Zoom Video Communications, Inc. (NASDAQ:ZM) Q3 2023 Earnings Conference Call November 21, 2022 5:00 PM ET Company Participants Tom McCallum - Head, Investor Relations Eric Yuan - Founder and CEO Kelly Steckelberg - Chief Financial Officer Conference Call Participants Meta Marshall - Morgan Stanley Mark Murphy - JPMorgan Fred Lee - Credit Suisse Michael Turrin - Wells Fargo Kash Rangan - Goldman Sachs George Iwanyc - Oppenheimer Siti Panigrahi - Mizuho Sterling Auty - SVB Moffett William Power - Baird Matt S ...

| --- | --- | --- | --- | --- | --- | |---------------------------------------------------|-------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Zoom Video | | | | | | | Communications Q3 FY23 Earnings November 21, 2022 | | | | | | | | | | | | | 1 zoom Use of non-GAAP financial measures 2 In addition to the financials presented in accordance with U.S. generally accepted accounting principles ("GAAP"), this presentation includes the following non-GAAP metrics: Rev ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________________________ FORM 10-Q ___________________________________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Co ...

Financial Data and Key Metrics Changes - Total revenue for Q2 FY23 grew 8% year-over-year to $1.099 billion, approximately $16 million below the low end of guidance due to a stronger U.S. dollar and weaker new online sales [6][11] - Non-GAAP gross margin improved to 78.9% from 76.2% year-over-year, with expectations to maintain approximately 78% for the remainder of the year [8] - Non-GAAP diluted earnings per share was $1.05, exceeding guidance by 13 cents [9] Business Line Data and Key Metrics Changes - Revenue from enterprise customers grew 27% year-over-year, representing 54% of total revenue, up from 46% a year ago [6][7] - The number of enterprise customers increased 18% year-over-year to approximately 204,100, with a net dollar expansion rate of 120% [7] - Zoom Phone achieved significant milestones, with the number of customers with 10,000 or more paid seats increasing 112% year-over-year [3][6] Market Data and Key Metrics Changes - Revenue growth in the Americas and APAC was 12% and 10% year-over-year, respectively, while EMEA experienced an 8% decline due to macroeconomic factors [7] - The impact of the Russia-Ukraine war and a strengthening dollar contributed to challenges in the EMEA market [7][11] Company Strategy and Development Direction - The company is focused on driving innovation and customer satisfaction through strategic investments, particularly in R&D and sales [3][8] - Zoom aims to enhance its platform strategy, with Zoom Rooms and Zoom Phone being critical components, and is seeing early traction in Zoom Contact Center and Zoom IQ for Sales [3][6] - The company is committed to building a unified communications platform to replace legacy systems, which is expected to drive future growth [3][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the macroeconomic challenges but emphasized the strong growth in the enterprise segment, driven by cloud migration and digital transformation [2][3] - The company expects enterprise revenue to grow in the low to mid-20s, while online business is projected to decline by 7% to 8% for the year [10][11] - Management remains cautious and is adjusting spending to focus on high ROI areas while maintaining a target non-GAAP operating margin of approximately 33% [11] Other Important Information - The company ended the quarter with approximately $5.5 billion in cash and cash equivalents, and has initiated a stock repurchase program [9][10] - The upcoming Zoomtopia event is expected to showcase the company's platform strategy and innovations [11] Q&A Session Summary Question: Impact of macro factors on guidance - Management indicated that the majority of the $115 million impact on guidance is related to the online segment, with enterprise showing strength despite longer sales cycles [12][13] Question: Sales cycles for large deals - Management noted that Q2 saw high win rates for Zoom Phone, with expectations for revenue to flow through as enterprise customers consolidate their communication needs [13][18] Question: Online business performance - Management confirmed stability in retention rates for online business, with expectations for improvement in the second half of the year [22] Question: Growth sustainability in enterprise - Management stated that growth is coming from both ramping reps and selling into the existing customer base, with a focus on expanding product offerings [25][28]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________________________ FORM 10-Q ___________________________________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO C ...

