong and durable enterprise conditions.

Speaker #1: I'll try and take those in order. Net seller expansion. Look, we've been seeing some investors that the intent would be to inflect on them.

Speaker #1: We were pleased to see, in this quarter, a modest improvement. Most of that, just to avoid repeating myself, is the same durable thing that we've been talking about.

Speaker #1: AI monetization, product diversification, and the intent in the fullness of time is that that thing would continue to grow. Off those dynamics, we will have a little bit of the white label churn that we mentioned going forward.

Michelle Chang: To your second question, which I took to be kind of the macro nature, look, we continue to see strong and durable enterprise conditions. More importantly, sometimes we don't always get to control the conditions that we're given, but I think Zoom has a very strong TCO story, even within whatever conditions we're given, and it's only getting stronger as we move into this system of action. We're moving into a very different relationship with our customers that we're very excited about. Remind me on your third part of your question, here. What was the third part?

Speaker #1: To your second question, which I took to be kind of of the macro nature, look, we continue to see strong and durable enterprise conditions.

Speaker #1: And more importantly, sometimes we don't always get to control the conditions that we're given. But I think Zoom has a very strong TCO story, even within whatever conditions we're given.

Michelle Chang: More importantly, sometimes we don't always get to control the conditions that we're given, but I think Zoom has a very strong TCO story, even within whatever conditions we're given, and it's only getting stronger as we move into this system of action. We're moving into a very different relationship with our customers that we're very excited about. Remind me on your third part of your question, here. What was the third part?

Speaker #1: And it's only getting stronger as we move into the system of action. We're moving into a very different relationship with our customers that we're very excited about.

Speaker #1: And then remind me, on your third part of your question here—what was the third part?

Speaker #6: Yeah. Just, I mean, philosophy around discounting—discipline around that.

Yanni Sammoilis: Yeah, just philosophy around discounting, discipline around that.

Yanni Samoilis: Yeah, just philosophy around discounting, discipline around that.

Michelle Chang: Discounting and pricing. Yeah. Look, generally, we do price raises in enterprise, and you've seen us do that on phone and contact center. Generally, we try, and we'll do those when sort of market conditions or competitive dynamics make sense. More and more, we work discounting, we work deal terms and conditions as you would expect us to do. We feel good about where we are with deal health as well as opportunities going forward.

Speaker #1: Exciting. Yes. So, look, generally we do price raises in the enterprise, and you've seen us do that on Phone and Contact Center. But generally, we try and we'll do those when, sort of, market conditions and competitive dynamics warrant.

Speaker #1: Makes sense. But more in large, we work discounting. We work deal terms and conditions, as you would expect us to do. And we feel good about where we are with deal health as well as opportunities going forward.

Speaker #6: Awesome. Super helpful. Thank you.

Yanni Sammoilis: Awesome. Super helpful. Thank you.

Yanni Samoilis: Awesome. Super helpful. Thank you.

[Company Representative] (Zoom): Our next question comes from Allan Verkhovski with BTIG.

Operator: Our next question comes from Allan Verkhovski with BTIG.

Speaker #1: Our next question comes from Allen Verkovsky with BTIG.

Allan Verkhovski: Awesome. Hey, guys. Thanks for taking the question here. Eric, I have a question on the AI momentum you're seeing. You've been rolling out a lot of new functionality, and based on the conversations you're having, can you talk through how the average customer's perception of Zoom being a system of action in the enterprise progressed over this past quarter? Just as a follow-up, another question on Custom AI Companion. Can you share what kind of trends you're seeing in terms of adoption today? Are there specific industries or size of customers where you're maybe seeing more success with? Any other color would be helpful.

Speaker #4: Awesome. Hey, guys. Thanks for taking the question here. Eric, I have a question on the AI momentum you're seeing. You've been rolling out a lot of new functionality.

Speaker #4: And based on the conversations you're having, can you talk through how the average customer's perception of Zoom being a system of action in the enterprise progressed over this past quarter?

Speaker #4: And then, just as a follow-up, another question on custom AI companion. Can you share what kind of trends you're seeing in terms of adoption today?

Speaker #4: Are there specific industries or sizes of customers where you're maybe seeing more success? Any other color would be helpful.

Allan Verkhovski: Are there specific industries or size of customers where you're maybe seeing more success with? Any other color would be helpful.

Eric Yuan: Yeah, Alan, such a great question. Interestingly enough, this morning I had a call with one of our big customers in the financial sector. Exactly same, as you said, right? What's the customer perception about Zoom? Are you an AI company or not AI company? For now, in my view, when I talk to so many customers, for now they all view like NVIDIA or the OpenAI and so big as AI company. Everybody else, I'm not sure from a cost perspective, they think any other software company, the AI company. I think that's right, because whenever the new technology, you look at a stack. From infrastructure layer. The cloud infrastructure, the chip layer, and also large language model, are more like AI company. More and more, and application layer, you will see some company will emerge as an AI company.

Speaker #2: Yeah. Allen starts this great question. And interestingly enough, this morning I had a call with one of our big customers in the financial sector.

