Q2 2027 Zoom Video Communications Inc Earnings Call
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Speaker #2: Of elevating workplace with workplace with AI, scaling AI-first AI, scaling AI-first customer customer experience, and driving growth in experience, and driving growth in new AI new AI products.
Speaker #2: Of elevating
Speaker #2: products. This progress This progress reflects our success in reflects our success in bringing our bringing our AI-first system of AI-first system of action vision action vision to life, helping to life, helping customers reduce customers reduce costs and create greater costs and create greater business business value.
Speaker #2: That vision is grounded value. That vision is grounded in Zoom in Zoom Workplace, which we Workplace, which we continue to enhance continue to enhance with with AI.
Speaker #2: Across AI. Across Workplace and our broader Workplace and our broader communications communications platform, AI is becoming platform, AI is becoming increasingly increasingly embedded in how users work embedded in how users work throughout the throughout the communication and collaboration communication and collaboration lifecycle.
Speaker #2: lifecycle. Licensed monthly Licensed monthly active users of active users of our AI our AI features in Workplace features in Workplace grew grew 125% year over 125% year over year, we year, we are even more encouraged by are even more encouraged by the broadening the broadening engagement, which has expanded engagement, which has expanded from reactive from reactive communication communication summaries into summaries into active querying and building active querying and building workflows, workflows, turning insights into action turning insights into action and conversations and conversations into into outcomes.
Speaker #2: Our outcomes. Our wins in Q2 wins in Q2 speak to our growing speak to our growing ability to win ability to win as a system of as a system of action for modern action for modern work.
Speaker #2: We work. We saw one of the saw one of the largest U.S. tech largest U.S. tech companies renew Zoom companies renew Zoom Workplace in a deal that Workplace in a deal that expanded its expanded its ARR by ARR by $1.9 1.9 million dollars, driven by million.
Speaker #2: Driven by the deep employee the deep employee appreciation for appreciation for the Zoom meetings and rooms the Zoom meetings and rooms experience experience, our AI vision and our our AI vision and our ability to ability to integrate and coexist with integrate and coexist with Google Google Workspace.
Speaker #2: Workspace. With With ARR growing in the ARR growing in the teens, teens, Zoom phone continues to Zoomphone continues to demonstrate its value demonstrate its value both as a natural both as a natural add-on to add-on to Zoom Workplace and Zoom Workplace and increasingly as a increasingly as a driver to broader platform driver to broader platform adoption.
Speaker #2: adoption. We saw both We saw both dynamics in dynamics in Q2: a Q2: a major U.S. major U.S. wealth manager upgraded wealth manager upgraded to Zoom to Zoom Workplace Enterprise Workplace Enterprise Premiere, including a Premier, including a wall-to-wall rollout of wall-to-wall rollout of Zoomphone, Zoom phone, replacing multiple replacing multiple vendors.
Speaker #2: Zoom phone is also vendors. Zoomphone is also creating creating pull-through for our pull-through for our broader broader platform. For example, platform. For example, QXO, QXO, a large North American a large North American distributor and distributor and installer of building products, installer of building products, chose Zoomphone chose Zoom phone company-wide for company-wide for roughly roughly $8,000 employees $8,000 employees alongside Zoom alongside Zoom contact center to unify Contact Center to unify their their UCaaS and CCaaS UCaaS and CCaaS systems, integrate systems, integrate with Microsoft Teams, and with Microsoft Teams, and automatically automatically drive CRM updates drive CRM updates from live from live interactions.
Speaker #2: We interactions. We were also very were also very pleased with the progress pleased with the progress of our of our employee experience offering employee experience offering within our system within our system of of action.
Speaker #2: In action. In Q2, a leading U.S. Q2, a leading U.S. insurer and major insurer and major Zoom Workplace and phone user Zoom Workplace and phone user expanded expanded into WorkVivo, into WorkVivo, marking one of marking one of WorkVivo's largest WorkVivo's largest-ever deals as it ever deals as it also surpassed also surpassed 100 million 100 million dollars in dollars in ARR.
Speaker #2: We are ARR. We are also priming WorkVivo for also priming WorkVivo for the AI era by the AI era by launching WorkVivo launching WorkVivo HQ, an HQ, an AI-native digital AI-native digital headquarters, built headquarters, built on Zoom's AI on Zoom's AI technology, technology, bringing communication, bringing communication, knowledge, and action knowledge, and action together for every together for every employee.
Speaker #2: employee. On a global luxury On a global luxury retail brand, retail brand, selected WorkVivo selected WorkVivo HQ as their HQ as their employee experience employee experience platform and will deploy platform and will deploy WorkVivo HQ WorkVivo HQ agent to give agent to give thousands of frontline thousands of frontline workers faster workers faster access to answers from access to answers from their policies and their policies and databases.
Speaker #2: As you can databases. As you can see, customers are see, customers are choosing Zoom as choosing Zoom as an AI-first, an AI-first, secure, secure, integrated multi-product system of integrated multi-product system of action, action, sometimes displacing multiple sometimes displacing multiple vendors, other times vendors, other times coexisting with coexisting with them.
Speaker #2: This them. This progress exemplifies our progress exemplifies our ability to ability to meet customers where they meet customers where they are, turn are, turn conversations into business conversations into business value, while value, while driving durable platform driving durable platform expansion for expansion for Zoom.
Speaker #2: Zoom. Customer experience is a clear Customer experience is a clear example of example of our platform our platform strategy translating strategy translating into growth and direct into growth and direct AI AI monetization.
Speaker #2: In monetization. In Q2, Q2, Zoom CX Zoom CX ARR continued to ARR continued to grow at a high grow at a high double-digit double-digit year-over-year rate, and we set year-over-year rate and we set a record for the a record for the number of number of 7-figure 7-figure ARR deals.
Speaker #2: ARR deals. AI continues AI continues to drive this to drive this momentum, with paid momentum, with paid AI in 9 of the top AI in 9 of the top 10 Zoom 10 Zoom CX deals, showing growing CX deals showing growing demand for a system demand for a system of action that connects of action that connects automation, automation, human agents, and human agents, and intelligence.
Speaker #2: We intelligence. We saw rapid saw rapid adoption in Zoom adoption in Zoom Virtual Agent, Virtual Agent, both as a Zoom both as a Zoom Contact Center attach contact center attach and as a standalone and as a standalone offering with its offering, with its customer count growing more customer count growing more than than 250% year over 250% year over year.
