Zoom Communications, Inc. — Call Transcript 2026

Hello, 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. 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. 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. 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. 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. With that, let me turn the discussion over to Eric, who is giving his prepared remarks via Zoom custom avatar. 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. 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. 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. 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. 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 the workplace with AI sets the foundation for our second priority, driving growth in new AI revenue streams. 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. 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. 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. 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 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. By connecting collaboration, voice, contact center, Virtual Agent, 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. 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. 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 Resona, 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. 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? Thank you, Eric. 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 one 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 one 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. 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. 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%-2%. For Q2, we expect deferred revenue to be up 2%-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. 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'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 billion-$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 million-$513 million, representing an operating margin of 40.3% at the midpoint. Our outlook for non-GAAP earnings per share is $1.45-$1.47, based on approximately 304 million shares outstanding. 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 billion-$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 billion-$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-$6 based on approximately 304 million shares outstanding. As a reminder, future share repurchases are not reflected in share count and EPS guidance. We continue to expect free cash flows for FY 2027 to be in the range of $1.7 billion-$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. In closing, Q1 was a strong start to FY 2027, 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. 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. 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, you know, 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? How much incremental expansion of your wallet within customers is that driving? Michelle, I've got a quick follow-up for you. Alex asks a really good question. you know, speaking of ZCX, right? You look at the, now out of top 10 deals, you know, paid AI was involved, right? it's meaning AI is really help our ZCX. Look at the top 10 ZCX deals. Four of them also the includes ZVA as well, right? As we further improve our, you know, the ZCX product, specifically doubling down on AI, our, you know, pricing model is getting more and more flexible. For now, you take a ZCX, for example, is, you know, usage-based. You know, very soon we are going to introduce outcome-based, right? Some customer like outcome-based, some customer 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. ZV is just one example. ZRA, all those vertical AI product, we are taking the same approach. 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. Yeah. kind of maybe a little bit of a Tale of Two Cities. I'm curious if you can just unpack both of those dynamics. Yeah in order. Your question is in part, you know, sort of what changed on the deferred revenue as well as just broadly what we're seeing kind of in enterprise billings? Okay. Look, in enterprise billings, Alex, it's exactly what we've been talking to investors about. 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 MAU going up 184% and additional customer references and even new products coming in in AI. Certainly Eric covered a lot of the contact center. Maybe I'll add in my favorite of high double digits that now for the second quarter 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 contracts 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. 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 is far more stable. Look, it's a nominal uptick in churn in online. Thank you, guys. Okay. Our next question comes from Siti Panigrahi from Mizuho. All right. Thanks for taking my question. Just continue the Alex question. Your revenue accelerated 5.5% this quarter. I think that's one of the best growth rate we have seen in recent years. You talked about some of this AI monetization pitch queue 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 the back half of fiscal 2027, given your guidance implies some kind of deceleration in the second half? 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. In terms of 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 basis points 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. From an online perspective, we saw a little bit. 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 decel in the growth rate in Q2 through Q4. Okay, great. Thank you. All right. Our next question comes from Josh Baer with Morgan Stanley. 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? Also wondering what can be done from an in-product perspective or from a sales perspective to help to drive that conversion. Yeah. Josh, this is a great question. When it comes to Custom AI Companion, we have a few key features like enterprise agent retrieval, and also the workflow builder, and also the agentic builder as well. Some customer like workflow or agent or enterprise search. All three are part of the key features for Custom AI Companion. Speaking of how to leverage Custom AI Companion-driven 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? Without a customer AI Companion, we really cannot transform our business from conversation-centric business to completion-centric. That's why customer AI Companion is as great the part of that vision. Excellent. Thanks, Eric. Maybe a quick one for 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 and, if they can expand, what are the largest sources of leverage? 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. Operating margins +40, best in class as you know. Also worth noting that our GAAP margins are equally important. Look, we're going to keep working at that. 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. 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's not just a frame to talk to you guys, it's how we run the company internally. Look, I would say broadly AI. I'm 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'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. 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. Great. Yeah. Thank you. Congrats on the consistent- Thank you, Josh. performance. Yeah. Our next question comes from James Fish with Piper Sandler. James, sorry, you are muted. 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. Yes. Yes, Salesforce is a great customer and a partner, We are entering into this market from different angle. Their strengths really about CRM, and the marketing cloud, and so on and so forth. We entered into this market based on our customer feedback. Many customers already deploy our UC solutions, our meeting solutions. Naturally, the next step, really about a contact center, right? You look at a contact center, it's more like a conversation centric, right? Rather than the system of record centric, right? That's kind of our key differentiation. Plus, we have an infrastructure layer. When customers call the agent, the infrastructure layer also our UC system. Quite often, if an agent wants to turn on the video, that's also our strength as well, right? With AI Companion or Custom AI Companion, I think we offer a very differentiated CX solution. Plus ZVA, and also CX Insights, a lot of AI integrations. That's the reason why customer trust us. Then 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. It's something we see because of our differentiated kind of position inside and outside of the company. I think just times are changing, and more of that on-prem base is being unseated. Got it. Thanks, Eric. Thanks, Michelle. Thank you. Next, we have a question from Michael Funk with Bank of America. Sorry, guys. Give me one second here. No worries. Yeah, a little. It happens even on earnings calls and every day. There we- out there. There you go There we go. Thank you all for that. A couple questions for me. You already touched on it briefly, Michelle Chang, but wanted to hear more about your success moving up market in Zoom contact center and how you're being more successful in winning those deals, 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 Yuan, 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. Yeah. Maybe, Michelle, feel free to chime in, maybe 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 eight out of 10 deals, we are replacing some other CCaaS vendors. Look at the entire CCaaS market is pretty big, and we're replacing almost every one of them. Because of our product, rich feature and innovation, and also the AI, plus our UC and CC combined in a story. That's the reason why we're winning. You look at the top 10 ZCX deals, four out of 10 also include a phone. Look at the top 10 of phone deals, four out of the 10 also include ZCC as well. There's a UC and a ZCC combination also helping us a lot. In terms of organic growth, to build an 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 generative workflow, right? We want to build up ourself. 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. This 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. Of course. Very nice quarter, guys. Thank you. Appreciate it. Up next, we have a question from Jackson Ader with KeyBanc. 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? Yeah. Let me kind of attack it from a revenue perspective, because 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 sort of the impact of a price increase. 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. 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. 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, the hunt and enterprise, where they make sense for our online customers, bringing new paths to AI monetization, My Notes being a great example of that. Certainly, new products and acquisitions, since Eric just mentioned them. We did welcome Bonsai. I think it's the dynamic sort of popping up Q1. 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. Great. Then a real quick follow-up. If we continue to kind of see this non-current RPO- Yeah outgrow current RPO. Yeah. 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. The dynamic. 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 more into phone, more into contact center, more into AI. contact center in particular comes with longer term deals than maybe a traditional Zoom Meetings, and so 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. Got it. Thanks, guys. Thank you. Up next, we have a question from William Power with Baird. Great, thanks. Yanni Samoilis on for Will 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. Just how you're thinking about discipline there, given the value of the platform, and the AI products that you're offering. Thanks. I'll try and take those in order. Net dollar expansion, look, we've been saying to investors that the intent would be to inflect on, 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 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. 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. Then remind me on your third part of your question here. What was the third part? Yeah, just philosophy around discounting, discipline around that. Discounting and pricing. Yes. Look, generally, we do price raises in the 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 large, 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. Awesome. Super helpful. Thank you. Our next question comes from Allan Verkhovski with BTIG. 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. Yeah, Allan, 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, and I talk to so many customers, for now they all view like NVIDIA or the OpenAI and Zoom as AI company. Everybody else, I'm not sure, because from a cost perspective, they think any other software company, they AI company. I think that's naturally, I think that's right, because whenever the new technology, you look at the stack, right? From infrastructure layer, right? The cloud infrastructure, the chip layer, and also large language model are more like a AI company. More to more, and application layer, you will see some company will emerge as a AI company. I think we want to be part of that because of our AI innovation. When customer, they tested our My Notes feature, they love that. When I shared our the new innovation we are going to announce next month, we love that. More and more when customer and they deploy all those innovative AI services, give me some time, for sure, wow, this is AI company. For now because as I explained the technology stack, right? That's the perception. I'm sorry, what's your second part of the question? 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. Look at not only for a lot enterprise customers, SMB, even including the solopreneurs, I think in terms of conversation-centric AI, like a transcription summary, all is there, the CX Insights, the ZVA, all those I think is doing very well, adopted very well. Inside of that's more like a conversation-centric AI. 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 build a workflow attached with the conversation, How to leverage AI to focus on agent retrieval. I think more and more, we shift our focus to AI completion part. Got it. Perfect. Thank you, guys. Congrats. Thank you, Allan. Appreciate it. Our next question comes from Tyler Radke with 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? Good question. You mentioned our AI Services that we offer the speech and the API Service, because when customer tests that, the quality much better than any other competitors, right? This is kind of a speak of our product, they also have a great AI talents. That's one. Two, when we build all those AI Services, we also co-innovative with customer. Even before build, we already shared why want to build those services, customer resonate very well. That's the reason why next month we'll have quite a few announcement, some customer in the pilot, they really like that, right? Because the co-innovation. Also, especially for a lot of 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 FDE, full-time deployment engineer working together. Take a ZVA, for example. Some enterprise customer really like our technology. If you want to let Zoom-Deploy those solutions take some time. We have FDE working together with those enterprise customers, drive the AI adoption. That's another way for us to win. Overall, we have high confidence about our AI innovation. 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 the upcoming 12-18 months? 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 impacts 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, as 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. There's progress in things like ZRA. Workvivo came out with new stuff relative to AI monetization. Clearly Custom AI Companion and look, services is one. I wouldn't put it at the top of the list, maybe just answer the question explicitly. Then 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 forward. By the way, we have some very exciting new product solution announcement next month, all our AI-driven product. Thank you. Appreciate it. Yeah. Our next question comes from Andrew King with Rosenblatt Securities. Hey there. Thanks for taking my question and congrats on the really strong quarter. Just wanted to double-click on that Resona 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. 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 we focus on inbound. That's 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, they want to leverage AI technology to reach as many customers as possible, right? That's why outbound, I feel like even more opportunity. Again, the same technology stack. We just focus on all those different use cases, right? That's kind of the platform approach. Yeah, when we started a few years ago, we also just focused on inbound, and now I feel like outbound, inbound, sometimes hybrid, I think will bring us a lot of new, exciting opportunities. Just any comments on if there's any needed pricing structure changes between outbound versus inbound? 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? Asking that model, customer resonate very well, right? If I reach 1,000 prospect to leverage our technology, right? If only five out of 1,000 reply back, you get the least, I think that don't make any sense, right? That's why outcome-based model, I think is more for outbound. Got it. Thank you. Yeah. Thank you. Our next question comes from Peter Weed with Bernstein. There we go. Sorry, I'm out here. Harder to get unmuted. I think you've talked about this in the past, but maybe remind us, 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 kind of when you look at how you can price and maybe get value, how you kind of stay away from fee-based potential challenges there? Michelle, you want to address that? 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. Did I get it right? Well, I think very specifically in contact center itself. Perfect where I think there's some pressure maybe. 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, part of why I think you're seeing this when, I think Eric gave it, but if not, eight 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, three-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, Eric touched on this a little bit earlier, a more consumptive-based business model, potentially outcomes-based, 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. 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 ZCX seats. If 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. I appreciate it. Thank you. Thank you, Peter. Our next question comes from Peter Levine with Evercore. 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. With 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. Wow. I think last quarter, you framed buyback as a minimum offsetting dilution. Yeah. The size of this incremental authorization feels like a step up in posture. How should we best think about the pace and size of buyback from here? Thanks again, guys. 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, now we've executed against $3.1 billion of that. Look, we have $1.6 billion remaining, 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. It's something I wouldn't get overly thinking about a particular tranche rather than keeping the kind of broader perspective in mind. Great. Thank you. Yeah. Our last question today comes from Thomas Blakey with Cantor Fitzgerald. 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, thank you. I wish you are the first one to ask me this question because those two are the most important questions in my view. I think first of all, you look at the prior to AI era, for any of us to complete a task, normally it will need two-step, right? 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. After the Zoom call, guess what? I look at my manual notes and log into the back-end system and how big is this deal, and so on and so forth. I just update it back in the system. That's two-step process. In the AI era, with the AI technology, it become one step. Zoom interface will remain the same, but after Zoom conversation is over, my agent will automatically get the work done for me, right? 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 minutes talking to a patient. After the conversation with the patient, they need to spend a lot of time to update Epic. Now with the AI, everything can be done automatically, right? That's why Zoom is become the human to human interaction not only remain the same, but become more and more important because the Zoom conversation will generate a lot of very, I would say, 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. After this Zoom call is over, I have a huge context how to leverage the AI, generate the insights, the tasks, get this thing done. I think we are uniquely positioned because of AI, because of human to human interaction. I cannot imagine, right? Your agent and my agent are talking to each other, we are not going to use Zoom. It would never work, in my view. That's why Zoom call will become more important in the AI era. Yeah. Can't be displaced, so that's great. 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. Yeah. Thank you, Eric. Thank you, Michelle. Thank you. We have one more question today from Arjun Bhatia from William Blair. Oh, perfect. Thank you. Let me see. I got to change my camera. Wow. 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 MongoDB example, where they were basically taking actions in CRM ticketing from a Zoom conversation. How aware are customers that Zoom can do this, right, 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? 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 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. Customer 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 people mention, "Wow, I did not realize you can do this, can do that." I think it does tell us, and 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. Great. If you have any good idea, please let us know. I really appreciate. Yes. I will keep you posted. Thank you so much. Appreciate it. Thank you. Yeah. This concludes the Q&A portion of today's call. I'll now turn it back over to Eric for closing remarks. Yes, thank you to every great customers, partners, Zoom employees, and also thank you to our beloved investors. I truly appreciate for your good support. We are going to work as hard as we can in the AI era to keep build some innovative solutions to delight our customers. See you next quarter. Thank you. This concludes today's earnings call. Thank you all for attending, and have a great rest of your day.