Speaker #2: And that is the same as you said, right? What's the customer perspective about Zoom? Are you an AI company or not an AI company?

Speaker #2: For now, in my view, when I talk to so many customers, for now, they all view, like NVIDIA or OpenAI, Anthropic, as an AI company.

Speaker #2: Everybody else, I'm not sure the cost from a cost perspective—they think any other software company, the AI company. I think that's naturally, I think that's right because whenever the new technology, you look at the stack, right?

Eric Yuan: From infrastructure layer. The cloud infrastructure, the chip layer, and also large language model, are more like AI company. More and more, and application layer, you will see some company will emerge as an AI company. I think we want to be part of that, because of our AI innovation. When customers tested our My Notes feature, they love that. When I shared the new innovation we are going to announce next month, we love that. More and more when customer deploy all those innovative AI services, give me some time, for sure, wow, this is an AI company.

Speaker #2: From infrastructure leader, right? The cloud infrastructure, the chip leader, and also large language model—large language model—more like an AI company. But more and more, and particularly, you will see some company will emerge as an AI company.

Speaker #2: I think we won't be part of that because of our AI innovation. When customers, they test our Minute feature, they love that. When I shared our new innovation, we are going to announce next month, we love that.

Eric Yuan: I think we want to be part of that, because of our AI innovation. When customers tested our My Notes feature, they love that. When I shared the new innovation we are going to announce next month, we love that. More and more when customer deploy all those innovative AI services, give me some time, for sure, wow, this is an AI company. For now, because as I explained, the technology stack. That's the perception. I'm sorry, what's your second part of the question?

Speaker #2: More and more, when customers deploy all those innovative AI services, give them some time for sure. Wow, this is an AI company.

Eric Yuan: For now, because as I explained, the technology stack. That's the perception. I'm sorry, what's your second part of the question?

Speaker #2: For now, because, as I explained, the technology stack, right? So that's the perception. I'm sorry for your second part of the question.

Allan Verkhovski: The second part was just any trends you're seeing in terms of customers that are adopting Custom AI Companion, maybe specific industries or more upmarket, mid-market, just generally any trends would be helpful in terms of what you're seeing there.

Speaker #4: The second part was just any trends you're seeing in terms of customers that are adopting custom AI Companion—maybe specific industries, or more up-market, mid-market—just generally any trends would be helpful in terms of what you're seeing there.

Speaker #2: Yeah. So, look, not only for a lot of enterprise customers—SMB, even including the solopreneurs—I think, in terms of composition-centric AI, like transcription, summary, all is there.

Eric Yuan: Yeah. Look at not only for a lot enterprise customers, SMB, even including the solopreneurs, I think in terms of conversation-centric AI, like transcription, summary, all is there. The CX Insight, the ZVA, all those I think is doing very well, adopted very well. Inside of that's more like a conversation-centric AI, and when we announce a new product which is focused on completion, that also will help us to change the customer perception. More like, hey, how to leverage Zoom AI to build agent, how to leverage AI to build a workflow attached with the conversation, and how to leverage AI to focus on agent retrieval. I think more and more, we shift our focus to AI completion part.

Speaker #2: The CX inside, ZV, all those, I think, is doing very well, adopted very well. I mean, side of that, that's more like a composition-centric AI.

Speaker #2: And when we announce a new product, which is focused on completion, that also will help us to change the customer perspective or perception, right? More like, hey, how to leverage Zoom AI to build an agent?

Eric Yuan: More like, hey, how to leverage Zoom AI to build agent, how to leverage AI to build a workflow attached with the conversation, and how to leverage AI to focus on agent retrieval. I think more and more, we shift our focus to AI completion part.

Speaker #2: How to leverage AI build a workflow, attach with the composition? And how to leverage AI to focus on agentic retrieval? I think more and more we shift our focus to AI completion part.

Allan Verkhovski: Got it. Perfect. Thank you, guys. Congrats.

Speaker #4: Got it. Perfect. Thank you, guys. Congrats.

Eric Yuan: Thank you, Alan Ferkofsky. Appreciate it.

Speaker #2: Thank you, Allen. Appreciate.

[Company Representative] (Zoom): Our next question comes from Tyler Radke with Citi.

Operator: Our next question comes from Tyler Radke with Citi.

Speaker #1: Our next question comes from Tyler Radke with Citi.

[Analyst] (Citi): Hi, thank you. This is Kylie on today for Tyler, and congrats on a great start to the year. One for both of you, Eric, maybe starting with you. As enterprises figure out that build versus buy allocation, how is Zoom positioning the new AI Services and Custom AI Companion to win that wallet share, especially with it launching in March and Scribe seeing some early adoption, what would you call out as some of the biggest moats for that and the others coming on the roadmap?

Kylie Towbin: Hi, thank you. This is Kylie on today for Tyler, and congrats on a great start to the year. One for both of you, Eric, maybe starting with you. As enterprises figure out that build versus buy allocation, how is Zoom positioning the new AI Services and Custom AI Companion to win that wallet share, especially with it launching in March and Scribe seeing some early adoption, what would you call out as some of the biggest moats for that and the others coming on the roadmap?