Speaker #2: ZVA's voice year. ZVA's voice and chat and chat agents go beyond agents go beyond simply answering simply answering questions; they resolve questions; they resolve issues issues complete multi-step complete multi-step workflows and escalate workflows and escalate to human agents with full to human agents with full context when context when needed.
Speaker #2: This needed. This validates our validates our vision of moving vision of moving customers from customers from chatbots to resolution chatbots to resolution agents, agents, turning conversations into turning conversations into resolved resolved outcomes at outcomes at scale.
Speaker #2: scale. Increasingly, customers are Increasingly, customers are going all going all in on Zoom in on Zoom CX, combining CX, combining our virtual agent and our virtual agent and agent-assisted agent-assisted AI solutions to AI solutions to enable seamless enable seamless transitions from automated transitions from automated self-service to self-service to human support.
Speaker #2: For human support. For example, in Q2, one of the example, in Q2, one of the largest U.S. largest U.S. banks chose banks chose ZVA, while ZVA, while expanding its expanding its existing existing ZCC Elite deployment to ZCC Elite deployment to enable enable self-service alongside self-service alongside AI-assisted human AI-assisted human support, helping them scale to support, helping them scale to meet surging meet surging helpdesk helpdesk volume.
Speaker #2: For volume. For others, the value others, the value is in breaking down is in breaking down the fragmentation the fragmentation between UCaaS between UCaaS and CCaaS solutions and and CCaaS solutions and bringing bringing communications onto a unified communications onto a unified platform.
Speaker #2: In Q2, a platform. In Q2, a leading enterprise leading enterprise software company selected software company selected ZVA Voice ZVA Voice as a natural extension as a natural extension to to Zoom phone, as they look to modernize their customer experience.
Speaker #2: We also saw a major Zoom Phone, as they look to modernize their customer experience. We also saw a major.
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Speaker #2: Our progress in enhancing Workplace and scaling customer experience gives us a natural foundation from which to deliver new AI value to our customers in horizontal and vertical scenarios.
Speaker #2: In horizontal AI, we launched Zoom Mate in June, bringing our system of action strategy to life for our workplace users through AI-first productivity tools, agentic search, and agentic workflows.
Speaker #2: We've already seen interest spanning our Zoom Workplace base, from small businesses to the world's largest enterprises. By combining Zoom conversation data and proprietary intelligence with other enterprise systems, Zoom Mate turns conversations into completed work and business value.
Speaker #2: In Q2, we were delighted to see the University of Newcastle in Australia already a full-platform Zoom customer. Adding Zoom Mate will further enhance its collaboration and communication capabilities.
Speaker #2: As we expand this system of action across the enterprise, we are using Zoom's unique position in live communications to capture context and intent, and apply that intelligence to vertical workflows.
Speaker #2: Sales is a strong example. Zoom Revenue Accelerator, our revenue orchestration solution, turns live sales conversations into intelligence that supports coaching and action to improve seller productivity and win rates.
Speaker #2: ZRA had another strong quarter, with paid customers growing 41% year over year. Common Room extends this value upstream, creating a fuller end-to-end revenue intelligence and orchestration solution together with ZRA and the broader Zoom platform.
Speaker #2: We closed the acquisition in mid-July, adding buyer intelligence that unifies fragmented signals to identify in-market accounts, key buyers, and the right reasons to engage.
Speaker #2: In Q2, Okta expanded their Common Room contract as they looked to further capture the value that AI-driven buyer intelligence delivers by consolidating customer insights across platforms and surfacing real-time buyer signals to convert deals into wins faster.
Speaker #2: Across our three priorities, the common thread is clear: Zoom is deepening its value to our customers as a system of action. We are embedding AI across our platform to turn conversational context into action and deliver what customers want.
Speaker #2: Real AI value that produces outcomes. We are encouraged by the momentum across our platform and proud of our progress expanding AI monetization to drive durable growth and, most importantly, deliver enduring value for our customers.
Speaker #2: Michelle, via Zoom custom avatar, will now take us through our Q2 financial results. Michelle?
Speaker #3: Thank you, Eric, and hello everyone. I'm excited to be with you today to share Zoom's Q2 FY2027 financial performance. In Q2, total revenue grew 4.9% year over year to $1.28 billion, or 4.7% in constant currency.
Speaker #3: This result was $7 million above the high end of our guidance. Our enterprise business drove the outperformance, with revenue growing 7.8% year over year, representing 62% of our total revenue, up 2 points year over year.
Speaker #3: In our online business, Q2 average monthly churn was 2.9%, in line with Q2 of last year. 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.
Speaker #3: 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 Q2 was 99%, up 1 point from the prior year period and in line with the prior quarter.
Speaker #3: Looking at our international growth, our Americas revenue grew 6% year over year, EMEA grew 2%, and APAC grew 4%. Moving to our non-GAAP results, which, as a reminder, exclude stock-based compensation expense and associated payroll taxes, net litigation settlements, acquisition-related expenses, net gains or losses on strategic investments, and all associated tax effects.
Speaker #3: Non-GAAP gross margin in Q2 was 79.1%, compared to 79.8% in Q2 of last year. We continue to deliver strong gross margins as we broaden our AI product portfolio and optimize for scaling customer adoption.
Speaker #3: Non-GAAP income from operations grew 1% year over year to $510 million, in line with our guidance. Non-GAAP operating margin for Q2 was 40%, compared to 41.3% in Q2 of last year.
Speaker #3: We continue to deliver very strong operating margins while improving top-line growth as we further invest in our growing portfolio of AI products and drive future efficiencies in our AI infrastructure.
Speaker #3: Non-GAAP diluted net income per share in Q2 increased to 1 dollar and 55 cents on approximately 300 million non-GAAP diluted weighted average shares outstanding, this result was 8 cents above the high end of our guidance and 2 cents higher than Q2 of last year.
Speaker #3: The EPS growth reflects strong top-line performance as well as anti-dilution, driven by our buyback program and disciplined stock compensation management. Turning to the balance sheet.
Speaker #3: Deferred revenue at the end of Q2 grew 6% year over year to $1.56 billion, above the high end of our previously provided range of 2% to 3%.
Speaker #3: For Q3, we expect deferred revenue to be up 3% to 4% year over year. Looking at both our billed and unbilled contracts, our RPO increased 14% year over year to approximately $4.5 billion, driven by non-current RPO growth of 25%.
Speaker #3: The strong growth in RPO reflects our continued success landing larger, longer-term, multi-product platform deals, demonstrating growing demand for our AI-first platform. In Q2, operating cash flow was $495 million, representing an operating cash flow margin of 38.7%.