Speaker 12: Hello, 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. Hello, welcome to Zoom's Q1 FY 2027 earnings release webinar. hello welcome to zoom's q1 fy 2027 earnings release webinar I will now hand things over to Charles Eveslage, Head of Investor Relations. i will now hand things over to charles eveslage head of investor relations Charles, over to you. charles over to you

Speaker 5: 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. Our earnings release was issued today after the market closed and may be downloaded from the investor relations page at investors.zoom.com. Thank you, Catherine. thank you catherine Hello, everyone, and welcome to Zoom's earnings webinar for the first quarter of fiscal year 2027. 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. 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. 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. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Also on this page, you'll be able to find a copy of today's prepared remarks and a slide deck with financial highlights that, along with our earnings release, include a reconciliation of GAAP to non-GAAP financial results. also on this page you'll be able to find a copy of today's prepared remarks and a slide deck with financial highlights that along with our earnings release include a reconciliation of gaap to non-gaap financial results These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. 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. 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. 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 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. With that, let me turn the discussion over to Eric, who is giving his prepared remarks via Zoom custom avatar. These statements are only predictions that are based on what we believe today, and actual results may differ materially. 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. 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. zoom assumes no obligation to update any forward-looking statements we may make today on today's webinar With that, let me turn the discussion over to Eric, who is giving his prepared remarks via Zoom custom avatar. with that let me turn the discussion over to eric who is giving his prepared remarks via zoom custom avatar

Speaker 6: 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. Thank you, Charles. thank you charles FY 2027 is off to a good start, continuing the momentum from FY 2026. 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. 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. 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. 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. 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. He will help drive our AI-first roadmap as we connect conversations, workflows, and outcomes through our system of action. 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. 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. 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. My Notes has quickly emerged as a breakout product, surpassing 1.5 million monthly active users, excluding trial users just four months after launch. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. The customer chose Zoom to meet stringent government security requirements and unlock insights from live communications data to support its broader AI workflows. 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. 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. Baptist Health selected Zoom phone because of its reliability, hybrid flexibility, and industry-specific integrations. Taken together, these wins show a consistent pattern. 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. 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. baptist health selected zoom phone because of its reliability hybrid flexibility and industry-specific integrations Taken together, these wins show a consistent pattern. 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 the workplace with AI sets the foundation for our second priority, driving growth in new AI revenue streams. 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. 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. this reinforces our confidence in zoom's ability to turn conversations into action and drive durable platform expansion Our progress elevating the workplace with AI sets the foundation for our second priority, driving growth in new AI revenue streams. our progress elevating the workplace with ai sets the foundation for our second priority driving growth in new ai revenue streams 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. 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. 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. 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. Custom AI Companion also wins on its ability to support agentic workflows. 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. 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. 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. Just as Custom AI Companion creates an AI monetization path within Zoom Workplace, ZVA Receptionist represents an important new monetization layer for Zoom phone. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. BrightHire, which brings conversational AI to recruiting and hiring, had a strong quarter with continued momentum in tech and other sectors. 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. 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. 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. 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. 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. 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. 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 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. The same combination of AI context and workflow orchestration is also driving our third priority, scaling AI-first customer experience. 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. the same ai-first platform that powers zoom workplace and phone also extends to customer engagement This is a true point of differentiation. this is a true point of differentiation Zoom is one of the few scaled companies with a native platform that bridges UC and CX. zoom is one of the few scaled companies with a native platform that bridges uc and cx By connecting collaboration, voice, contact center, Virtual Agent, 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. By connecting collaboration, voice, contact center, Virtual Agent, 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. by connecting collaboration voice contact center virtual agent 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. 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. 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. 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. 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 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. Zoom Customer Experience is emerging as a key growth driver and represents the strategic expansion of our platform into mission-critical customer operations. 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. 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. 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. Showcasing the strength of our full system of action, we landed Chelsea FC, one of the world's most recognized football clubs. 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. 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. 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. 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. 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 Resona, 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. We also saw a strong full CX platform win in Japan with Resona, 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. we also saw a strong full cx platform win in japan with resona 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. 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. Michelle will now take us through our Q1 financial results. Michelle? 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. 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 will now take us through our q1 financial results Michelle? michelle