Speaker #5: Hi. Thank you. This is Kylie on today for Tyler. And congrats on a great start to the year. One for both of you. Eric, maybe starting with you, as enterprises figure out that build versus buy allocation, how is Zoom positioning the new AI services and custom AI Companion to win that wallet share?

Speaker #5: Especially with it launching in March, and Scribe seeing some early adoption, what would you call out as some of the biggest moats for that and the others coming on the roadmap?

Eric Yuan: Yeah, good question. You mentioned our AI services that we offer the speech and the API service, because when customer test that, the quality much better than any other competitors. This is kind of speak of our product, and also meaning also have a good AI talents. That's one. Two, when we build all those AI services, we also co-innovate with customer. Even before build, we already shared why I want to build those services. Customer resonate very well. That's reason why next month we'll have quite a few announcements, some customer in the pilot, they really like that. Because of the co-innovation. Also especially for large enterprise customers, even AI is such a great technology, the adoption speed is not as fast as we want. That's why we also have some FD, full-time deployment engineers working together. Take a ZVA, for example.

Speaker #2: Yeah, good question. Yeah. You mentioned our AI service. We offer the speech and the API service because when customers test that, the quality is much better than any other competitors, right?

Speaker #2: This is kind of a speaker of our product, and also meaning also have a great AI talent. That's one. Two, when we build all those AI services, we also co-innovate with customers.

Speaker #2: Even before build, we already shared why I want to build those services. Customers resonated very well. That's the reason why next month we have quite a few announcements. Some customers in the pilot, they really like that, right?

Eric Yuan: That's reason why next month we'll have quite a few announcements, some customer in the pilot, they really like that. Because of the co-innovation. Also especially for large enterprise customers, even AI is such a great technology, the adoption speed is not as fast as we want. That's why we also have some FD, full-time deployment engineers working together. Take a ZVA, for example. Some enterprise customer really like our technology.

Speaker #2: Because of the co-innovation. And also, especially for a lot of customers, even though AI is such a great technology, the adoption speed is not as fast as we want.

Speaker #2: That's why we also have some FD, full-time deployment engineers, working together. Take a ZVE, for example. Some internet customers really like our technology. But if you want to let Zoom deploy those solutions, it takes some time.

Eric Yuan: Some enterprise customer really like our technology. If you want to let Zoom deploy those solutions, take some time. We have FD working together with those enterprise customers, drive the AI adoption. That is another way for us to win. Overall, we have high confidence about our AI innovation.

Eric Yuan: If you want to let Zoom deploy those solutions, take some time. We have FD working together with those enterprise customers, drive the AI adoption. That is another way for us to win. Overall, we have high confidence about our AI innovation.

Speaker #2: We have an FD working together with those enterprise customers, driving the AI adoption. That's another way for us to win. Overall, we have a high confidence about our AI innovation.

[Analyst] (Citi): Great. One for you, Michelle. I understand it's early on AI Services, so with all of the monetization avenues you're now offering for AI, what would you rank order as sort of the most significant drivers in upcoming 12 to 18 months?

Kylie Towbin: Great. One for you, Michelle. I understand it's early on AI Services, so with all of the monetization avenues you're now offering for AI, what would you rank order as sort of the most significant drivers in upcoming 12 to 18 months?

Speaker #1: Great. And then one for you, Michelle. I understand it's early on AI services. So, with all of the monetization avenues you're now offering for AI, what would you rank order as sort of the most significant drivers in the upcoming 12 to 18 months?

Michelle Chang: Yeah. First, I know there's a lot out there that like to put out the AI revenue stat. Let me just use this opportunity to throw in. To me, the most important thing is to ensure that AI monetization reflects your total revenue growth. Look, that's already happening from a Zoom perspective. Clearly, the area where we have the most momentum, and you hear that even reflected in our three priority wording, is to scale the clear signal that we have in customer experience. I won't add to all the metrics because I think Eric covered a couple and I've covered a couple. That's clearly the most important. Then look, within new revenue streams of AI, look at how much just even quarter-over-quarter we're just bringing new to the market. Look, we get excited.

Speaker #3: Yeah. First, I know there's a lot out there that like to put out the AI revenue stat. Let me just use this opportunity to throw in.

Speaker #3: To me, the most important thing is to ensure that AI—so look, that's already happening from a Zoom perspective. Clearly, the area where we have the most momentum.

Speaker #3: And you hear that even reflected in our three priority wording. It's to scale the clear signal that we have in customer experience. And I won't add to all the metrics because I think Eric covered a couple and I've covered a couple.

Speaker #3: But that's clearly the most important. And then, look, within new revenue streams of AI, look at how much, just even quarter over quarter, we're just bringing new to the market.

Michelle Chang: That's clearly the most important. Then look, within new revenue streams of AI, look at how much just even quarter-over-quarter we're just bringing new to the market. Look, we get excited. There's progress in things like ZRA, Workvivo came out with new stuff relative to AI monetization. Clearly, Custom AI Companion. Look, services is one. I wouldn't put it at the top of the list, maybe just to answer the question explicitly.