Speaker #3: Free cash flow in the quarter was $472 million, representing a free cash flow margin of 37%. We ended the quarter with $7.2 billion in cash, cash equivalents, and marketable securities, excluding restricted cash.
Speaker #3: In Q2, we repurchased 3.7 million shares for approximately $352 million. Across our $4.7 billion share repurchase plan, we've repurchased a total of 44.2 million shares for $3.4 billion.
Speaker #3: Turning to guidance. For Q3, we expect revenue to be in the range of $1.275 to $1.28 billion, representing 3.9% year-over-year growth at the midpoint.
Speaker #3: We expect non-GAAP operating income to be in the range of $510 to $515 million, representing an operating margin of 40.1% at the midpoint.
Speaker #3: Our outlook for non-GAAP earnings per share is 1 dollar and 46 cents to 1 dollar and 48 cents based on approximately 301 million shares outstanding.
Speaker #3: For the full year of FY27, we are excited to raise our revenue and EPS guidance. We now expect revenue to be in the range of $5.085 to $5.095 billion, which represents 4.5% year-over-year growth at the midpoint.
Speaker #3: Our increased revenue outlook assumes enterprise revenue growing faster than expected, partially offset by flat online growth. We continue to 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 #3: In addition, our outlook for non-GAAP earnings per share in fiscal year 27 is increasing to 6 dollars and 8 cents to 6 dollars and 12 cents, based on approximately 301 million shares outstanding.
Speaker #3: As a reminder, future share repurchases are not reflected in share count and EPS guidance. We are also pleased to raise our free cash flow outlook for the full year, which we now expect to be in the range of $1.78 to $1.82 billion.
Speaker #3: This raise reflects the strength in free cash flow in the first half, as well as a downward revision in our capex spend for the year.
Speaker #3: In closing, Q2 was a good quarter, with continued execution across our three priorities and growing adoption of Zoom as an AI-first system of action.
Speaker #3: We are pleased with our progress in AI monetization, led by customer experience and 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 #3: Thank you to our customers and investors, and, of course, the entire Zoom team for your trust and support. With that, Catherine, please queue 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.
Speaker #1: As a reminder, in an effort to hear from everyone, please limit yourself to one question. Our first question will come from Matt Bullock with Bank of America.
Speaker #2: Hey everyone, good to see you—Michelle and Eric. It's nice to be working with you again. I was maybe hoping, Michelle and Eric, you could elaborate on what you're seeing in terms of phone demand and customer purchasing behavior.
Speaker #2: In the second quarter, and then maybe help us think through the outlook for modeling the rest of the year. Thanks.
Speaker #1: And your latter part of your question, Matthew, is on the entirety of the business, or Phone uniquely?
Speaker #2: Phone specifically.
Speaker #1: Yep. Eric, did you want to lead off, or I'm happy to take this one as well? Yeah. So, look, we're really encouraged with our phone results.
Speaker #1: You saw us highlight a lot of the things about what continues to be in teen growth. Let me maybe give a little bit of context and color.
Speaker #1: Matthew, to other dimensions that we're seeing—I think we're seeing strong takeout motions. Ten of our top ten deals were takeouts. We're seeing continued strength in verticals and international.
Speaker #1: We're seeing that continued UCaaS and CCaaS. And then maybe two new elements within Phone before I flip to talking about the revenue guide that I would call out. I think, increasingly, it's going to be a great pathway to other AI monetization.
Speaker #1: Meaning we're seeing it set up a lot of ZRA deals, Zoom-made deals, Zoom virtual AI receptionist deals, so we're encouraged by that. And we're also seeing strong momentum in our Teams integration.
Speaker #1: So, with respect to our guide, look, it represents a constant currency beat and raise. We're pleased with the progress for the full year. It's a raise from where we came in at the beginning, which was at 4.1% growth.
Speaker #1: So now guiding at the mid at 4.5, and that's up versus last year. And also, I'll remind investors about that headwind of a white label deal that we had that had about a 60- or 40-basis-point—excuse me—impact to the top line.
Speaker #1: Look, the fundamental headline in our growth inflection is enterprise. You saw from Eric the three-year highest growth rate. I'm sure we'll get to talking more about that.
Speaker #1: And then we tempered it slightly with results in online.
Speaker #2: That's great. And maybe just one more to follow up, if I could. It looks like this was the strongest RPO quarter in a few years—a really nice step up.
Speaker #1: Yeah.
Speaker #2: And you mentioned a couple of things: landing larger, longer-duration contracts. But I was hoping you could expand maybe on some of the underlying drivers—what you think is driving the strength and the step-up in bookings in the quarter.
Speaker #1: Yeah. Look, I think it tells the story of our enterprise business at large. Look, if you look at that 7.8, the strongest in three years, that's even with that white label churn headwind that I talked about that had about a 60 basis point impact to enterprise.
Speaker #1: You see it in the NDE inflection. And look, it's really what we've been telling investors we would work on: product diversification, AI monetization, moving upmarket, expanding in new routes to market with channel, while working our churn.
Speaker #1: And look, as we move into these different businesses, and we move into that deeper relationship that Eric talked about with our customers, it will come with longer, larger AI-related deals.
Speaker #2: Great. Thanks.
Speaker #1: Our next question comes from Sameek Chatterjee with J.P. Morgan.
Speaker #5: Hi. Hi, Eric and Michelle, thanks for taking my question. Maybe if you can talk a bit more about the record seven-figure deals that you highlighted for the quarter—how is the composition of these deals changing as you see these record deals come through?
Speaker #5: Is this being more driven by contact center seats? Are you seeing more AI attached, sort of starting to make these deals larger in size?
Speaker #5: I'm just curious—in terms of whether it's certain products that are driving some of the deal sizes to expand over time, how should we think about that?
Speaker #5: And a quick follow-up for you, Michelle, just on the gross margin side—how are you looking to sort of continuously navigate the increasing compute costs as well, particularly as we saw gross margins moderate slightly in the quarter?
Speaker #5: How do we think about managing those on an ongoing basis? Thank you. Thanks for taking my questions.
Speaker #1: Yeah, let me start with the first one. Look, I think it's both, and it's all the elements that I just talked through with Matthew on sort of the enterprise business.
Speaker #1: So I won't repeat it this step, but I think what you're referencing, however, was in Contact Center. So let me maybe make some comments about what we're seeing in Contact Center before I hit gross margin.