Speaker 11: Thank you, Eric. 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 one point year-over-year. Thank you, Eric. thank you eric Hello, everyone. hello everyone I'm excited to be here with you today to share Zoom's Q1 FY 2027 performance. 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. 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. 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 one point year-over-year. our enterprise business continues to be strong with revenue growing 7.2% year-over-year representing 61% of our total revenue up one 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 one point year-over-year. Our trailing 12-month net dollar expansion rate for enterprise customers in Q1 improved to 99%. In our online business, Q1 average monthly churn was 3%, as compared to 2.8% in Q1 of FY 2026. 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. 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 one point year-over-year. these customers now make up 33% of our total revenue up one point year-over-year Our trailing 12-month net dollar expansion rate for enterprise customers in Q1 improved to 99%. 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. 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. Looking at our international growth, our Americas revenue and EMEA revenue both grew 5% year-over-year, while APAC grew 6%. 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. 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. 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. 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%. 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. 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. 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. The operating margin improvement was primarily driven by the accounting amortization change we discussed last quarter and our gross margin improvements. 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. 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. 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%-2%. This result was $0.13 above the high end of our guidance and $0.12 higher than Q1 of last year. 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. 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. 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%-2%. 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%-2% For Q2, we expect deferred revenue to be up 2%-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. For Q2, we expect deferred revenue to be up 2%- 3% year-over-year. for q2 we expect deferred revenue to be up 2%- 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. 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. 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. 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. 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%. 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. 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. 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. In Q1, we repurchased 4.2 million shares for $362 million across the preexisting $3.7 billion share repurchase plan. We've repurchased a total of 40.4 million shares for $3.1 billion. 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. 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. 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. in q1 we repurchased 4.2 million shares for $362 million across the preexisting $3.7 billion share repurchase plan We've repurchased a total of 40.4 million shares for $3.1 billion. 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 billion-$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 million-$513 million, representing an operating margin of 40.3% at the midpoint. Our outlook for non-GAAP earnings per share is $1.45-$1.47, based on approximately 304 million shares outstanding. Turning to the guidance. turning to the guidance For Q2, we expect revenue to be in the range of $1.265 billion-$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 million-$513 million, representing an operating margin of 40.3% at the midpoint. for q2 we expect revenue to be in the range of $1.265 billion-$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 million-$513 million representing an operating margin of 40.3% at the midpoint Our outlook for non-GAAP earnings per share is $1.45-$1.47, based on approximately 304 million shares outstanding. our outlook for non-gaap earnings per share is $1.45-$1.47 based on approximately 304 million shares outstanding 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 billion-$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 billion-$2.075 billion, representing an operating margin of 40.7% at the midpoint. For the full year for FY 2027, we're pleased to raise both our revenue and profitability guidance. 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 billion-$5.09 billion, which at the midpoint represents 4.4% year-over-year growth. we now expect revenue to be in the range of $5.08 billion-$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 billion-$2.075 billion, representing an operating margin of 40.7% at the midpoint. we expect our non-gaap operating income to be in the range of $2.065 billion-$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-$6 based on approximately 304 million shares outstanding. As a reminder, future share repurchases are not reflected in share count and EPS guidance. We continue to expect free cash flows for FY 2027 to be in the range of $1.7 billion-$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. In addition, our outlook for non-GAAP earnings per share in FY 2027 is increasing to $5.96-$6 based on approximately 304 million shares outstanding. in addition our outlook for non-gaap earnings per share in fy 2027 is increasing to $5.96-$6 based on approximately 304 million shares outstanding As a reminder, future share repurchases are not reflected in share count and EPS guidance. as a reminder future share repurchases are not reflected in share count and eps guidance We continue to expect free cash flows for FY 2027 to be in the range of $1.7 billion-$1.74 billion. we continue to expect free cash flows for fy 2027 to be in the range of $1.7 billion-$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. 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. In closing, Q1 was a strong start to FY 2027, with continued execution across our three priorities and growing adoption of Zoom as an AI-first system of action. 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. 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 FY 2027, with continued execution across our three priorities and growing adoption of Zoom as an AI-first system of action. in closing q1 was a strong start to fy 2027 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. We are encouraged by progress scaling customer experience and the early momentum across new AI revenue streams. 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. 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. 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. with that catherine please queue up the first question

Speaker 12: 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. Thank you, Michelle. thank you michelle We will now begin the Q&A portion of the call. we will now begin the q&a portion of the call When I read your name, please turn on your video and unmute. 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. 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. our first question will come from alex zukin with wolfe research

Speaker 1: 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, you know, 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? How much incremental expansion of your wallet within customers is that driving? Michelle, I've got a quick follow-up for you. Hey, guys. hey guys Thanks for taking the time and taking the question. thanks for taking the time and taking the question Congrats on a really solid quarter. congrats on a really solid quarter I guess maybe, Eric, first one for you. 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, you know, ZCX, which sounds like it didn't need as much discounting or flexibility in terms of billings terms as before. when you think about the execution that you're seeing particularly both on the ai products and particularly on you know 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? maybe what are you seeing in the pull-through from some of your ai solutions How much incremental expansion of your wallet within customers is that driving? how much incremental expansion of your wallet within customers is that driving Michelle, I've got a quick follow-up for you. michelle i've got a quick follow-up for you

Speaker 6: Alex asks a really good question. you know, speaking of ZCX, right? You look at the, now out of top 10 deals, you know, paid AI was involved, right? it's meaning AI is really help our ZCX. Look at the top 10 ZCX deals. Four of them also the includes ZVA as well, right? Alex asks a really good question. you know, speaking of ZCX, right? alex asks a really good question you know speaking of zcx right You look at the, now out of top 10 deals, you know, paid AI was involved, right? it's meaning AI is really help our ZCX. you look at the now out of top 10 deals you know paid ai was involved right it's meaning ai is really help our zcx Look at the top 10 ZCX deals. look at the top 10 zcx deals Four of them also the includes ZVA as well, right? four of them also the includes zva as well right As we further improve our, you know, the ZCX product, specifically doubling down on AI, our, you know, pricing model is getting more and more flexible. For now, you take a ZCX, for example, is, you know, usage-based. You know, very soon we are going to introduce outcome-based, right? Some customer like outcome-based, some customer like a prepaid usage-based, right? We are very flexible, right? As we further improve our, you know, the ZCX product, specifically doubling down on AI, our, you know, pricing model is getting more and more flexible. as we further improve our you know the zcx product specifically doubling down on ai our you know pricing model is getting more and more flexible For now, you take a ZCX, for example, is, you know, usage-based. for now you take a zcx for example is you know usage-based You know, very soon we are going to introduce outcome-based, right? you know very soon we are going to introduce outcome-based right Some customer like outcome-based, some customer like a prepaid usage-based, right? some customer like outcome-based some customer like a prepaid usage-based right We are very flexible, 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. ZV is just one example. ZRA, all those vertical AI product, we are taking the same approach. We co-innovate with the customer in terms of product innovation, AI features, and also the business model as well. 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. that's why we have high confidence ZV is just one example. zv is just one example ZRA, all those vertical AI product, we are taking the same approach. zra all those vertical ai product we are taking the same approach

Speaker 1: 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. Excellent. excellent Michelle, kind of maybe just a two-parter for you. michelle kind of maybe just a two-parter for you Really strong execution on billings. really strong execution on billings I think some of your best outperformance that we've seen. i think some of your best outperformance that we've seen For you guys in a while. for you guys in a while Maybe what drove that? 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? 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. online maybe a little higher churn than we've seen in some time

Speaker 11: Yeah. Yeah. yeah

Speaker 1: kind of maybe a little bit of a Tale of Two Cities. I'm curious if you can just unpack both of those dynamics. kind of maybe a little bit of a Tale of Two Cities. kind of maybe a little bit of a tale of two cities I'm curious if you can just unpack both of those dynamics. i'm curious if you can just unpack both of those dynamics

Speaker 11: Yeah Yeah yeah

Speaker 1: in order. in order. in order

Speaker 11: Your question is in part, you know, sort of what changed on the deferred revenue as well as just broadly what we're seeing kind of in enterprise billings? Okay. Look, in enterprise billings, Alex, it's exactly what we've been talking to investors about. 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? Your question is in part, you know, sort of what changed on the deferred revenue as well as just broadly what we're seeing kind of in enterprise billings? your question is in part you know sort of what changed on the deferred revenue as well as just broadly what we're seeing kind of in enterprise billings Okay. okay Look, in enterprise billings, Alex, it's exactly what we've been talking to investors about. look in enterprise billings alex it's exactly what we've been talking to investors about We're diversifying our product set. we're diversifying our product set We're working on churn. we're working on churn Churn year-over-year continued its trend of going down. churn year-over-year continued its trend of going down We're working on AI monetization. we're working on ai monetization Look, I think you can see that across the three parties that we talk about, right? look i think you can see that across the three parties that we talk about right Much progress from MAU going up 184% and additional customer references and even new products coming in in AI. Certainly Eric covered a lot of the contact center. Maybe I'll add in my favorite of high double digits that now for the second quarter in a row has even increased on top of that. Look, broadly, the answer is durable revenue from the enterprise that's driving it. Much progress from MAU going up 184% and additional customer references and even new products coming in in AI. much progress from mau going up 184% and additional customer references and even new products coming in in ai Certainly Eric covered a lot of the contact center. certainly eric covered a lot of the contact center Maybe I'll add in my favorite of high double digits that now for the second quarter in a row has even increased on top of that. maybe i'll add in my favorite of high double digits that now for the second quarter in a row has even increased on top of that Look, broadly, the answer is durable revenue from the enterprise that's driving it. 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 contracts to kind of leverage those early grace periods that I mentioned in February. 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. 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 contracts to kind of leverage those early grace periods that I mentioned in February. 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 contracts 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. Look, those grace periods are great for Zoom. look those grace periods are great for zoom They come with less discount, longer term deals. they come with less discount longer term deals They ease our customers into large competitive wins. they ease our customers into large competitive wins Look, if we don't need them in a quarter, we won't take them. look if we don't need them in a quarter we won't take them Second question on churn. second question on churn Look, I would say we saw a nominal uptick in churn in online. look i would say we saw a nominal uptick in churn in online I really don't read too much into it. i really don't read too much into it It's been a long-term low churn for us. it's been a long-term low churn for us I think we're making progress. 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 is far more stable. Look, it's a nominal uptick in churn in online. 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 is far more stable. 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 is far more stable Look, it's a nominal uptick in churn in online. look it's a nominal uptick in churn in online