Speaker #3: And so look, we get excited. There's progress, and things like ZRA, Workvivo came out with new stuff relative to AI monetization. Clearly, custom AI companion.

Michelle Chang: There's progress in things like ZRA, Workvivo came out with new stuff relative to AI monetization. Clearly, Custom AI Companion. Look, services is one. I wouldn't put it at the top of the list, maybe just to answer the question explicitly. Look, I'd be remiss if I didn't say also that AI usage and threading that in is also a very important indirect measure, in terms of how to think about monetization. Meaning putting it in our paid SKUs at no additional cost is intended to reduce churn and bring in new interest in customers. We get excited, and look, every single quarter, there's just a lot more momentum coming at us. We look forward to talking about it with investors going on, going forward.

Speaker #3: And look, services is one. I wouldn't put it at the top of the list. Maybe just answer the question explicitly. And then that AI usage, and threading that in, is also a very important indirect thing about monetization—meaning putting it in our paid SKUs at no additional cost is intended to reduce churn and bring in new interest in customers, so we get excited.

Michelle Chang: Look, I'd be remiss if I didn't say also that AI usage and threading that in is also a very important indirect measure, in terms of how to think about monetization. Meaning putting it in our paid SKUs at no additional cost is intended to reduce churn and bring in new interest in customers. We get excited, and look, every single quarter, there's just a lot more momentum coming at us. We look forward to talking about it with investors going on, going forward.

Speaker #3: And look, every single quarter, there's just a lot more momentum coming at us. And we look forward to talking about it with investors going forward.

Speaker #2: Yeah. But by the way, we have some very exciting new product solution announcements next month. All our AI-driven product. So, yeah.

Eric Yuan: By the way, we have some very exciting new product solution announcement next month. All are AI-driven product.

[Analyst] (Citi): Thank you.

Kylie Towbin: Thank you.

Speaker #5: Thank you.

Eric Yuan: Appreciate it.

Speaker #2: Appreciate it.

Charles Eveslage: Yeah. Our next question comes from Andrew King with Rosenblatt Securities.

Operator: Yeah. Our next question comes from Andrew King with Rosenblatt Securities.

Speaker #5: Yeah.

Speaker #1: Our next question comes from Andrew King with Rosenblatt Securities.

Andrew King: Hey there. Thanks for taking my question, and congrats on the really strong quarter. Just wanted to double-click on that Ren win in Japan. It was really notable because it's the first time I can remember hearing of ZVA being deployed for outbound engagement rather than traditional inbound deflection. How large is that outbound ZVA opportunity in your view? Is this an emerging use case that you're looking to actively build go-to-market around, and is there any needed pricing change for the outbound versus inbound? Thank you.

Speaker #4: Hey there. Thanks for taking my question, and congrats on the really strong quarter. Just wanted to double-click on that Renzo win in Japan. It was really notable because it's the first time I can remember hearing of ZVA being deployed for outbound engagement rather than traditional inbound deflection.

Speaker #4: How large is that outbound ZVA opportunity, in your view? And is this an emerging use case that you're looking to actively build go-to-market around?

Speaker #4: And is there any needed pricing change for the outbound versus inbound? Thank you.

Speaker #2: So those are two different use cases. It's hard to say which one is bigger because you are so right. And naturally, you think probably focus on inbound.

Eric Yuan: Those are two different use cases. It is hard to say which one is bigger because you are so right, and naturally, you think probably focused on inbound. That is not the case because you look at the technology, outbound, right? I think it might be even larger, right? Because more and more, the companies, right, they want to leverage AI technology to reach as many customers as possible, right? That is why outbound, I feel like even more opportunity. Again, the same technology, same technology stack. We just focused on all those different use cases, right? That is kind of the platform approach. Yeah, when we started a few years ago, we also just focused on inbound. Now I feel like outbound, inbound, sometimes it is hybrid, I think will bring us a lot of new, exciting opportunities.

Speaker #2: That's not the case, because you look at the technology outbound, right? I think, even in my view, even larger, right? Because more and more, the companies, right?

Speaker #2: They want to leverage AI technology to reach as many customers as possible, right? And that's why outbound—I feel like there's even more opportunity. Again, it's the same technology, same technology stack.

Speaker #2: We just focus on all those different use cases, right? That's kind of the platform approach. And yeah, when we started, like a few years ago, we also just focused on inbound.

Eric Yuan: That is kind of the platform approach. Yeah, when we started a few years ago, we also just focused on inbound. Now I feel like outbound, inbound, sometimes it is hybrid, I think will bring us a lot of new, exciting opportunities.

Speaker #2: And now I feel like outbound, inbound, sometimes hybrid—I think will bring us a lot of new, exciting opportunities.

Speaker #4: And then, just any comments on if there's any needed pricing structure changes between outbound versus inbound?

Andrew King: Just any comments on if there's any needed pricing structure changes between outbound versus inbound?