Speaker #1: Look, we continue to see it in high double digits. We're clearly taking share. It's driven by AI. We're winning in that market. So, we saw a record quarter of $1 million-plus deals in Contact Center, as well as we saw strength in over $100,000 and $1 million in our all-up business.
Speaker #1: And look, it's the same dynamics that we've been highlighting quarter in and quarter out with investors. We're displacing big competitors. It's off the backs of AI.
Speaker #1: And we're encouraged by our investments in channel ruling being part of that. Look, when it comes to gross margins, I think the teams have done a beautiful job in holding gross margins—best in class.
Speaker #1: They go, and they can have some variability from any quarter, one to the other. But we've been able to hold that as we shift to an enterprise business, and as AI usage goes up.
Speaker #1: We had a little bit of a growth in expenses this quarter, as we saw AI usage spike with some of our new products. And look, as is everyone, we will work to optimize that in the second half, and we continue to reiterate our comments about holding to long-term margins.
Speaker #1: Maybe let me say, I'll give you kind of the quick version of what gives us confidence in working to those margins—it's our federated approach in AI.
Speaker #1: Being able to take the best model for the right time, at the right cost, and be able to fluidly direct traffic between them, while we work to bring high volumes onto the Zoom SLM.
Speaker #1: Additionally, we sort of create products once in our core, and then we take those core technologies and infuse them throughout our products.
Speaker #1: That, together with additional areas of improvement in our core, gives us confidence in the long-term, on the long-term 80%.
Speaker #5: Thank you. Thanks for the question.
Speaker #1: Up next, we have a question from James Fish with Piper Sandler.
Speaker #6: Hey, good afternoon, guys. Thanks for the questions here. Maybe just on ZVA—there are a lot of consumption models out there for paid AI, and it's interesting seeing attach across contact center and as a standalone.
Speaker #6: I guess, how are you guys balancing or looking at consumption or usage models, rather than kind of per-seat monetization? How does that impact the model?
Speaker #6: And then secondly, you guys increased the online price back in mid-March by mid-single digits. Still not seeing much churn activity, really, and you're even seeing that 16-month-plus cohort move higher.
Speaker #6: In terms of the growth rate, I guess, how much more price elasticity do you think you have? I understand you don't typically increase price just for the sake of it.
Speaker #6: Thanks, guys.
Speaker #1: Eric, do you want to take the consumption, or do you want me to? I'm happy to take it.
Speaker #2: Yeah, yeah, go ahead. Yeah, go ahead. Yeah.
Speaker #1: Look, you know, we benefit broadly from per-user models. That's what's been the norm. But, look, the market at large is shifting to more consumptive.
Speaker #1: And so, you've seen us in ZVA, which was sort of where the root of your question was, but we also employ full consumptive, outcome-based, and a combination of per-user with a certain amount of consumptive.
Speaker #1: Look, I think there are benefits to customers on both sides of the fence, and there are learnings for everyone involved. But broadly, our approach is to match what makes sense relative to market and competitive dynamics.
Speaker #1: And ultimately, what's in the customer's best interest. Your second question about progress and online—look, I'm not going to make any comments about future pricing on that, other than to just reiterate what you were sort of noting: this is our second round of price increases.
Speaker #1: We did one for the monthly and then one annual. So you can kind of think about it as one all-up, of roughly 6% in our online business.
Speaker #1: And to your point, we didn't really see a massive—or really any—change in our churn. It remained low, and to your point, those customers that have been with us for over 16 months just continue to inflect up.
Speaker #1: So, look, we think that's a really good sign about the stability of our base. In our online business, we're going to work on sort of land and expand.
Speaker #1: And look, we contemplate price increases as we think they make sense, and we work discounts down in the enterprise. There's really nothing that I'd sort of add to it about any future plans.
Speaker #6: Thanks, Michelle.
Speaker #1: Yeah. Our next question comes from Peter Levine with Evercore.
Speaker #7: Great, thank you for taking my question. Maybe if you look at Phone ARR, it's still growing in terms of team size and scale, but I guess the question is: how much more runway do you see remaining in Phone, particularly within your existing kind of workplace install base?
Speaker #7: And if you look at phone today, is it still acting as an entry point for CX, or is it still just an add-on to meetings?
Speaker #7: Just more curious, like how much room do you have left with phone? And then Michelle, similar question with contact center. Like how much of those net new deals that you saw this quarter, which was impressive to see, were like net new customers to Zoom or are these all just kind of renewals, upsells, that you kind of saw just through execution?
Speaker #7: Thank you.
Speaker #1: Yeah, let me—I'll get to Contact Center. So, look, I think we've been growing in the teams for a while and clearly gaining share.
Speaker #1: And look, if you think about it from a market perspective, there are about, I think, 130-some-odd cloud seats and about 150 million equivalent on-prem.
Speaker #1: And so we are winning in both and feel good about our ability to capture competitive share there. And this quarter was no different. Ten of our top ten deals involved takeouts.
Speaker #1: And I'll note it can differ here from one quarter to the next, but this quarter saw a large percentage of those in online.
Speaker #1: Look, to your question of kind of the UCaaS, CCaaS synergies, about five of our top 10 phone deals had contact center in them. So it gives you a sense that, both, you’re bringing in customers outside of that, and then clearly there’s a UCaaS-CCaaS connection.
Speaker #1: And then, when I go to contact center, I think we're clearly seeing a lot of new inroads. And what I mean by that is some of them, of course, come from phone.
Speaker #1: So if you look at it, I think three of the top 10 deals in contact center had Phone on them. But then there's also a clear signal that some of them are just coming for contact center in and of themselves.
Speaker #1: And look, sometimes that comes, and I think you saw the customer examples in Eric's prepared remarks—some coming in through ZVA, some coming in through contact center.
Speaker #1: And some are going all in with Zoom from day one. So clearly, there's an AI story in contact center. Clearly, there's a competitive displacement across both.
Speaker #1: And I think these represent durable drivers for Zoom for the foreseeable future.
Speaker #7: Thank you, Michelle.
Speaker #1: Yeah. Our next question comes from Elizabeth Porter with Morgan Stanley.
Speaker #8: Great, thank you so much. I wanted to follow up on the enterprise revenue acceleration. You've highlighted that it was the strongest growth in three years.
Speaker #8: While the trailing 12 months enterprise NVR remained at about that 99%, how should we think about the balance of acceleration between some of these new logos and larger initial lands, where you've highlighted some displacements?
Speaker #8: And expansion of the install base. And are there any products—whether it's Phone, CX, or paid AI—that are more influential in moving that NVR sustainably above 100%?