Speaker 1: Thank you, guys. Thank you, guys. thank you guys

Speaker 11: Okay. Okay. okay

Speaker 12: Our next question comes from Siti Panigrahi from Mizuho. Our next question comes from Siti Panigrahi from Mizuho. our next question comes from siti panigrahi from mizuho

Speaker 14: All right. Thanks for taking my question. Just continue the Alex question. Your revenue accelerated 5.5% this quarter. I think that's one of the best growth rate we have seen in recent years. You talked about some of this AI monetization pitch queue 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 the back half of fiscal 2027, given your guidance implies some kind of deceleration in the second half? All right. all right Thanks for taking my question. thanks for taking my question Just continue the Alex question. just continue the alex question Your revenue accelerated 5.5% this quarter. your revenue accelerated 5.5% this quarter I think that's one of the best growth rate we have seen in recent years. i think that's one of the best growth rate we have seen in recent years You talked about some of this AI monetization pitch queue in my notes. you talked about some of this ai monetization pitch queue in my notes How much of that acceleration is attributable to this AI monetization versus broader enterprise deal activity that you saw? 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 the back half of fiscal 2027, given your guidance implies some kind of deceleration in the second half? how should we think about the durability of that pace in the back half of fiscal 2027 given your guidance implies some kind of deceleration in the second half

Speaker 11: 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. In terms of modeling and thinking about future going forward. Maybe let me break it down by enterprise and online. Yeah. yeah Perfect. perfect I'll go ahead and take that one. i'll go ahead and take that one Look, 5.5% growth. look 5.5% growth We're super pleased to your comment. we're super pleased to your comment It's among our highest and a beat of high guide. it's among our highest and a beat of high guide Look, it's important to note that some of that was FX driven. look it's important to note that some of that was fx driven In terms of modeling and thinking about future going forward. in terms of modeling and thinking about future going forward Maybe let me break it down by enterprise and online. 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 basis points 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. 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. 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 basis points impact of that white label churn, right? we saw 7.2% revenue growth in enterprise up from 7.1% in q4 but that's with a 60 basis points 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. 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. From an online perspective, we saw a little bit. 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 decel in the growth rate in Q2 through Q4. All the things that we've said would be sort of durable elements with investors, we're seeing the fruits of. 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. from an online perspective we saw a little bit 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. 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 decel in the growth rate in Q2 through Q4. you will see we're still projecting online to be a slight growth on the full year but you will see some decel in the growth rate in q2 through q4

Speaker 14: Okay, great. Thank you. Okay, great. okay great Thank you. thank you

Speaker 11: All right. All right. all right

Speaker 12: Our next question comes from Josh Baer with Morgan Stanley. Our next question comes from Josh Baer with Morgan Stanley. our next question comes from josh baer with morgan stanley

Speaker 9: 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? Also wondering what can be done from an in-product perspective or from a sales perspective to help to drive that conversion. Excellent. excellent Thanks for the question. thanks for the question I wanted to ask about Custom AI Companion. i wanted to ask about custom ai companion A little bit more about the path to conversion. 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? just what are some of the features or the use cases in custom that are really key to that conversion Also wondering what can be done from an in-product perspective or from a sales perspective to help to drive that conversion. also wondering what can be done from an in-product perspective or from a sales perspective to help to drive that conversion

Speaker 6: Yeah. Josh, this is a great question. When it comes to Custom AI Companion, we have a few key features like enterprise agent retrieval, and also the workflow builder, and also the agentic builder as well. Some customer like workflow or agent or enterprise search. All three are part of the key features for Custom AI Companion. Speaking of how to leverage Custom AI Companion-driven product usage or maybe when the customer use the product to discover the Custom AI Companion, I'll give one example. Yeah. yeah Josh, this is a great question. josh this is a great question When it comes to Custom AI Companion, we have a few key features like enterprise agent retrieval, and also the workflow builder, and also the agentic builder as well. when it comes to custom ai companion we have a few key features like enterprise agent retrieval and also the workflow builder and also the agentic builder as well Some customer like workflow or agent or enterprise search. some customer like workflow or agent or enterprise search All three are part of the key features for Custom AI Companion. all three are part of the key features for custom ai companion Speaking of how to leverage Custom AI Companion-driven product usage or maybe when the customer use the product to discover the Custom AI Companion, I'll give one example. speaking of how to leverage custom ai companion-driven 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? Without a customer AI Companion, we really cannot transform our business from conversation-centric business to completion-centric. That's why customer AI Companion is as great the part of that vision. Today, when you schedule a Zoom call, right, you can attach a meeting with a workflow. today when you schedule a zoom call right you can attach a meeting with a workflow Meaning during the meeting, we generate My Notes. 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. 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? customer really like that vision focus on the conversation to completion right Without a customer AI Companion, we really cannot transform our business from conversation-centric business to completion-centric. without a customer ai companion we really cannot transform our business from conversation-centric business to completion-centric That's why customer AI Companion is as great the part of that vision. that's why customer ai companion is as great the part of that vision

Speaker 9: Excellent. Thanks, Eric. Maybe a quick one for 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 and, if they can expand, what are the largest sources of leverage? Excellent. excellent Thanks, Eric. thanks eric Maybe a quick one for Michelle. maybe a quick one for michelle I mean, low 40s operating margins and free cash flow margins are obviously excellent. i mean low 40s operating margins and free cash flow margins are obviously excellent I'm just wondering from here, where can margins go and, if they can expand, what are the largest sources of leverage? i'm just wondering from here where can margins go and if they can expand what are the largest sources of leverage

Speaker 11: 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. Operating margins +40, best in class as you know. Also worth noting that our GAAP margins are equally important. Look, we're going to keep working at that. I think, first of all, just to give credit, maybe I'll even add one in there. 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. we're super pleased with our free cash flow generation had a strong q1 in regards to that Operating margins + 40, best in class as you know. operating margins + 40 best in class as you know Also worth noting that our GAAP margins are equally important. also worth noting that our gaap margins are equally important Look, we're going to keep working at that. look we're going to keep working at that 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. 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. 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. 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 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. 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's not just a frame to talk to you guys, it's how we run the company internally. Look, I would say broadly AI. I'm 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'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. 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. It's not just a frame to talk to you guys, it's how we run the company internally. it's not just a frame to talk to you guys it's how we run the company internally Look, I would say broadly AI. look i would say broadly ai I'm super excited at what Custom AI Companion has done, even in the finance team, to reinvent things. i'm 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. 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. 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 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. 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

Speaker 9: Great. Great. great

Speaker 11: Yeah. Yeah. yeah

Speaker 9: Thank you. Congrats on the consistent- Thank you. thank you Congrats on the consistent- congrats on the consistent-

Speaker 6: Thank you, Josh. Thank you, Josh. thank you josh

Speaker 9: performance. performance. performance

Speaker 11: Yeah. Yeah. yeah

Speaker 12: Our next question comes from James Fish with Piper Sandler. Our next question comes from James Fish with Piper Sandler. our next question comes from james fish with piper sandler

Speaker 6: James, sorry, you are muted. James, sorry, you are muted. james sorry you are muted

Speaker 8: 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. Yeah. yeah Hey, thanks for the question here. 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. 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? 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. 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? is there something incremental you're trying to call out here or what's the causation Thanks, guys. thanks guys

Speaker 6: Yes. Yes, Salesforce is a great customer and a partner, We are entering into this market from different angle. Their strengths really about CRM, and the marketing cloud, and so on and so forth. We entered into this market based on our customer feedback. Many customers already deploy our UC solutions, our meeting solutions. Naturally, the next step, really about a contact center, right? You look at a contact center, it's more like a conversation centric, right? Yes. yes Yes, Salesforce is a great customer and a partner, We are entering into this market from different angle. yes salesforce is a great customer and a partner we are entering into this market from different angle Their strengths really about CRM, and the marketing cloud, and so on and so forth. their strengths really about crm and the marketing cloud and so on and so forth We entered into this market based on our customer feedback. we entered into this market based on our customer feedback Many customers already deploy our UC solutions, our meeting solutions. many customers already deploy our uc solutions our meeting solutions Naturally, the next step, really about a contact center, right? naturally the next step really about a contact center right You look at a contact center, it's more like a conversation centric, right? you look at a contact center it's more like a conversation centric right Rather than the system of record centric, right? That's kind of our key differentiation. Plus, we have an infrastructure layer. When customers call the agent, the infrastructure layer also our UC system. Quite often, if an agent wants to turn on the video, that's also our strength as well, right? With AI Companion or Custom AI Companion, I think we offer a very differentiated CX solution. Plus ZVA, and also CX Insights, a lot of AI integrations. That's the reason why customer trust us. Rather than the system of record centric, right? rather than the system of record centric right That's kind of our key differentiation. that's kind of our key differentiation Plus, we have an infrastructure layer. plus we have an infrastructure layer When customers call the agent, the infrastructure layer also our UC system. when customers call the agent the infrastructure layer also our uc system Quite often, if an agent wants to turn on the video, that's also our strength as well, right? quite often if an agent wants to turn on the video that's also our strength as well right With AI Companion or Custom AI Companion, I think we offer a very differentiated CX solution. with ai companion or custom ai companion i think we offer a very differentiated cx solution Plus ZVA, and also CX Insights, a lot of AI integrations. plus zva and also cx insights a lot of ai integrations That's the reason why customer trust us. that's the reason why customer trust us