Eric Yuan: It's a great question. I think inbound might more like use it outcome-based. Outbound, we also want to focus on the outcome-based, right? I think that model customer resonate very well, right? If I reach 1,000 prospects to leverage our technology, right, and only 5 out of 1,000 reply back, you get the leads, I think that don't make any sense, right? That's why outcome-based model, I think, is more for outbound.

Speaker #2: It's a great question. I think inbound, more like a usage or outcome-based. Outbound, we also want to focus on the outcome-based—asking that model, customers resonated very well, right?

Speaker #2: If I reach, like, 1,000 prospects to leverage our technology, right? Only five out of 1,000 reply back, you get the least. I think it doesn't make any sense, right?

Speaker #2: So that's why the outcome-based model, I think, is more and more for outbound.

Andrew King: Got it. Thank you.

Speaker #4: Got it. Thank you.

Eric Yuan: Yeah. Thank you.

Speaker #2: Yeah. Thank you.

Charles Eveslage: Our next question comes from Peter Weed with Bernstein. there we go.

Operator: Our next question comes from Peter Weed with Bernstein. there we go.

Speaker #1: Our next question comes from Peter Weed with Bernstein.

Speaker #5: And there we go.

Peter Weed: Sorry, I'm out here. Harder to get unmuted. I think you've talked about this in the past, but maybe remind us, CCaaS is obviously doing really well for you guys. If we look forward, one of the areas where there seems to be a lot of pressure from AI is perhaps the scale of people employed in contact centers. How do you see that impacting your revenue opportunity and when you look at how you can price and maybe get value, how you kind of stay away from seat-based potential challenges there?

Speaker #6: Sorry, I'm out of the airport. Harder to get unmuted. I think you've talked about this in the past, but maybe remind us. This is obviously doing really well for you guys.

Speaker #6: But if we look forward, one of the areas where there seems to be a lot of pressure from AI is perhaps the scale of people employed, etc.

Speaker #6: How do you see that impacting your revenue opportunity? And kind of, when you look at how you can price and maybe get value, how do you kind of stay away from fees, potential challenges then?

Eric Yuan: Michelle, you want to address that?

Speaker #2: I mean, do you want to address that?

Michelle Chang: You cut out a little bit, Peter, there. I think your question was sort of how do we find the right balance between sort of consumptive and per user business models. Did I get it right?

Speaker #3: You cut out a little bit, Peter, there, but I think your question was sort of how do we find the right balance between sort of consumptive and per-user business models.

Speaker #3: Did I get it right?

Peter Weed: Well, I think very specifically in contact center itself.

Speaker #2: Well, and I think very specifically in contact center itself.

Michelle Chang: Perfect

Speaker #3: Perfect.

Peter Weed: where I think there's some pressure maybe.

Speaker #2: Where I think there's some pressure, maybe.

Michelle Chang: Yeah. This is a good one because it's actually I think a little bit different for Zoom than it is maybe some of the legacy players. Look, legacy players have, and part of why I think you're seeing this win, I think Eric gave it, but if not, 8 of 10 were legacy displacements of our top 10 deals in contact center. Look, it's because we don't have the tech debt. We come at contact center with a very fresh and modern approach, an AI-first approach. To your question maybe more specifically, we also don't have the business model pressure. Look, our agent-assisted product, we have a per user, 3-tiered structure, kind of good, better, best. Best being the elite, where we kind of get to the AI value.

Speaker #3: Yeah, so this is a good one because it's actually, I think, a little bit different for Zoom than it is maybe some of the legacy players.

Speaker #3: Look, legacy players have, and part of why I think you're seeing this win—I think Eric gave it—but if not, 8 of 10 were legacy displacements of our top 10 deals in contact center.

Speaker #3: And look, it's because we don't have the tech debt. We come at Contact Center with a very fresh and modern approach, and an AI-first approach.

Speaker #3: To your question, maybe more specifically, we also don't have the business model pressure. And so, look, our agent-assisted product—we have a per-user, three-tiered structure: kind of good, better, best.

Michelle Chang: Look, our agent-assisted product, we have a per user, 3-tiered structure, kind of good, better, best. Best being the elite, where we kind of get to the AI value. Increasingly, we're introducing where I think the market is going, and Eric touched on this a little bit earlier, a more consumptive-based business model, potentially outcomes one base, and that is the pricing structure for ZVA. Zoom added a new, really important layer this quarter of insights to be able to look across that entire stack, and that is consumptive as well.

Speaker #3: Best being the elite, where we kind of get to the AI value. And increasingly, we're introducing—where I think kind of the market is going, and Eric touched on this a little bit earlier.

Michelle Chang: Increasingly, we're introducing where I think the market is going, and Eric touched on this a little bit earlier, a more consumptive-based business model, potentially outcomes one base, and that is the pricing structure for ZVA. Zoom added a new, really important layer this quarter of insights to be able to look across that entire stack, and that is consumptive as well.

Speaker #3: A more consumptive-based business model potentially outcomes one base, and that is the pricing structure for ZVA. And Zoom added a new, really important layer this quarter of insights to be able to look across that entire stack, and that is consumptive as well.