Speaker #8: Thanks.
Speaker #1: There's a lot in there. So keep me honest, Elizabeth, when I, if I don't get to some of the nuances in your question. Let me start with NVE and then I'll kind of work back to enterprise and kind of the fundamental drivers and broadly kind of the balance of new versus expansion, if I got sort of frame up your questions.
Speaker #1: From an NVE perspective, look, I think we've said for a long time that the goal is obviously to move that up, and 100 and beyond.
Speaker #1: And you're seeing it go up to 99 now for the second quarter. I will remind investors we have that white label churn that will come in a touch more in the second half.
Speaker #1: But look broadly, it tells the story of Enterprise. It tells the 7.8% growth in Enterprise, a 60 bps increase even quarter over quarter. And then factor in again that white label churn headwind, and you can kind of get a sense of where the Enterprise growth is.
Speaker #1: It's off product diversification—all these same factors that kind of play through net dollar expansion. We're diversifying our product set. The big headlines there are obviously Phone and Contact Center, but also the onset of a lot of AI monetization that the teams have been working very hard on.
Speaker #1: It's helpful—the way we think about it, the way we talk to investors, the way we run the company, allocate resources—are those three priorities that we frame in our prepared remarks. They are really the fundamental building blocks for our long-term growth.
Speaker #1: And we feel good about—there are different stages, but we feel good about those. So those are kind of durable things that you can continue to watch.
Speaker #1: Maybe the last thing that I'll say is, we continue to make progress in churn and deal dynamics in the enterprise space, and certainly that's a plus as we move upmarket.
Speaker #1: We think our durable elements will continue. Maybe one last comment on the topic of new versus expansion: it's clearly coming from both. I guess I'd go back to, I think it was Peter's question on contact center and phone.
Speaker #1: Clearly, we're benefiting from a Zoom base in our customers there. But increasingly, with AI monetization, new routes and new products being delivered—plus Contact Center—it's also helping us to bring in net new customers to Zoom.
Speaker #1: And that's supported by our investments in our channel.
Speaker #6: Yeah. By the way, to add on to what Michelle said, right? Just look at the contact center, for example. Customers not only look at the cloud-based contact center, but also look at agentic capability.
Speaker #6: Looking at the latest report from IDC, MarketScape, for agentic CCaaS, Zoom was named a leader in a much better position than a lot of traditional cloud contact center vendors, right?
Speaker #6: It does speak to the capability of Zoom Contact Center with agentic capability and a much better position, I think.
Speaker #1: Next up, we have a question from Samad Samana with Jefferies.
Speaker #5: Hi, good evening, and thanks for taking my question. Maybe just on the Common Room acquisition, can you help us think through what the contribution there was to the guidance?
Speaker #5: And then, from a strategic perspective, how should we see that, maybe pairing it with the Revenue Accelerator offering that you already have? And how does it fit into this overall theme of adding more robust functionality that's maybe borderline front-office functionality, if I would put it that way?
Speaker #1: Eric, do you want to maybe start with the thesis of why Common Room, and then I'll jump in with the numbers component?
Speaker #6: Yeah, absolutely. So in terms of strategic value, you look at our AI capabilities. We build a federated AI, and not only do we add those capabilities to the horizontal product lines, but we also focus on the lens of the business, right?
Speaker #6: Like a contact center, and a ZRE as well. ZRE, I think, has become more and more important because we add more and more capability to our ZRE, right?
Speaker #6: We build those product organically and also how to accelerate the ZRE portfolio, right? That's why we acquired a common rooms with common rooms with ZRE plus upcoming the engagement or other forecast a lot of new capabilities in the pipeline.
Speaker #6: Our ZV is also uniquely positioned to win in the sales space. Essentially, we have an AI vertical product to target a sales department. I think that's a big opportunity for the future quarters, where I'm very excited about that synergy between the ZRE as well as the common rooms opportunity.
Speaker #1: Yeah. And maybe just to give a little bit more in terms of the guidance, obviously our prior guidance included the acquisitions, like BrightHire. Common Room was folded in here.
Speaker #1: Look, these are early-stage companies. While Common Room was Zoom's largest acquisition to date, at $250 million, these are early-stage companies. And so, they are going to be de minimis to the impact on our revenue relative to a $5 billion base.
Speaker #1: But for all these things Eric said, we're excited about what they can mean to our future growth, to our system of action, vision. And I think the combination of ZRA together with Common Room is a perfect example of what we're talking about in system of action, moving into a different layer of value, now helping our customers help drive their revenue.
Speaker #1: So we're really excited about the future potential. And then maybe just a comment, of course, when you do acquisitions like this, they don't come with Zoom best-in-class margins.
Speaker #1: And so maybe an element of why we kind of met margins and held them on the foliar is, we obviously folded that in. And we'll continue to work those as the businesses scale and abate that difference.
Speaker #5: Yeah, great.
Speaker #6: By the way, yeah, a little bit more card up on that integration because Common Room’s visiting Seattle. We have a large AI team over there.
Speaker #6: I think engineering integration, product integration, even the sales integration—we're doing very well, just a few weeks after they closed the deal.
Speaker #6: So it's a very promising.
Speaker #5: Great. Thank you both.
Speaker #6: Thank you.
Speaker #1: Our next question comes from Siti Panagrahi with Mizuho.
Speaker #7: Thank you. Thanks for taking my question. I just wanted to dig into the contact center. This is one area where you see most of the AI-driven innovations coming into the space in a few years.
Speaker #7: Also, recently, we saw OpenAI's presence there, and even some of the CRM vendors are trying to get into native voice and CX capabilities. So how are you seeing that competitive landscape evolving?
Speaker #7: And what's Zoom's win rate against some of the other new entrants in the market?
Speaker #6: Yeah, it's a great question. First of all, so many players in that market is good news, right? Because this market is growing—a lot of opportunities ahead of us.
Speaker #6: At the same time, you look at our ZV, right? I think we're uniquely positioned because, for those customers, right, they deploy like meetings, the phone, and contact center, right?
Speaker #6: Essentially, they would like to consolidate into one vendor because, if you look at the AI, I think you have access to all the data in a way that's better than those other vendors, right?
Speaker #6: So, they only focus on one piece, right? You've got a CCaaS or just the ZV. We have everything; that's one. Two, you look at our technology—federated AI, our ASR technology—I think is one of the best technologies in the world, right?
Speaker #6: Look at the latency, and also, we build all those technologies by ourselves. We also can leverage third parties as well. I think a federated AI approach puts us in a unique position.