Speaker 11: Then 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. It's something we see because of our differentiated kind of position inside and outside of the company. I think just times are changing, and more of that on-prem base is being unseated. Then James, on your comment or question around the win backs. then 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. 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. 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. rather than something in the quarter i think we've been highlighting more and more of those increasingly It's something we see because of our differentiated kind of position inside and outside of the company. it's something we see because of our differentiated kind of position inside and outside of the company I think just times are changing, and more of that on-prem base is being unseated. i think just times are changing and more of that on-prem base is being unseated

Speaker 8: Got it. Thanks, Eric. Thanks, Michelle. Got it. got it Thanks, Eric. thanks eric Thanks, Michelle. thanks michelle

Speaker 6: Thank you. Thank you. thank you

Speaker 12: Next, we have a question from Michael Funk with Bank of America. Next, we have a question from Michael Funk with Bank of America. next we have a question from michael funk with bank of america

Speaker 10: Sorry, guys. Give me one second here. Sorry, guys. sorry guys Give me one second here. give me one second here

Speaker 11: No worries. No worries. no worries

Speaker 10: Yeah, a little. Yeah, a little. yeah a little

Speaker 11: It happens even on earnings calls and every day. It happens even on earnings calls and every day. it happens even on earnings calls and every day

Speaker 10: There we- There we- there we-

Speaker 11: out there. There you go out there. out there There you go there you go

Speaker 10: There we go. Thank you all for that. A couple questions for me. You already touched on it briefly, Michelle Chang, but wanted to hear more about your success moving up market in Zoom contact center and how you're being more successful in winning those deals, 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 Yuan, 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. There we go. there we go Thank you all for that. thank you all for that A couple questions for me. a couple questions for me You already touched on it briefly, Michelle Chang, but wanted to hear more about your success moving up market in Zoom contact center and how you're being more successful in winning those deals, more established providers, functionality or even bidding process. you already touched on it briefly michelle chang but wanted to hear more about your success moving up market in zoom contact center and how you're being more successful in winning those deals more established providers functionality or even bidding process Another one just on use of cash. another one just on use of cash I know you get asked all the time on this, but Eric Yuan, 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. i know you get asked all the time on this but eric yuan 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 6: Yeah. Maybe, Michelle, feel free to chime in, maybe 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. Yeah. yeah Maybe, Michelle, feel free to chime in, maybe address the CX. maybe michelle feel free to chime in maybe address the cx We built a very scalable CX platform, right? 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. 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. 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 eight out of 10 deals, we are replacing some other CCaaS vendors. Look at the entire CCaaS market is pretty big, and we're replacing almost every one of them. Our channel partners, they know how to pitch our story, how to sell to our enterprise customers. our channel partners they know how to pitch our story how to sell to our enterprise customers Also look at our top 10 deals. also look at our top 10 deals In eight out of 10 deals, we are replacing some other CCaaS vendors. in eight out of 10 deals we are replacing some other ccaas vendors Look at the entire CCaaS market is pretty big, and we're replacing almost every one of them. look at the entire ccaas market is pretty big and we're replacing almost every one of them Because of our product, rich feature and innovation, and also the AI, plus our UC and CC combined in a story. That's the reason why we're winning. You look at the top 10 ZCX deals, four out of 10 also include a phone. Look at the top 10 of phone deals, four out of the 10 also include ZCC as well. There's a UC and a ZCC combination also helping us a lot. Because of our product, rich feature and innovation, and also the AI, plus our UC and CC combined in a story. because of our product rich feature and innovation and also the ai plus our uc and cc combined in a story That's the reason why we're winning. that's the reason why we're winning You look at the top 10 ZCX deals, four out of 10 also include a phone. you look at the top 10 zcx deals four out of 10 also include a phone Look at the top 10 of phone deals, four out of the 10 also include ZCC as well. look at the top 10 of phone deals four out of the 10 also include zcc as well There's a UC and a ZCC combination also helping us a lot. there's a uc and a zcc combination also helping us a lot In terms of organic growth, to build an 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 generative workflow, right? We want to build up ourself. If there are any other innovative startup companies, we are willing to. In terms of organic growth, to build an AI or the acquisition, first of all, we look at everything from customer perspective. in terms of organic growth to build an 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? what kind of services or features they want us to innovate together with them Like a search, like a generative workflow, right? like a search like a generative workflow right We want to build up ourself. we want to build up ourself If there are any other innovative startup companies, we are willing to. 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. This 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. 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. 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. again look at our r&d 26% right in terms of revenue the percentage This is pretty large spending, right? this is pretty large spending right We have so many great top talents. we have so many great top talents We have a high confidence we can build a lot of innovations. 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. at the same time see michael if you know of any great startup companies with great technology we are very open-minded

Speaker 10: Of course. Very nice quarter, guys. Of course. of course Very nice quarter, guys. very nice quarter guys

Speaker 6: Thank you. Appreciate it. Thank you. thank you Appreciate it. appreciate it

Speaker 12: Up next, we have a question from Jackson Ader with KeyBanc. Up next, we have a question from Jackson Ader with KeyBanc. up next we have a question from jackson ader with keybanc

Speaker 7: 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? Great. great Hey, guys. hey guys Good to see you. good to see you The question I had was on the online segment, Michelle. 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. 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? can you just talk about maybe the dynamics of the online net new customer adds you're seeing

Speaker 11: Yeah. Let me kind of attack it from a revenue perspective, because 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 sort of the impact of a price increase. Yeah. yeah Let me kind of attack it from a revenue perspective, because I think it may be a little easier to digest. let me kind of attack it from a revenue perspective because i think it may be a little easier to digest Our Q1 revenue went up 2.8% in Q1. 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 sort of the impact of a price increase. 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 sort of the impact of a price increase 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. 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. 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, the hunt and enterprise, where they make sense for our online customers, bringing new paths to AI monetization, My Notes being a great example of that. 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. 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 Look, we saw some continued progress with low churn. look we saw some continued progress with low churn It's a very different base than sort of what we had in the pandemic. 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. you can see that i think in so many ways 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, the hunt and enterprise, where they make sense for our online customers, bringing new paths to AI monetization, My Notes being a great example of that. 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 the hunt and enterprise where they make sense for our online customers bringing new paths to ai monetization my notes being a great example of that Certainly, new products and acquisitions, since Eric just mentioned them. We did welcome Bonsai. I think it's the dynamic sort of popping up Q1. 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. Certainly, new products and acquisitions, since Eric just mentioned them. certainly new products and acquisitions since eric just mentioned them We did welcome Bonsai. we did welcome bonsai I think it's the dynamic sort of popping up Q1. i think it's the dynamic sort of popping up q1 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. 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 7: Great. Then a real quick follow-up. If we continue to kind of see this non-current RPO- Great. great Then a real quick follow-up. then a real quick follow-up If we continue to kind of see this non-current RPO- if we continue to kind of see this non-current rpo-

Speaker 11: Yeah Yeah yeah

Speaker 7: outgrow current RPO. outgrow current RPO. outgrow current rpo

Speaker 11: Yeah. Yeah. yeah

Speaker 7: 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. Is it customer led? is it customer led Are customers looking for longer term deals? are customers looking for longer term deals Is Zoom really kind of pushing longer term deals? is zoom really kind of pushing longer term deals Just curious about the push and pull there. just curious about the push and pull there

Speaker 11: The dynamic. 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 more into phone, more into contact center, more into AI. contact center in particular comes with longer term deals than maybe a traditional Zoom Meetings, and so that's really what you're seeing there. The dynamic. the dynamic Yeah. yeah What we're seeing there is just a reflection of what we've been talking about. 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 more into phone, more into contact center, more into AI. contact center in particular comes with longer term deals than maybe a traditional Zoom Meetings, and so that's really what you're seeing there. if you think about our levers for growth and kind of growth inflection are changing more into phone more into contact center more into ai contact center in particular comes with longer term deals than maybe a traditional zoom meetings and so 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. Look, we're pleased that it went up even versus Q4, which tends to be our biggest selling quarter. 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. 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. i think it's something that really just reflects more where our business is going

Speaker 7: Got it. Thanks, guys. Got it. got it Thanks, guys. thanks guys

Speaker 6: Thank you. Thank you. thank you

Speaker 12: Up next, we have a question from William Power with Baird. Up next, we have a question from William Power with Baird. up next we have a question from william power with baird