Speaker #2: So yeah, Peter, from a high level, let's say any customer, if they are going to hire more and more human agents, it's great. They can deploy more Zoom ZCX seats.

Eric Yuan: Yeah, Peter, from a high level, let's say any customer, if they are going to hire more and more human agent, it's great. They can deploy more Zoom CX seats. If they do not want to hire more human agent, guess what? They can deploy more Zoom ZVA as well, right? We are giving customer a very flexible solution.

Speaker #2: If you don't want to hire more human agents, guess what? They can deploy more Zoom ZVA as well, right? So, we are giving customers a very flexible solution.

Peter Weed: I appreciate it. Thank you.

Eric Yuan: Thank you, Peter.

Speaker #2: Thank you, Peter.

Charles Eveslage: Our next question comes from Peter Levine with Evercore.

Operator: Our next question comes from Peter Levine with Evercore.

Speaker #1: Our next question comes from Peter Levine with Evercore.

[Analyst] (Evercore): Hey, guys. This is Charles for Peter. Thanks very much for taking our question and congrats on the strong quarter. Michelle, one for you on capital returns. With the new $1 billion authorization on top of the $6.5 million remaining

Speaker #7: Hey, guys, this is Charlie for Peter. Thanks very much for taking our question, and congrats on the strong quarter. Michelle, one for you on capital returns.

Speaker #7: What's the new $1 billion authorization on top of the $625 million remaining? You now have about $1.6 billion of buyback capacity against almost $8 billion of cash.

[Analyst] (Evercore): You now have about $1.6 billion of buyback capacity against almost $8 billion of cash.

Michelle Chang: Yeah.

Speaker #7: And I think last quarter you framed buyback as a minimum offsetting dilution, but the size of this incremental authorization feels like a step in posture.

[Analyst] (Evercore): I think last quarter, you framed buyback as a minimum offsetting dilution.

Michelle Chang: Yeah.

[Analyst] (Evercore): The size of this incremental authorization feels like a step up in posture. How should we best think about the pace and size of buybacks from here? Thanks again, guys.

Speaker #7: And how should we best think about the pace and size of buyback from here? Thanks again, guys.

Michelle Chang: Yeah. I don't see it as different. I think this is an area where investors have given Zoom feedback. We do have a large cash balance, even though it went down. We're a very free cash flow generative company. Look, I'm proud of the progress that we've made in buybacks. I don't necessarily think about it per se by tranche. We tend to think more holistically. We've authorized $4.7 billion in total. That's been a big change for Zoom, and now we've executed against $3.1 billion of that. We have $1.6 billion remaining, and we're going to leverage that. We think that's a great sign, this latest tranche, of confidence that Eric, myself, and the board have in where Zoom is going. Look, we'll leverage that as it makes sense relative to what's going on in the market and stock price.

Speaker #3: Yeah, I mean, I don't see it as different. I think this is an area where ambassadors have given Zoom feedback. We do have a large cash balance, even though it went down.

Speaker #3: We're a very free cash flow generative company. And look, I'm proud of the progress that we've made in buybacks. And I don't necessarily think about it, per se, by tranche.

Speaker #3: So, we tend to think more holistically. We've authorized $4.7 billion in total. That's been a big change for Zoom. And now we've executed against $3.1 billion of that.

Speaker #3: And so, look, we have $1.6 billion remaining, and we're going to leverage that. We think that's a great sign—this latest tranche of confidence that Eric, myself, and the board have in where Zoom is going.

Michelle Chang: We think that's a great sign, this latest tranche, of confidence that Eric, myself, and the board have in where Zoom is going. Look, we'll leverage that as it makes sense relative to what's going on in the market and stock price. It's something I wouldn't get overly thinking about a particular tranche rather than keeping the kind of broader perspective in mind.

Speaker #3: And look, we'll leverage that as it makes sense relative to what's going on in the market and stock price. But it's something I wouldn't get overly thought or thinking about at a particular tranche, rather than keeping the kind of broader perspective in mind.

Michelle Chang: It's something I wouldn't get overly thinking about a particular tranche rather than keeping the kind of broader perspective in mind.

Thomas Blakey: Great. Thank you.

[Analyst] (Evercore): Great. Thank you.

Speaker #7: Great. Thank you.

Michelle Chang: Yeah.

[Company Representative] (Zoom): Our last question today comes from Thomas Blakey with Cantor Fitzgerald.

Operator: Our last question today comes from Thomas Blakey with Cantor Fitzgerald.

Speaker #1: Our last question today comes from Tom Blakey with Cantor Fitzgerald.

Thomas Blakey: Oh, I think I'm on there. Thank you, Eric and Michelle, for taking the question. Maybe as a final question, it's a good wrap-up here. I think with the big AI disruption that you were hinting at, Eric, could you just maybe talk about the durability of the communications app, if you will, the communications layer when you talk with customers? Maybe as a secondary to that, just what is the strategic value of the data, the real-time data that you can bring to AI applications when you talk to your customers to kind of illuminate the value proposition of what Zoom is selling to these large customers? Thank you.