Speaker #6: You look at latency, and the speech quality, ASR, TTS, right? We keep improving those features. I think also better positioning. And also, we already won the trust, in particular, from a lot of enterprise customers over the past many years.
Speaker #6: And they deploy the meetings. We tell them we are giving the phone, doing very well. We tell them build a contact center, also doing very well.
Speaker #6: Now we added a ZVA, and they trust our brand as well. So, with the Yucca CCaaS ZV plus our AI technology, we have high confidence.
Speaker #6: We can execute very well compared to any other vendors.
Speaker #7: Thank you.
Speaker #6: Appreciate it. Lucky, given your background, Siti.
Speaker #1: Our next question is from Jackson Adder with KeyBank.
Speaker #8: Great. Hey, guys, good to see you. I actually had a question on that particular topic, Eric—on the difference in contact center. You guys talked about seeing strength in contact center and virtual agent, and that sometimes it was combined and sometimes it would be sold—like virtual agent would be sold separately.
Speaker #8: It's like a standalone product. Just curious—we're talking a lot about bundling, we're talking a lot about consolidating onto a single platform. So I'm curious: how prevalent is it for Virtual Agent to be sold on a standalone basis?
Speaker #8: And what are the kinds of merits of that? And then, Michelle, just quickly, any kind of net expansion rate you can share on the contact center piece?
Speaker #8: Is this a land and expand motion, or is it just big lands and not much expansion effort? Thank you both.
Speaker #6: Yeah. So yeah, speaking of ZV, right, in Q2, our leading enterprise software company, they deployed a Zoom Phone service before. They deployed a ZV Voice.
Speaker #6: And natural extension to Zoom Phone. So, meaning customers, they said they deploy Meetings in my local ZVA, they deploy Phone also, might be looking at the ZVA as well.
Speaker #6: Oh, for sure. For contact center customers, also look at the ZVA as well. Essentially, we can bundle ZVA and contact center together as one solution.
Speaker #6: And also, we sell the ZVA separately as well, right? Even some customers, they do not use Zoom Meeting or phone in Contact Center.
Speaker #6: They also look at the ZVA as well, because it's something new, and it's the new market opportunity. So we focus on the two things.
Speaker #6: The product experience—and make sure we build something customers really like. The second thing, we own the technology. The speed of innovation is always something customers really like.
Speaker #6: And that's why I think, when you look at the ZVA opportunity, we're in a much better position. Even if we announced ZVA a little bit later compared to some startup vendors, let's look at the speed of innovation—we have higher confidence.
Speaker #6: We are going to continue gaining market share.
Speaker #1: And maybe just to layer on with sort of maybe some stats in terms of thinking about kind of the typical motions that we see the short answer is it's a variety of that.
Speaker #1: And that's why in our prepared remarks, we wanted to kind of paint a different picture of what we're seeing in our customers. But maybe just to give you a couple of stats.
Speaker #1: In our top 10 ZVA deals, six of 10 came with Contact Center. So I think it gives you a sense that it is both a 'sell with' motion, meaning when they want that full platform that Eric's talking about, and they want to go all in with Zoom.
Speaker #1: And it also paints the picture that some of the customers are starting in ZVA, and then it gives us an opportunity to land and expand from there.
Speaker #1: Similar sort of comments, I think, on the contact center side. Of our top 10 deals, seven of 10 were elite. So that's an agent being assisted by AI.
Speaker #1: And four of our top 10 were ZVA. So all of that is a way of sort of numerically saying there are many paths to growth here, and we think that for that reason, it gives us a lot to go on going forward.
Speaker #8: Okay. Okay. Thank you, guys.
Speaker #6: Thank you.
Speaker #1: Our next question comes from Ryan McWilliams with Wells Fargo.
Speaker #8: Hey, thanks for the question. Two-part question from me. For Michelle, just on the online segment, it seems like growth is slightly lower than last quarter.
Speaker #8: Anything to call out on SMBs more broadly, or is it due to generally lacking the price increase? And then for Eric, as we're seeing AI models improve and organizations build systems around their data and AI, how are your leading-edge AI customers building AI use cases off the data they gather over Zoom?
Speaker #8: And how do you think this data gravity helps Zoom and your stickiness in enterprises going forward? Thanks.
Speaker #1: Yeah, so let me comment about our online business. Look, I would characterize our Q2 results as solid. We saw low churn, and I think that low churn says—and I think there was an earlier question on this.
Speaker #1: But we're having success at demonstrating customer value even amidst the backdrop of a price increase. And you saw the stability of the base go up even further.
Speaker #1: Look, we took an opportunity in the call to emphasize it here—to sort of temper, out of prudence, our full-year guidance, which had been slight increase to flat.
Speaker #1: And we're adjusting to that, really, the data dynamics that we saw in Q2. The top of funnel across the industry, where people are just discovering products in different ways.
Speaker #1: And we're aggressively working to address that, meaning they're going from search to more AI. We're active in addressing that. And the prudence is really just a near-term statement of expectations.
Speaker #1: The big picture is to continue to work to get that business to return to growth. That comes with components of working churn, which we feel very good about, and product expansion—which we've never had such a broad portfolio of expansion products that we can open up to our online customers due to our AI innovation.
Speaker #1: And then just continuing to work through things like, what does this look like in an AI world, where we think our brand is also going to be very helpful to us.
Speaker #1: And we're working on conversion. And we have a great TCO story that I might also end with, from an SMB perspective, that I feel like we're going to be able to do great with the audience.
Speaker #6: Yeah. So, Ryan, back to the second part of the question. I think data, as we all know, is extremely important for customers to leverage AI.
Speaker #6: So, we look at all of our services. We want to make sure we look at everything from the customer's perspective—meaning, how do we make sure our data is accessible by customers, because they might use other large language models.
Speaker #6: And let's take My News, for example—we expose the context layer, right? So that's one. Two is, customers say, yeah, we also can leverage Zoom AI service as well, like Zoom Meet, right?
Speaker #6: And Zoom Meet can search for all the customer content, not only Zoom data but also third-party content as well. This gives customers the capability to search, to create the agent, and to drive workflow as well.
Speaker #6: Yeah, essentially you look at it from both sides. We expose our data API through MCP, and also the customer can leverage our AI service as well.
Speaker #6: Essentially, both of those are extremely important for us to leverage AI because of the data, so.
Speaker #8: Excellent. Thank you.
Speaker #6: Thank you.
Speaker #1: Up next, we have a question from Alex Zukin with Wolfe Research.