Speaker 16: Great, thanks. Yanni Samoilis on for Will 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. Just how you're thinking about discipline there, given the value of the platform, and the AI products that you're offering. Thanks. Great, thanks. great thanks Yanni Samoilis on for Will Power tonight. yanni samoilis on for will power tonight Good to see the enterprise NRR tick higher. 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 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. 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. you already talked a little bit about discounting Just how you're thinking about discipline there, given the value of the platform, and the AI products that you're offering. just how you're thinking about discipline there given the value of the platform and the ai products that you're offering Thanks. thanks

Speaker 11: I'll try and take those in order. Net dollar expansion, look, we've been saying to investors that the intent would be to inflect on, 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. I'll try and take those in order. i'll try and take those in order Net dollar expansion, look, we've been saying to investors that the intent would be to inflect on, we were pleased to see in this quarter a modest improvement. net dollar expansion look we've been saying to investors that the intent would be to inflect on 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. 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 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. The intent in the fullness of time is that that thing would continue to grow off those dynamics. 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. 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. 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. Then remind me on your third part of your question here. What was the third part? 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. 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. we're moving into a very different relationship with our customers that we're very excited about Then remind me on your third part of your question here. then remind me on your third part of your question here What was the third part? what was the third part

Speaker 16: Yeah, just philosophy around discounting, discipline around that. Yeah, just philosophy around discounting, discipline around that. yeah just philosophy around discounting discipline around that

Speaker 11: Discounting and pricing. Yes. Look, generally, we do price raises in the 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 large, 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. Discounting and pricing. discounting and pricing Yes. yes Look, generally, we do price raises in the enterprise, and you've seen us do that on phone and contact center. look generally we do price raises in the 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. generally we try and we'll do those when sort of market conditions or competitive dynamics make sense More and large, we work discounting, we work deal terms and conditions as you would expect us to do. more and large 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. we feel good about where we are with deal health as well as opportunities going forward

Speaker 16: Awesome. Super helpful. Thank you. Awesome. awesome Super helpful. super helpful Thank you. thank you

Speaker 12: Our next question comes from Allan Verkhovski with BTIG. Our next question comes from Allan Verkhovski with BTIG. our next question comes from allan verkhovski with btig

Speaker 2: 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? Awesome. awesome Hey, guys. hey guys Thanks for taking the question here. thanks for taking the question here Eric, I have a question on the AI momentum you're seeing. 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? 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. Just as a follow-up, another question on Custom AI Companion. 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? 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? are there specific industries or size of customers where you're maybe seeing more success with Any other color would be helpful. any other color would be helpful

Speaker 6: Yeah, Allan, 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, and I talk to so many customers, for now they all view like NVIDIA or the OpenAI and Zoom as AI company. Yeah, Allan, such a great question. yeah allan such a great question Interestingly enough, this morning, I had a call with one of our big customers in the financial sector. interestingly enough this morning i had a call with one of our big customers in the financial sector Exactly same as you said, right? exactly same as you said right What's the customer perception about Zoom? what's the customer perception about zoom Are you an AI company or not AI company? are you an ai company or not ai company For now, in my view, and I talk to so many customers, for now they all view like NVIDIA or the OpenAI and Zoom as AI company. for now in my view and i talk to so many customers for now they all view like nvidia or the openai and zoom as ai company Everybody else, I'm not sure, because from a cost perspective, they think any other software company, they AI company. I think that's naturally, I think that's right, because whenever the new technology, you look at the stack, right? From infrastructure layer, right? The cloud infrastructure, the chip layer, and also large language model are more like a AI company. Everybody else, I'm not sure, because from a cost perspective, they think any other software company, they AI company. everybody else i'm not sure because from a cost perspective they think any other software company they ai company I think that's naturally, I think that's right, because whenever the new technology, you look at the stack, right? i think that's naturally i think that's right because whenever the new technology you look at the stack right From infrastructure layer, right? from infrastructure layer right The cloud infrastructure, the chip layer, and also large language model are more like a AI company. the cloud infrastructure the chip layer and also large language model are more like a ai company More to more, and application layer, you will see some company will emerge as a AI company. I think we want to be part of that because of our AI innovation. When customer, they tested our My Notes feature, they love that. When I shared our the new innovation we are going to announce next month, we love that. More and more when customer and they deploy all those innovative AI services, give me some time, for sure, wow, this is AI company. For now because as I explained the technology stack, right? That's the perception. I'm sorry, what's your second part of the question? More to more, and application layer, you will see some company will emerge as a AI company. more to more and application layer you will see some company will emerge as a ai company I think we want to be part of that because of our AI innovation. i think we want to be part of that because of our ai innovation When customer, they tested our My Notes feature, they love that. when customer they tested our my notes feature they love that When I shared our the new innovation we are going to announce next month, we love that. when i shared our the new innovation we are going to announce next month we love that More and more when customer and they deploy all those innovative AI services, give me some time, for sure, wow, this is AI company. more and more when customer and they deploy all those innovative ai services give me some time for sure wow this is ai company For now because as I explained the technology stack, right? for now because as i explained the technology stack right That's the perception. that's the perception I'm sorry, what's your second part of the question? i'm sorry what's your second part of the question

Speaker 2: 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. 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. 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 6: Look at not only for a lot enterprise customers, SMB, even including the solopreneurs, I think in terms of conversation-centric AI, like a transcription summary, all is there, the CX Insights, the ZVA, all those I think is doing very well, adopted very well. Inside of that's more like a conversation-centric AI. When we announce a new product, which is focused on completion, that also will help us to change the customer perception. Look at not only for a lot enterprise customers, SMB, even including the solopreneurs, I think in terms of conversation-centric AI, like a transcription summary, all is there, the CX Insights, the ZVA, all those I think is doing very well, adopted very well. look at not only for a lot enterprise customers smb even including the solopreneurs i think in terms of conversation-centric ai like a transcription summary all is there the cx insights the zva all those i think is doing very well adopted very well Inside of that's more like a conversation-centric AI. inside of that's more like a conversation-centric ai When we announce a new product, which is focused on completion, that also will help us to change the customer perception. 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 build a workflow attached with the conversation, How to leverage AI to focus on agent retrieval. I think more and more, we shift our focus to AI completion part. More like, hey, how to leverage Zoom AI to build agent, how to leverage AI build a workflow attached with the conversation, How to leverage AI to focus on agent retrieval. more like hey how to leverage zoom ai to build agent how to leverage ai build a workflow attached with the conversation how to leverage ai to focus on agent retrieval I think more and more, we shift our focus to AI completion part. i think more and more we shift our focus to ai completion part

Speaker 2: Got it. Perfect. Thank you, guys. Congrats. Got it. got it Perfect. perfect Thank you, guys. thank you guys Congrats. congrats

Speaker 6: Thank you, Allan. Appreciate it. Thank you, Allan. thank you allan Appreciate it. appreciate it

Speaker 12: Our next question comes from Tyler Radke with Citi. Our next question comes from Tyler Radke with Citi. our next question comes from tyler radke with citi

Speaker 17: 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? Hi, thank you. hi thank you This is Kylie on today for Tyler, and congrats on a great start to the year. this is kylie on today for tyler and congrats on a great start to the year One for both of you. one for both of you Eric, maybe starting with 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? 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? 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 6: Good question. You mentioned our AI Services that we offer the speech and the API Service, because when customer tests that, the quality much better than any other competitors, right? This is kind of a speak of our product, they also have a great AI talents. That's one. Two, when we build all those AI Services, we also co-innovative with customer. Even before build, we already shared why want to build those services, customer resonate very well. Good question. good question You mentioned our AI Services that we offer the speech and the API Service, because when customer tests that, the quality much better than any other competitors, right? you mentioned our ai services that we offer the speech and the api service because when customer tests that the quality much better than any other competitors right This is kind of a speak of our product, they also have a great AI talents. this is kind of a speak of our product they also have a great ai talents That's one. that's one Two, when we build all those AI Services, we also co-innovative with customer. two when we build all those ai services we also co-innovative with customer Even before build, we already shared why want to build those services, customer resonate very well. even before build we already shared why want to build those services customer resonate very well That's the reason why next month we'll have quite a few announcement, some customer in the pilot, they really like that, right? Because the co-innovation. Also, especially for a lot of 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 FDE, full-time deployment engineer working together. That's the reason why next month we'll have quite a few announcement, some customer in the pilot, they really like that, right? that's the reason why next month we'll have quite a few announcement some customer in the pilot they really like that right Because the co-innovation. because the co-innovation Also, especially for a lot of enterprise customers, even AI is such a great technology, the adoption speed is not as fast as we want. also especially for a lot of 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 FDE, full-time deployment engineer working together. that's why we also have some fde full-time deployment engineer working together Take a ZVA, for example. Some enterprise customer really like our technology. If you want to let Zoom-Deploy those solutions take some time. We have FDE working together with those enterprise customers, drive the AI adoption. That's another way for us to win. Overall, we have high confidence about our AI innovation. Take a ZVA, for example. take a zva for example Some enterprise customer really like our technology. some enterprise customer really like our technology If you want to let Zoom-Deploy those solutions take some time. if you want to let zoom-deploy those solutions take some time We have FDE working together with those enterprise customers, drive the AI adoption. we have fde working together with those enterprise customers drive the ai adoption That's another way for us to win. that's another way for us to win Overall, we have high confidence about our AI innovation. overall we have high confidence about our ai innovation