Tom Blakey: Oh, I think I'm on there. Thank you, Eric and Michelle, for taking the question. Maybe as a final question, it's a good wrap-up here. I think with the big AI disruption that you were hinting at, Eric, could you just maybe talk about the durability of the communications app, if you will, the communications layer when you talk with customers? Maybe as a secondary to that, just what is the strategic value of the data, the real-time data that you can bring to AI applications when you talk to your customers to kind of illuminate the value proposition of what Zoom is selling to these large customers? Thank you.

Speaker #8: Oh, I think I'm on there. Thank you, Eric and Michelle, for taking the question. Maybe as a final question, it's a good wrap-up here.

Speaker #8: I think with the big AI disruption that you were hinting at, Eric, could you just maybe talk about the durability of the communications app, if you will—the communications layer—when you talk with customers? And maybe as a secondary to that?

Speaker #8: Just what is the strategic value of the data? The real-time data that you can bring to AI applications when you talk to your customers to kind of illuminate the value proposition of what Zoom is selling to these large customers?

Speaker #8: Thank you.

Speaker #2: Well, Tom, thank you. I wish you were the first one to ask this question, because those two are the most important questions in my view.

Eric Yuan: Tom, thank you. I wish you are the first one to ask me this question, because those 2 are the most important questions in my view. I think first of all, you look at the product AI era for any of us to complete a task, normally it will need 2 steps, right? Step 1, you and I have a Zoom call or in-person conversation. Let's say I'm a sales rep. I talk with you are a potential customer. After Zoom call, guess what? I look at my manual notes and log into the backend system and how big is this deal and so on and so forth. I just update the backend system. That's 2-step process. In the AI era, with AI technology, it become 1 step.

Speaker #2: So I think, first of all, you look at the product AI era. For any of us to complete a task, normally it will need two steps, right?

Speaker #2: Step one: you and I have a Zoom call or in-person conversation, right? Let's say I'm a sales rep; I talk with you—you are a potential customer.

Speaker #2: After the Zoom call, guess what? I look at my manual notes, and I log into the backend system. And how big is this deal, and so on and so forth, right?

Speaker #2: Just update the backend system. That's a two-step process. In the AI era, with AI technology, it becomes one step. Zoom interface will remain the same, but after the Zoom conversations, my agent will automatically get the work done for me.

Eric Yuan: Zoom interface will remain the same, but after Zoom conversations were, my agent will automatically get the work done for me. That's a beautiful part of the AI. I dramatically automated all those work I used to spend a lot of time working on. Another example, like a doctor and a patient. Spend a certain minute talking to a patient. After the conversation with the patient, they need to spend a lot of time to update Epic. Now with AI, everything can be done automatically. That's why Zoom is become the human-to-human interaction not only remain the same, but become more and more important because Zoom conversation will generate a lot of very meaningful important asset or data to help you drive your next step. I call that a context layer. Let's take this Zoom call, for example.

Speaker #2: Right? That's a beautiful part of the AI. I dramatically automated all that work I used to spend a lot of time working on. Another example—like a doctor and a patient.

Speaker #2: You spend 30 minutes talking to a patient. After the conversation, the patient says they need to spend a lot of time to update Epic. Now, with AI, everything can be done automatically, right?

Eric Yuan: That's why Zoom is become the human-to-human interaction not only remain the same, but become more and more important because Zoom conversation will generate a lot of very meaningful important asset or data to help you drive your next step. I call that a context layer. Let's take this Zoom call, for example.

Speaker #2: That's why Zoom has become the human-to-human interaction—not only remain the same, but become more and more important—because Zoom conversation will generate a lot of very meaningful, important assets, data to help you drive your next step.

Speaker #2: I call that a context layer. Let's take this Zoom call, for example. After this Zoom call, Zoom, I have a huge context. How to leverage AI?

Eric Yuan: After this Zoom call is over, I have a huge context how to leverage the AI, generate the insights, the tasks, to get this thing done. I think we're uniquely positioned because of AI, because of human-to-human interaction.

Speaker #2: Generate insights, tasks, get the thing done. I think about uniquely positioned because of AI, because of human-to-human interaction. Because I cannot imagine, right? Your agent and my agent are talking to each other.

Thomas Blakey: Thank you, Eric.

Tom Blakey: Thank you, Eric.

Eric Yuan: Because I cannot imagine, your agent and my agent talk with each other. We are now going to use Zoom. It would never work, in my view. That's why Zoom call will become more important in the AI era.

Speaker #2: We are not going to use Zoom. It will never work, in my view. So that's why Zoom calls will become more important in the AI era.

Thomas Blakey: Yeah. Can't be displaced. That's great.

Tom Blakey: Yeah. Can't be displaced. That's great.

Speaker #8: Yeah, it can't be displaced, so that's great.

Eric Yuan: Absolutely. Otherwise, what do we do? If you're sending your agent and my agent to work together, it's never worked, in my view.

Speaker #2: Absolutely. Otherwise, what do we do? If you send your agent and my agent to work together, it has never worked, in my view.

Speaker #8: Thank you, Eric. Thank you, Michelle.