Speaker #7: Hey guys, thanks for taking the question and the time. Maybe just two quick ones. Eric, can you talk a little bit about the contribution from your new pricing models, both the outcome-based pricing and the consumption-based pricing?
Speaker #7: When would you expect that to start actually showing up more meaningfully in the net retention rates and in revenue? And then, Michelle, just really—I think the strongest bookings growth, calculated bookings growth, and billings growth in a long time. How much should we read into that from a forward-looking perspective around the potential for continuing to see accelerating enterprise growth over the coming quarters?
Speaker #6: Yeah, Alex, so in terms of usage-based pricing as well as outcome-based pricing, it's more like for the new AI product. I do not think that works for Meetings or Phone, right?
Speaker #6: So, speaking of the opportunity to take a ZVA, for example, by and large it's still usage-based. But we are embracing outcome-based pricing as well, because some customers like that and some customers still prefer usage-based as well.
Speaker #6: So we support, we have flexibility to support that. As we gain more and more market share for ZVA, I think we will see more and more that outcome-based pricing can probably contribute to our top-line growth.
Speaker #6: Again, this is something new. And the market ZVA is also a new product as well. But we have confidence to support all kinds of monetization opportunities.
Speaker #6: Especially for enterprise customers, given the RM token cost, I think more and more we'll embrace outcome-based pricing.
Speaker #1: And look, on the RPO, I think it's a little bit of both. In our best of quarters, let me remind you that we always tell investors that the best indicator of future performance is our revenue guide.
Speaker #1: So you have that. At the same time, look, you're seeing the trend in RPO inflect all up, and it's coming off long-term RPO. And it's because of durable drivers.
Speaker #1: It's because we're moving our business, diversifying it into products that come with larger deals, longer-term deals. And so, from that standpoint, those would be durable elements, moving up market even further.
Speaker #1: Those would be elements that would be durable. But in terms of doing calculus to get that back into revenue, we continue to point to our revenue guide.
Speaker #6: So, by the way, Alex, speaking of outcome-based pricing, we also look at other services as well, like ZRA and Brighter High as well.
Speaker #6: And we look at all those vertical AI products, right? We narrow it to make sense. For us to support the outcome-based pricing model, we would like to do that, because this is good for customers as well.
Speaker #7: Maybe I'll sneak one in, Eric, on voice. Are there any exciting elements that we should think about, as it seems like you have a meaningful opportunity to lean in on voice again—maybe following from that consumption-based pricing opportunity as well?
Speaker #6: Right. API is great—consumption-based, right? And also, we already have, I think, probably the best ASR model, right? Based on our smaller model, we pushed the training and it's doing very well.
Speaker #6: We published the API as well. Also, based on all the tests, ASR is in a much better position. At the same time, we support having a full-featured speech API set.
Speaker #6: We also need to support a TTS as well. And then the team is working hard on that. If you have a both ASR and also TTS and also along with other services, we have a full, I think, speech AI opportunity ahead of us.
Speaker #6: We're very excited about that, so.
Speaker #1: Our next question comes from Patrick Walravens with Citizens.
Speaker #5: Oh, great. Thank you. My favorite part of your call was your custom avatars, Eric. I think it's such a good real-time example of voice AI for us.
Speaker #5: So Charles, yours, and you had to do the—
Speaker #1: Oh, Patrick, I think you're on mute.
Speaker #5: The same few. Oh, really? Okay. Is it okay? So Charles had fairly uniform pacing, with few pauses, and his intonation consistently fell at the end of the phrase.
Speaker #5: Eric, yours was better. And Michelle, I wasn't—did you actually use your custom avatar?
Speaker #1: I did. I did.
Speaker #5: Yours was fantastic. Yours was really great. So just to help us understand, what causes the difference? And if a bank wants to use them, or if we want our virtual agents to sound really human, what do we have to do to train them so they sound as much like Michelle as possible?
Speaker #1: Well, I'll answer that, Eric, because I will admit, when Eric had mentioned for me to do this, I was a laggard in the adoption curve here.
Speaker #1: And it literally took me two minutes to set up. And there's some kind of tips that I think—being as natural as you possibly can—but it literally takes, I think, under two minutes to basically get your avatar set up.
Speaker #1: And then, of course, we have a human in the loop and make sure we review what the avatar says. But it's a really fun way, I think, to demonstrate our technology, and it's super easy.
Speaker #1: And for me, Eric, you can give the tech version of this answer, but for me, it was just being as natural as you possibly can in the setup of the avatar, because then it just sort of flows through.
Speaker #6: So Patrick, your observation about Michelle's voice is correct. The reason this is the first time for Michelle to use a customized AI avatar is that she is using the latest version.
Speaker #6: The AI avatar I created is from six months ago, so that means our technology is getting better and better. And maybe next quarter, I'm going to create a new one to match our latest version.
Speaker #6: By the way, it’s not only for AI avatar download. I would like, maybe someday, for my avatar to be able to answer any question as well.
Speaker #6: Then I can sit here and just listen to the call. So that's our dream.
Speaker #5: All right. Great, thank you. We'll watch next quarter, and we'll see the difference. Thank you, guys.
Speaker #6: Thank you, Patrick.
Speaker #1: Our next question comes from Tyler Radkey with Citi.
Speaker #4: Yeah, thanks for taking the question. So, the enterprise bookings and growth on enterprise look pretty solid. I was wondering if you could help us understand just where we are in terms of contact center milestones.
Speaker #4: I think five quarters ago, you talked about it hitting $100 million ARR for Zoom CX. You've talked about high double-digit growth for multiple quarters.
Speaker #4: So, will you update this at $200 million, $250 million? And is that kind of the biggest driver of the enterprise raise that you're seeing?
Speaker #4: And then, just a quick follow-up—a question for Michelle. Can you just touch on what's driving the lower capex for the year as well?
Speaker #5: Sure. Sure.
Speaker #1: Look, I think in regards to milestones, we're going to give them periodically as it makes sense. That doesn't mean they come every 100. And look, you have one that's sort of across the 100.
Speaker #1: And then I think since then, we've seen high double digits, taking sort of a guesstimate from there. Look, the components to the enterprise inflection are the same things I've been highlighting.
Speaker #1: It's product diversification, of which CX is a piece. It's AI monetization, of which CX is a part. It's moving upmarket.
Speaker #1: CX is part of that, but the theme being it's building out a channel. And CX is part of that, but it's certainly not just CX alone.