Speaker 17: 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 the upcoming 12-18 months? Great. great One for you, Michelle. 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 12-18 months? 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 12-18 months

Speaker 11: 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 impacts 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. First, I know there's a lot out there that like to put out the AI revenue stat. 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 impacts your total revenue growth. let me just use this opportunity to throw in to me the most important thing is to ensure that ai monetization impacts your total revenue growth Look, that's already happening from a Zoom perspective. 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. 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, as 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. There's progress in things like ZRA. I won't add to all the metrics, as I think Eric covered a couple and I've covered a couple. i won't add to all the metrics as i think eric covered a couple and i've covered a couple That's clearly the most important. 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. 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. look we get excited There's progress in things like ZRA. there's progress in things like zra Workvivo came out with new stuff relative to AI monetization. Clearly Custom AI Companion and look, services is one. I wouldn't put it at the top of the list, maybe just answer the question explicitly. Then 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. Workvivo came out with new stuff relative to AI monetization. workvivo came out with new stuff relative to ai monetization Clearly Custom AI Companion and look, services is one. clearly custom ai companion and look services is one I wouldn't put it at the top of the list, maybe just answer the question explicitly. i wouldn't put it at the top of the list maybe just answer the question explicitly Then 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. then 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 forward. Meaning putting it in our paid SKUs at no additional cost is intended to reduce churn and bring in new interest in customers. 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 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 forward. we look forward to talking about it with investors going forward

Speaker 6: By the way, we have some very exciting new product solution announcement next month, all our AI-driven product. By the way, we have some very exciting new product solution announcement next month, all our AI-driven product. by the way we have some very exciting new product solution announcement next month all our ai-driven product

Speaker 17: Thank you. Thank you. thank you

Speaker 6: Appreciate it. Appreciate it. appreciate it

Speaker 11: Yeah. Yeah. yeah

Speaker 12: Our next question comes from Andrew King with Rosenblatt Securities. Our next question comes from Andrew King with Rosenblatt Securities. our next question comes from andrew king with rosenblatt securities

Speaker 3: Hey there. Thanks for taking my question and congrats on the really strong quarter. Just wanted to double-click on that Resona 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. Hey there. hey there Thanks for taking my question and congrats on the really strong quarter. thanks for taking my question and congrats on the really strong quarter Just wanted to double-click on that Resona win in Japan. just wanted to double-click on that resona 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. 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? 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? 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. thank you

Speaker 6: 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 we focus on inbound. That's 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, they want to leverage AI technology to reach as many customers as possible, right? That's why outbound, I feel like even more opportunity. Those are two different use cases. 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 we focus on inbound. it's hard to say which one is bigger because you are so right and naturally you think probably we focus on inbound That's not the case because you look at the technology, outbound, right? that's not the case because you look at the technology outbound right I think it might be even larger, right? i think it might be even larger right Because more and more, the companies, they want to leverage AI technology to reach as many customers as possible, right? because more and more the companies they want to leverage ai technology to reach as many customers as possible right That's why outbound, I feel like even more opportunity. that's why outbound i feel like even more opportunity Again, the same technology stack. We just focus on all those different use cases, right? That's kind of the platform approach. Yeah, when we started a few years ago, we also just focused on inbound, and now I feel like outbound, inbound, sometimes hybrid, I think will bring us a lot of new, exciting opportunities. Again, the same technology stack. again the same technology stack We just focus on all those different use cases, right? we just focus on all those different use cases right That's kind of the platform approach. that's kind of the platform approach Yeah, when we started a few years ago, we also just focused on inbound, and now I feel like outbound, inbound, sometimes hybrid, I think will bring us a lot of new, exciting opportunities. yeah when we started a few years ago we also just focused on inbound and now i feel like outbound inbound sometimes hybrid i think will bring us a lot of new exciting opportunities

Speaker 3: Just any comments on if there's any needed pricing structure changes between outbound versus inbound? Just any comments on if there's any needed pricing structure changes between outbound versus inbound? just any comments on if there's any needed pricing structure changes between outbound versus inbound

Speaker 6: 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? Asking that model, customer resonate very well, right? If I reach 1,000 prospect to leverage our technology, right? If only five out of 1,000 reply back, you get the least, I think that don't make any sense, right? That's why outcome-based model, I think is more for outbound. It's a great question. it's a great question I think inbound might more like use it outcome-based. i think inbound might more like use it outcome-based Outbound, we also want to focus on the outcome-based, right? outbound we also want to focus on the outcome-based right Asking that model, customer resonate very well, right? asking that model customer resonate very well right If I reach 1,000 prospect to leverage our technology, right? if i reach 1,000 prospect to leverage our technology right If only five out of 1,000 reply back, you get the least, I think that don't make any sense, right? if only five out of 1,000 reply back you get the least i think that don't make any sense right That's why outcome-based model, I think is more for outbound. that's why outcome-based model i think is more for outbound

Speaker 3: Got it. Thank you. Got it. got it Thank you. thank you

Speaker 6: Yeah. Thank you. Yeah. yeah Thank you. thank you

Speaker 12: Our next question comes from Peter Weed with Bernstein. Our next question comes from Peter Weed with Bernstein. our next question comes from peter weed with bernstein

Speaker 11: There we go. There we go. there we go

Speaker 13: Sorry, I'm out here. Harder to get unmuted. I think you've talked about this in the past, but maybe remind us, 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 kind of when you look at how you can price and maybe get value, how you kind of stay away from fee-based potential challenges there? Sorry, I'm out here. sorry i'm out here Harder to get unmuted. harder to get unmuted I think you've talked about this in the past, but maybe remind us, is obviously doing really well for you guys. i think you've talked about this in the past but maybe remind us 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. 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 kind of when you look at how you can price and maybe get value, how you kind of stay away from fee-based potential challenges there? 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 you kind of stay away from fee-based potential challenges there

Speaker 6: Michelle, you want to address that? Michelle, you want to address that? michelle you want to address that

Speaker 11: 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. Did I get it right? 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. 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 Did I get it right? did i get it right

Speaker 13: Well, I think very specifically in contact center itself. Well, I think very specifically in contact center itself. well i think very specifically in contact center itself

Speaker 11: Perfect Perfect perfect

Speaker 13: where I think there's some pressure maybe. where I think there's some pressure maybe. where i think there's some pressure maybe

Speaker 11: 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, part of why I think you're seeing this when, I think Eric gave it, but if not, eight of 10 were legacy displacements of our top 10 deals in contact center. Look, it's because we don't have the tech debt. Yeah. 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. 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, part of why I think you're seeing this when, I think Eric gave it, but if not, eight of 10 were legacy displacements of our top 10 deals in contact center. look part of why i think you're seeing this when i think eric gave it but if not eight of 10 were legacy displacements of our top 10 deals in contact center Look, it's because we don't have the tech debt. 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, three-tiered structure, kind of good, better, best. Best being the Elite, where we kind of get to the AI value. We come at contact center with a very fresh and modern approach, an AI-first approach. 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. 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, three-tiered structure, kind of good, better, best. look our agent-assisted product we have a per user three-tiered structure kind of good better best Best being the Elite, where we kind of get to the AI value. best being the elite where we kind of get to the ai value Increasingly we're introducing where I think the market is going, Eric touched on this a little bit earlier, a more consumptive-based business model, potentially outcomes-based, 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. Increasingly we're introducing where I think the market is going, Eric touched on this a little bit earlier, a more consumptive-based business model, potentially outcomes-based, and that is the pricing structure for ZVA. increasingly we're introducing where i think the market is going eric touched on this a little bit earlier a more consumptive-based business model potentially outcomes-based 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. 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 6: 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 ZCX seats. If 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. 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. 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 ZCX seats. they can deploy more zoom zcx seats If do not want to hire more human agent, guess what? if do not want to hire more human agent guess what They can deploy more Zoom ZVA as well, right? they can deploy more zoom zva as well right We are giving customer a very flexible solution. we are giving customer a very flexible solution

Speaker 13: I appreciate it. Thank you. I appreciate it. i appreciate it Thank you. thank you

Speaker 6: Thank you, Peter. Thank you, Peter. thank you peter

Speaker 12: Our next question comes from Peter Levine with Evercore. Our next question comes from Peter Levine with Evercore. our next question comes from peter levine with evercore

Speaker 18: 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. With 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. Hey, guys. hey guys This is Charlie for Peter. this is charlie for peter Thanks very much for taking our question, and congrats on the strong quarter. thanks very much for taking our question and congrats on the strong quarter Michelle, one for you on capital returns. michelle one for you on capital returns With the new $1 billion authorization on top of the $625 million remaining, yo u now have about $1.6 billion of buyback capacity against almost $8 billion of cash. with the new $1 billion authorization on top of the $625 million remaining, yo u now have about $1.6 billion of buyback capacity against almost $8 billion of cash

Speaker 11: Wow. Wow. wow

Speaker 18: I think last quarter, you framed buyback as a minimum offsetting dilution. I think last quarter, you framed buyback as a minimum offsetting dilution. i think last quarter you framed buyback as a minimum offsetting dilution

Speaker 11: Yeah. Yeah. yeah

Speaker 18: The size of this incremental authorization feels like a step up in posture. How should we best think about the pace and size of buyback from here? Thanks again, guys. The size of this incremental authorization feels like a step up in posture. the size of this incremental authorization feels like a step up in posture How should we best think about the pace and size of buyback from here? how should we best think about the pace and size of buyback from here Thanks again, guys. thanks again guys