Thomas Blakey: Thank you, Eric. Thank you, Michelle.

Tom Blakey: Thank you, Eric. Thank you, Michelle.

Eric Yuan: Thank you.

Speaker #2: Thank you.

[Company Representative] (Zoom): We have one more question today from Arjun Bhatia from William Blair.

Operator: We have one more question today from Arjun Bhatia from William Blair.

Speaker #1: We have one more question today from Arjun Bhatia from William Blair.

Arjun Bhatia: Oh, perfect. Thank you. Let me see. I got to change my camera. Well, there we go. Thanks for taking the question. Congrats on the strong quarter. Eric, actually, I'll follow up on that last question because I think one of the important, or interesting rather, use cases or customer examples you pointed out in the prepared remarks was the Mongo example, where they were basically taking actions in CRM ticketing from a Zoom conversation. How aware are customers that Zoom can do this, and that you are becoming this system of action? Maybe what do you need to do on the go-to-market side to really raise awareness that, hey, we're kind of evolving as a company, and it's becoming a lot more strategic?

Speaker #9: Oh, perfect. Thank you. Let me see. I've got to change my camera. Wow. There we go. Thanks for taking the question. Congrats on the strong quarter.

Speaker #9: Eric, actually, I'll follow up on that last question because I think one of the important, or interesting rather, use cases or customer examples you pointed out in the prepared remarks was the Mongo example, where they were basically taking actions in CRM ticketing from a Zoom conversation. But how aware are customers that Zoom can do this?

Speaker #9: Right? And that you are becoming this system of action? And maybe, what do you need to do on the go-to-market side to really raise awareness that, hey, we're kind of evolving as a company, and it's becoming a lot more strategic?

Arjun Bhatia: Maybe what do you need to do on the go-to-market side to really raise awareness that, hey, we're kind of evolving as a company, and it's becoming a lot more strategic?

Eric Yuan: Yeah. It's a great question. First of all, we have a new release next month, based on all the customer feedback, for sure that from a quality, from a feature perspective, much better. Afterwards, you're also right, we just need to double down on go-to-market side and make sure everyone are aware of that. For sure, we have a little bit of awareness problem. Customers do not know that. At the same time, a huge opportunity. I think internally, based on our Zoom employee feedback, a lot of information, wow, I did not realize you can do this, can do that. I think it does tell us, the product is ready, and we just need to turn on our marketing machine and make sure every of our customer, they can turn on those very cool features.

Speaker #2: Yeah, it's a great question. First of all, we have a new release next month. And based on all the customer feedback, for sure, from a quality and a feature perspective, it's much better.

Speaker #2: And afterwards, you're so right. We generally double down on the go-to-market side and make sure everyone is aware of that. For sure, we have a little bit of an awareness problem.

Speaker #2: Customers do not know that. But at the same time, the huge opportunity. And I think internally, based on our Zoom employee feedback, a lot of information—wow, I did not realize you can do this, can do that.

Speaker #2: I think it does tell us. And the product is ready. And we just need to think on our marketing machine and make sure every one of our customers, they can think on those very cool features.

Eric Yuan: I think it does tell us, the product is ready, and we just need to turn on our marketing machine and make sure every of our customer, they can turn on those very cool features. That's exactly our focus in the next few months and quarters.

Speaker #2: And that's exactly our focus in the next few months and quarters. If you have any good ideas, please let us know. I really appreciate it.

Eric Yuan: That's exactly our focus in the next few months and quarters.

Arjun Bhatia: Great.

Eric Yuan: If you have any good idea, please let us know. I really appreciate.

Arjun Bhatia: Yes. I will keep you posted. Thank you so much. Appreciate it.

Speaker #9: Yes, I will keep you posted. Yeah, thank you so much. Appreciate it.

Speaker #2: Thank you.

Eric Yuan: Thank you.

Michelle Chang: Yeah.

Speaker #1: Yep. This concludes the Q&A portion of today's call. I'll turn it back over to Eric for closing remarks.

[Company Representative] (Zoom): This concludes the Q&A portion of today's call. I'll now turn it back over to Eric for closing remarks.

Operator: This concludes the Q&A portion of today's call. I'll now turn it back over to Eric for closing remarks.

Eric Yuan: Yes, thank you to every great customers, partners, Zoom employees, and also thank you to our beloved investors. I truly appreciate for your continued support. We are going to work as hard as we can in the AI era to keep building some innovative solutions to delight our customers. See you next quarter. Thank you.

Speaker #2: Yes. Thank you to every great customer, partner, Zoom employee, and also thank you to our beloved investors—truly appreciate your great support. And we are going to work as hard as we can in the AI era to keep building some innovative solutions to delight our customers.

Speaker #2: See you next quarter. Thank you.

[Company Representative] (Zoom): This concludes today's earnings call. Thank you all for attending, and have a great rest of your day.

Operator: This concludes today's earnings call. Thank you all for attending, and have a great rest of your day.

Speaker #1: This concludes today's earnings call. Thank you for all for attending and have a great rest of your day.

Operator: Goodbye