Speaker #1: The other thing that I will say from maybe the core enterprise standpoint—and I think this is one that investors frequently ask about—is that year-over-year churn has gone down, and that's been a steady trend over the last year or two.
Speaker #1: And then people will ask on occasion about pricing elements and all of that, and that's been something that we've been working very hard on in finance together with sales to really make sure that we're getting discounts down and deal terms up, and auto renewals.
Speaker #1: So look, all of that is a long way of saying that many components go into that enterprise growth, and certainly CX is part of that.
Speaker #1: On the capex, look, I would say I think when we went into the year, the guidance was $70 million of capex. And just to remind investors, '26 for '26 was really a low year in capex.
Speaker #1: And so, we were returning more to normal states. Look, we took a decision that benefited our free cash flow raise by about $40 million, to simply extend the useful life of the asset in one of our data centers by two years.
Speaker #1: And so, because CapEx was sort of a lumpy kind of story going into the free cash flow, and more so because of the anomalous year in FY26, we just simply wanted to update investors.
Speaker #1: Worth also saying, we're not a huge capex business, and none of this is really AI—it's more just dynamics in our core.
Speaker #5: Thank you.
Speaker #1: Our next question comes from Alan Berkovsky with BTIG.
Speaker #7: Hey there. Thanks for taking the question. Michelle, I have a two-parter for you. One, can you share what trends you're seeing in enterprise workplace seat growth across larger versus smaller customers?
Speaker #7: And then the second part is, given the updated fiscal '27 constant currency total revenue guide implies roughly $30 million more enterprise revenue, can you talk through the main drivers of confidence in such a strong raise?
Speaker #7: And is it fair to assume, given the prior comment, that Common Room is contributing about $10 million or less than that to that updated guidance?
Speaker #1: Yeah, okay. There’s a lot in there. Let me try and address some of it. So, look, from a workplace perspective, what we typically talk about with investors is the online churn rate.
Speaker #1: And look, you've seen that continue to be low. I think at our lowest, we were at 2.7; 2.9 is very much in the norm. And to my earlier comments, we feel great about what that says about both the stability of our business, with our customers over 16 months going up and 75%, as well as the incremental value that we've put in our platform and AI.
Speaker #1: On the enterprise side, what we talked about with investors is the dollars of churn going down year over year. And certainly, Q2 continued in that.
Speaker #1: So we don't really give too much disclosure other than those two, but I would broadly call the trends very much in line with what we've been seeing.
Speaker #1: On the constant currency and the Enterprise—look, for the sake of re-repeating myself, it's all the same dynamics that I've been highlighting on our Enterprise growth: product diversity, product diversification—excuse me—AI monetization, moving upmarket, building out a channel.
Speaker #1: And keeping that churn low. And then, obviously, we folded in our common room in this. Just because it's a small component of our revenue, we're not going to get into sort of quantifying it.
Speaker #1: But it certainly was folded into the revenue guide. And then I'll just reiterate my comment that these are very early-stage companies, and we're very encouraged with the growth and what they can mean to our system of action, to all the things Eric commented on earlier.
Speaker #1: But relative to a $5 billion base, these are de minimis kinds of impacts.
Speaker #7: Makes sense. Thank you, guys.
Speaker #1: Our last question comes from William Power with Baird.
Speaker #8: Okay, great. Thanks for sneaking me in here. Maybe two then, if I can. Let me start on Workvivo. That was a nice milestone update in the quarter.
Speaker #8: I'd love to understand the ongoing cross-sell opportunity. My suspicion is it's probably still early, but how should we think about that, and what does that portend for the continuing growth in that product?
Speaker #8: And then, Michelle, just given the strength you're seeing in enterprise and RPO, I'm just trying to kind of square that with the full-year revenue raise versus the beat in Q2.
Speaker #8: It feels like there's some conservatism—just something to think about in the second half of the year on that front.
Speaker #1: Yep. Eric, do you want to take Workvivo?
Speaker #3: Sure, absolutely. I think, speaking of the Workvivo opportunity, we're very excited about it because, if you look at the opportunities we've won over the past few quarters—
Speaker #3: Quite often, those customers are not Zoom customers at all, but they deployed Workvivo. So, meaning for all of our large enterprise customers in the starter base, there are more opportunities for us to upsell Workvivo.
Speaker #3: And also, Workvivo, and launched Workvivo HQ. AI-driven product as well. Because in the AI era, data is becoming more and more important, right? And customer, the employee engagement, is also becoming more and more important, right, to drive company culture. And with Workvivo HQ, I think Workvivo, I think, is in a better position than before with this new launch.
Speaker #3: So, we're very excited about more and more opportunities in the enterprise space to win more deals.
Speaker #1: And then maybe with the guide, let me just talk to kind of the full year and the dynamics that I'd think about. Look, from a constant currency perspective, it represents a beat of 7.5% and a raise of 9% on the full year.
Speaker #1: And we feel good about kind of the dynamics underlying that. And already guiding to four and a half. Percent growth, halfway through the year.
Speaker #1: And, considering, I'll just continue to remind investors of that white label churn, that has a 40 basis-point impact. So you can kind of look at that relative to the growth rate of last year.
Speaker #1: Look, fundamentally, I think I've drained it in so many questions. What's behind that is our enterprise growth inflection. You saw it this quarter—it was one of the best growth rates we've had in three years.
Speaker #1: It's product diversification, it's AI, moving upmarket, and keeping churn low, and delivering against those three priorities that we talk about, which are going to be the durable elements of our growth going forward.
Speaker #1: Maybe the only one that I would—just, we talked about it earlier, but to your question of kind of how to reconcile it, we took the opportunity to slightly temper the expectation on online.
Speaker #1: We said previously, slight growth. We adjusted that in this earnings to flat, really because of a dynamic that we saw in Q2. We continue to see low churn, to all the conversation earlier.
Speaker #1: But saw some changes. I think, along with the rest of the industry, and in top of funnel in terms of our customers and how they discover us.
Speaker #1: And we're actively working to adjust those, and just wanted to be prudent with the near-term guidance.
Speaker #8: Okay. That's great. Thank you.
Speaker #1: This concludes the Q&A portion of today's call. I'll now turn it back over to Eric for closing remarks.
Speaker #3: Thank you. So to all Zoom employees, customers, partners, and also investors, we truly appreciate your support. We will continue innovating to build something we feel proud of and that also delights our customers.
Speaker #3: Thank you so much. See you next quarter.
Speaker #1: Thank you. This concludes today's earnings call. Thank you for attending and have a great rest of your day.