Speaker 11: 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, now we've executed against $3.1 billion of that. Yeah, I don't see it as different. yeah i don't see it as different I think this is an area where investors have given Zoom feedback. 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 do have a large cash balance even though it went down We're a very free cash flow generative company. we're a very free cash flow generative company Look, I'm proud of the progress that we've made in buybacks. look i'm proud of the progress that we've made in buybacks I don't necessarily think about it per se by tranche. i don't necessarily think about it per se by tranche We tend to think more holistically. we tend to think more holistically We've authorized $4.7 billion in total. we've authorized $4.7 billion in total That's been a big change for Zoom, now we've executed against $3.1 billion of that. that's been a big change for zoom now we've executed against $3.1 billion of that Look, we have $1.6 billion remaining, 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. It's something I wouldn't get overly thinking about a particular tranche rather than keeping the kind of broader perspective in mind. Look, we have $1.6 billion remaining, we're going to leverage that. look we have $1.6 billion remaining 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. 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. 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. it's something i wouldn't get overly thinking about a particular tranche rather than keeping the kind of broader perspective in mind

Speaker 18: Great. Thank you. Great. great Thank you. thank you

Speaker 11: Yeah. Yeah. yeah

Speaker 12: Our last question today comes from Thomas Blakey with Cantor Fitzgerald. Our last question today comes from Thomas Blakey with Cantor Fitzgerald. our last question today comes from thomas blakey with cantor fitzgerald

Speaker 15: 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. Oh, I think I'm on there. oh i think i'm on there Thank you, Eric and Michelle, for taking the question. thank you eric and michelle for taking the question Maybe as a final question, it's a good wrap-up here. 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? 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? 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. thank you

Speaker 6: Tom, thank you. I wish you are the first one to ask me this question because those two are the most important questions in my view. I think first of all, you look at the prior to AI era, for any of us to complete a task, normally it will need two-step, right? Step one, you and I have a Zoom call or in-person conversation, right? Tom, thank you. tom thank you I wish you are the first one to ask me this question because those two are the most important questions in my view. i wish you are the first one to ask me this question because those two are the most important questions in my view I think first of all, you look at the prior to AI era, for any of us to complete a task, normally it will need two- step, right? i think first of all you look at the prior to ai era for any of us to complete a task normally it will need two- step right Step one, you and I have a Zoom call or in-person conversation, right? 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. After the Zoom call, guess what? I look at my manual notes and log into the back-end system and how big is this deal, and so on and so forth. I just update it back in the system. That's two-step process. In the AI era, with the AI technology, it become one step. Let's say I'm a sales rep. let's say i'm a sales rep I talk with you. i talk with you You are a potential customer. you are a potential customer After the Zoom call, guess what? after the zoom call guess what I look at my manual notes and log into the back-end system and how big is this deal, and so on and so forth. i look at my manual notes and log into the back-end system and how big is this deal and so on and so forth I just update it back in the system. i just update it back in the system That's two-step process. that's two-step process In the AI era, with the AI technology, it become one step. in the ai era with the ai technology it become one step Zoom interface will remain the same, but after Zoom conversation is over, my agent will automatically get the work done for me, right? 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 minutes talking to a patient. After the conversation with the patient, they need to spend a lot of time to update Epic. Now with the AI, everything can be done automatically, right? Zoom interface will remain the same, but after Zoom conversation is over, my agent will automatically get the work done for me, right? zoom interface will remain the same but after zoom conversation is over my agent will automatically get the work done for me right That's a beautiful part of the AI. that's a beautiful part of the ai I dramatically automated all those work I used to spend a lot of time working on. i dramatically automated all those work i used to spend a lot of time working on Another example, like a doctor and a patient. another example like a doctor and a patient Spend a certain minutes talking to a patient. spend a certain minutes talking to a patient After the conversation with the patient, they need to spend a lot of time to update Epic. after the conversation with the patient they need to spend a lot of time to update epic Now with the AI, everything can be done automatically, right? now with the ai everything can be done automatically right That's why Zoom is become the human to human interaction not only remain the same, but become more and more important because the Zoom conversation will generate a lot of very, I would say, 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. That's why Zoom is become the human to human interaction not only remain the same, but become more and more important because the Zoom conversation will generate a lot of very, I would say, meaningful, important asset or data to help you drive your next step. that's why zoom is become the human to human interaction not only remain the same but become more and more important because the zoom conversation will generate a lot of very i would say meaningful important asset or data to help you drive your next step I call that a context layer. i call that a context layer Let's take this Zoom call, for example. let's take this zoom call for example After this Zoom call is over, I have a huge context how to leverage the AI, generate the insights, the tasks, get this thing done. I think we are uniquely positioned because of AI, because of human to human interaction. I cannot imagine, right? Your agent and my agent are talking to each other, we are not going to use Zoom. It would never work, in my view. That's why Zoom call will become more important in the AI era. After this Zoom call is over, I have a huge context how to leverage the AI, generate the insights, the tasks, get this thing done. after this zoom call is over i have a huge context how to leverage the ai generate the insights the tasks get this thing done I think we are uniquely positioned because of AI, because of human to human interaction. i think we are uniquely positioned because of ai because of human to human interaction I cannot imagine, right? i cannot imagine right Your agent and my agent are talking to each other, we are not going to use Zoom. your agent and my agent are talking to each other we are not going to use zoom It would never work, in my view. it would never work in my view That's why Zoom call will become more important in the AI era. that's why zoom call will become more important in the ai era

Speaker 15: Yeah. Can't be displaced, so that's great. Yeah. yeah Can't be displaced, so that's great. can't be displaced so that's great

Speaker 6: 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. Absolutely. absolutely Otherwise, what do we do? otherwise what do we do If you're sending your agent and my agent to work together, it's never worked, in my view. if you're sending your agent and my agent to work together it's never worked in my view

Speaker 15: Yeah. Thank you, Eric. Thank you, Michelle. Yeah. yeah Thank you, Eric. thank you eric Thank you, Michelle. thank you michelle

Speaker 6: Thank you. Thank you. thank you

Speaker 12: We have one more question today from Arjun Bhatia from William Blair. We have one more question today from Arjun Bhatia from William Blair. we have one more question today from arjun bhatia from william blair

Speaker 4: Oh, perfect. Thank you. Let me see. I got to change my camera. Wow. 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 MongoDB example, where they were basically taking actions in CRM ticketing from a Zoom conversation. Oh, perfect. oh perfect Thank you. thank you Let me see. let me see I got to change my camera. i got to change my camera Wow. wow There we go. there we go Thanks for taking the question. thanks for taking the question Congrats on the strong quarter. 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 MongoDB example, where they were basically taking actions in CRM ticketing from a Zoom conversation. 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 mongodb example where they were basically taking actions in crm ticketing from a zoom conversation How aware are customers that Zoom can do this, right, 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? How aware are customers that Zoom can do this, right, and that you are becoming this system of action? how aware are customers that zoom can do this right 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? 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 6: 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 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. Yeah, it's a great question. 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 that from a quality, from a feature perspective, much better. first of all we have a new release next month and based on all the customer feedback for sure that from a quality from a feature perspective much better Afterwards, you're also right. afterwards you're also right We just need to double down on go-to-market side and make sure everyone are aware of that. 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. for sure we have a little bit of awareness problem Customer 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 people mention, "Wow, I did not realize you can do this, can do that." I think it does tell us, and 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. Customer 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 people mention, "Wow, I did not realize you can do this, can do that." I think it does tell us, and 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. customer 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 people mention "wow i did not realize you can do this can do that." i think it does tell us and 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. that's exactly our focus in the next few months and quarters

Speaker 4: Great. Great. great

Speaker 6: If you have any good idea, please let us know. I really appreciate. If you have any good idea, please let us know. if you have any good idea please let us know I really appreciate. i really appreciate

Speaker 4: Yes. I will keep you posted. Thank you so much. Appreciate it. Yes. yes I will keep you posted. i will keep you posted Thank you so much. thank you so much Appreciate it. appreciate it

Speaker 6: Thank you. Thank you. thank you

Speaker 12: Yeah. This concludes the Q&A portion of today's call. I'll now turn it back over to Eric for closing remarks. Yeah. yeah This concludes the Q&A portion of today's call. this concludes the q&a portion of today's call I'll now turn it back over to Eric for closing remarks. i'll now turn it back over to eric for closing remarks

Speaker 6: Yes, thank you to every great customers, partners, Zoom employees, and also thank you to our beloved investors. I truly appreciate for your good support. We are going to work as hard as we can in the AI era to keep build some innovative solutions to delight our customers. See you next quarter. Thank you. Yes, thank you to every great customers, partners, Zoom employees, and also thank you to our beloved investors. yes thank you to every great customers partners zoom employees and also thank you to our beloved investors I truly appreciate for your good support. i truly appreciate for your good support We are going to work as hard as we can in the AI era to keep build some innovative solutions to delight our customers. we are going to work as hard as we can in the ai era to keep build some innovative solutions to delight our customers See you next quarter. see you next quarter Thank you. thank you

Speaker 12: This concludes today's earnings call. Thank you all for attending, and have a great rest of your day. This concludes today's earnings call. this concludes today's earnings call Thank you all for attending, and have a great rest of your day. thank you all for attending and have a great rest of your day