Financial Data and Key Metrics Changes - Total revenue grew 12% year-over-year to $1.074 billion, near the high end of guidance, primarily driven by strength in the enterprise business [5][6] - Non-GAAP gross margin improved to 78.6% from 73.9% year-over-year, with expectations for gross margins to remain in the range of 76% to 78% for the remainder of the year [7][9] - Non-GAAP operating income expanded to $400 million, translating to a 37.2% non-GAAP operating margin, compared to 41.9% a year ago [7][9] - Non-GAAP diluted earnings per share was $1.03, exceeding guidance by 15 cents [8] Business Line Data and Key Metrics Changes - Revenue from enterprise customers grew 31% year-over-year, representing 52% of total revenue, up from 45% in the same quarter last year [6] - The number of enterprise customers increased by 24% year-over-year to approximately 198,900 [6] - Zoom Phone reached 3 million seats during the quarter, with ongoing success in Zoom Rooms [6][8] Market Data and Key Metrics Changes - Americas revenue grew 15% year-over-year, while APAC revenue grew 20% year-over-year; EMEA showed flat growth due to online business headwinds [6] - The strengthening of the dollar and the Russia-Ukraine war impacted revenue, particularly in the online segment, with an estimated 1% impact on overall revenue [6][17] Company Strategy and Development Direction - The acquisition of Soli aims to enhance capabilities in conversational AI and accelerate the adoption of the contact center product [2] - New product launches, including Zoom Whiteboard and Zoom IQ for Sales, reflect the strategy to expand into adjacent workflows [2][5] - The company is focused on enabling more business workflows within its platform and enhancing customer experiences [2] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the enterprise business's growth, expecting it to grow substantially faster than the online business [10] - The company anticipates modest acceleration in total revenue growth rate in the fourth quarter of FY23 [10] - Management acknowledged ongoing macroeconomic challenges but noted strong customer trust and demand for Zoom's products [25] Other Important Information - Deferred revenue at the end of the period was $1.3 billion, up 22% year-over-year [8] - The company has a billion-dollar share buyback plan, with $132 million of stock purchased by the end of Q1 [9] - An inaugural ESG report was issued, detailing the company's initiatives and performance [10] Q&A Session Summary Question: What other categories of ancillary products could contribute to growth? - Management is excited about recently launched products like Whiteboard and Contact Center, expecting them to exceed 10% of revenue in FY24 or FY25 [11] Question: How is the adoption of the contact center product progressing? - Several paid customers have already deployed Zoom meetings and are interested in the contact center due to established trust in the brand [12] Question: What is the impact of FX headwinds and the Russia-Ukraine war on growth? - FX impacts are seen in the euro, pound, and yen, with a 1% revenue impact primarily affecting the online segment [17] Question: How is the company managing hiring and investments amid macro concerns? - The company continues to hire and invest in R&D and sales, focusing on innovation and expansion despite broader tech sector slowdowns [30] Question: What is the outlook for deferred revenue growth? - Deferred revenue growth is expected to be around 9-10% in Q2, with potential for acceleration in the back half of the year [29]

FORM 10-K ___________________________________________________________________ (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 31, 2022 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-38865 __________________________________________ ...

Hello, everyone, and welcome to Zoom's fourth quarter fiscal year 2022 earnings release. As a reminder, today's earnings webinar is being recorded, and now I will hand things over to Tom McCallum, head of investor relations. Please go ahead, Tom. Thank you, Kelsey. Hello, everyone, and welcome to Zoom's earnings video webinar for the fourth quarter and full year of FY22. I'm joined today by Zoom's founder and CEO, Eric Yuan, and Zoom's CFO, Kelly Steckelberg. Our earnings press release was issued today afte ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________________________ FORM 10-Q ___________________________________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________________________ FORM 10-Q ___________________________________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Co ...