Financial Data and Key Metrics Changes - Total revenue for Q3 FY2026 grew 4.4% year over year to $1.23 billion, exceeding guidance by $15 million [13] - Enterprise revenue increased by 6.1% year over year, accounting for 60% of total revenue, up 1 percentage point year over year [13] - Average monthly churn was 2.7%, matching last year's Q3 and marking an all-time low [13] - Non-GAAP gross margin improved to 80%, up 117 basis points year over year due to cost optimization [14] - Non-GAAP income from operations grew 11% year over year to $507 million, exceeding guidance by $37 million [14] - Non-GAAP diluted net income per share increased to $1.52, $0.08 above guidance and $0.14 higher than last year [15] - Operating cash flow grew 30% year over year to $629 million, with a margin of 51.2% [16] - Free cash flow margin increased to 50%, up 11 points year over year [16] Business Line Data and Key Metrics Changes - AI Companion adoption surged more than four times year over year, indicating strong demand for AI-driven solutions [8] - Team Chat monthly active users rose 20% year over year, enhancing asynchronous work capabilities [8] - WorkVivo logos grew nearly 70% year over year to 1,225, indicating strong performance in employee experience offerings [9] - Zoom Phone surpassed 10 million paid seats, with consistent ARR growth in the mid-teens [9] Market Data and Key Metrics Changes - Americas revenue grew 5% year over year, EMEA grew 3%, and APAC grew 4% [14] - Customer experience segment saw high double-digit ARR growth, with nine of the top ten CX deals involving paid AI solutions [11] Company Strategy and Development Direction - The company aims to evolve into an AI-first platform for work and customer experience, focusing on three priorities: elevating core products with AI, driving growth of new AI products, and scaling AI-first customer experience [7] - The acquisition of BrightHire is part of the strategy to enhance collaboration and customer engagement through AI [10] - The company is committed to disciplined growth while investing in AI and maintaining strong profitability [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's durability and the growing value delivered to customers [7] - The outlook for Q4 revenue is projected to be in the range of $1.23-$1.235 billion, representing approximately 4.1% year-over-year growth [17] - The company raised its full-year revenue guidance to $4.852-$4.857 billion, indicating a positive growth trajectory [18] Other Important Information - The board authorized an incremental $1 billion share repurchase, reflecting confidence in the company's financial health [18] - Deferred revenue grew 5% year over year to $1.44 billion, with expectations for continued growth in Q4 [15] Q&A Session Summary Question: Outlook for Q4 and pricing strategy for next year - Management indicated that they are not yet at the planning stage for FY2027 guidance, but enterprise growth will continue to be a key driver [22] Question: Pressure on enterprise net dollar expansion and seat-based contraction - Management noted that net dollar expansion is stabilizing, and while some seat pressures exist, overall macro demand remains strong [28] Question: Future M&A strategy - Management reiterated a disciplined approach to M&A, focusing on small to medium-sized acquisitions that align with strategic goals [33] Question: Sustainability of growth in Zoom Phone and customer experience - Management highlighted strong growth in Zoom Phone and customer experience, driven by AI integration and customer demand [41] Question: Integration with other productivity software - Management confirmed ongoing integrations with major productivity tools like Google and Microsoft, emphasizing the importance of customer feedback [66] Question: Free cash flow performance - Management acknowledged improvements in the collections process contributing to free cash flow, which is expected to remain durable [72] Question: Expansion into HR and other business workflows - Management confirmed that the BrightHire acquisition is part of a broader strategy to expand into mission-critical business workflows [82]

Financial Data and Key Metrics Changes - Total revenue grew 4.4% year over year to $1.23 billion, exceeding guidance by $15 million [12] - Enterprise revenue increased by 6.1% year over year, accounting for 60% of total revenue [12] - Non-GAAP gross margin improved to 80%, up 117 basis points from the previous year [13] - Non-GAAP diluted net income per share rose to $1.52, $0.14 higher than Q3 of last year [14] - Operating cash flow grew 30% year over year to $629 million, with a margin of 51.2% [16] Business Line Data and Key Metrics Changes - AI Companion adoption surged more than four times year over year, indicating strong demand for AI-driven solutions [6] - Team Chat monthly active users increased by 20% year over year [6] - WorkVivo logos grew nearly 70% year over year to 1,225 [7] - Zoom Phone surpassed 10 million paid seats, marking significant growth in unified communications [7] Market Data and Key Metrics Changes - Americas revenue grew 5% year over year, EMEA grew 3%, and APAC grew 4% [13] - The number of enterprise customers contributing over $100,000 in trailing 12-month revenue grew by 9% year over year [12] Company Strategy and Development Direction - The company aims to evolve into an AI-first platform for work and customer experience, focusing on elevating core products with AI and driving growth of new AI products [5] - The acquisition of BrightHire is part of the strategy to enhance collaboration and customer engagement through AI [9] - Customer experience is identified as a fast-growing business segment, with high double-digit ARR growth [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's durability and the ongoing demand for AI solutions [5] - The company anticipates continued growth in enterprise revenue and a slight increase in online business for the full year [22] - Management highlighted the importance of stabilizing churn and diversifying products as key growth drivers [24] Other Important Information - The board authorized an incremental $1 billion share repurchase, reflecting confidence in the company's financial health [18] - Deferred revenue grew 5% year over year to $1.44 billion, with expectations for continued growth [15] Q&A Session Summary Question: How should we think about growth heading into next year? - Management indicated that they are not yet at the planning stage for FY2027 guidance, but enterprise growth will continue to be a key driver [22] Question: Can you discuss the pressure on net dollar expansion and seat-based contraction? - Management noted that net dollar expansion is stabilizing, and while some seat pressures exist, overall demand remains strong [27] Question: What is the outlook for M&A in the future? - Management reiterated a disciplined approach to M&A, focusing on small to medium-sized acquisitions that align with strategic goals [32] Question: Can you elaborate on the growth sustainability of Zoom Phone and customer experience? - Management highlighted strong growth in Zoom Phone and customer experience, driven by AI integration and customer demand [38] Question: How is the company addressing the demand for integration with other productivity software? - Management confirmed ongoing integration efforts with major ecosystems like Google and Microsoft, while also adapting to AI-driven customer demands [58] Question: Were there any one-time benefits to free cash flow this quarter? - Management clarified that improvements in the collections process contributed to free cash flow, which is expected to be sustainable [61]

Summary of Zoom's Earnings Call Company Overview - **Company**: Zoom - **CFO**: Michelle Chang, who joined in October 2024 after 25 years at Microsoft, where she was CFO of Teams during the pandemic [2][4] Key Points and Arguments Company Strategy and Priorities - **Growth Rate Acceleration**: The primary focus is on accelerating growth rates, which is crucial for stock performance [5][6] - **Capital Allocation**: Emphasis on refining internal and external capital allocation, including an aggressive buyback strategy [6] - **Business Evolution**: Transitioning from a meetings company to a comprehensive workplace platform, expanding into adjacent Total Addressable Markets (TAM) [6][10] - **AI Integration**: Infusing AI across products and monetizing AI capabilities more explicitly [6][12] Product Offerings and Market Position - **Workplace Platform**: Zoom is not just a meetings tool; it includes calendar, chat, collaboration, and email functionalities [10] - **Customer Experience**: Significant demand in customer experience solutions, particularly in contact centers, with AI driving growth [11][12] - **Employee Experience**: Strong demand from Fortune 100 customers for employee experience solutions, with many new customers being introduced to the Zoom ecosystem [13][45] Growth Drivers - **New Customer Acquisition**: Focus on bringing new customers into the ecosystem rather than just upselling existing ones [14][15] - **AI as a Differentiator**: AI is seen as a key driver for growth, with a focus on democratizing AI value for all customers [16][17] - **M&A Strategy**: Future acquisitions will align with business priorities and aim to accelerate top-line growth [18] Recent Performance and Guidance - **Quarterly Results**: The recent quarter showed strong performance, leading to raised guidance for the full year [34] - **Price Increases**: A planned price increase for a subset of customers, expected to generate an additional $10 million to $15 million [34][38] - **Churn Reduction**: Online churn has decreased significantly, providing confidence for the price increase [37][38] Competitive Landscape - **Contact Center Growth**: Zoom is experiencing triple-digit growth in the contact center space, attributed to its omnichannel excellence and AI capabilities [46] - **Partnerships**: Strategic partnerships are essential for expanding capabilities and market reach [48] Capital Management - **Buyback Strategy**: Recent buybacks were both opportunistic and a response to investor feedback, with a commitment to a $1.2 billion buyback program [49][50] Additional Insights - **Customer Sentiment**: Surveys indicate that customers are willing to pay for added value, reflecting confidence in the platform's offerings [40] - **WorkVivo Success**: WorkVivo, an employee experience platform, has seen significant growth, with 90% of its customers being new to Zoom [41][45] This summary encapsulates the key insights from Zoom's earnings call, highlighting the company's strategic direction, product offerings, growth drivers, and recent performance metrics.

Financial Data and Key Metrics Changes - Total revenue for Q1 FY26 grew approximately 3% year over year to $1,175 million, exceeding guidance by $8 million [18] - Enterprise revenue increased approximately 6% year over year, now representing 60% of total revenue, up two points year over year [19] - Average monthly churn improved to 2.8%, a 40 basis point improvement year over year, marking the lowest churn rate for Q1 [19] - Non-GAAP gross margin for Q1 was 79.2%, slightly lower than the previous year due to AI investments [20] - Non-GAAP diluted net income per share was $1.43, exceeding guidance by $0.12 and up $0.08 from Q1 of last year [22] - Deferred revenue grew 5% year over year to $1,430 million, in line with the high end of the previously provided range [22] Business Line Data and Key Metrics Changes - Adoption of Zoom AI Companion grew with monthly active users up nearly 40% quarter over quarter [8] - Zoom Phone revenue grew in the mid-teens, indicating strong performance and market expansion [12] - The number of Zoom contact center customers grew 65% year over year, with Zoom Virtual Agent landing its largest deal to date [13] - Total WorkVivo customer count grew 106% year over year, driven partly by a partnership with Meta [15] Market Data and Key Metrics Changes - Americas revenue grew 4% year over year, EMEA grew 1%, and APAC grew 2% [20] - The customer experience offering has rapidly evolved, with a triple-digit million ARR business growing in high double digits [13] Company Strategy and Development Direction - The company is focused on AI-powered innovation to redefine modern work and deliver cost savings and productivity gains [6] - A strategic partnership with Bell Canada was announced, enhancing channel capabilities [16] - The company aims to drive value for customers while navigating an uncertain macro environment, emphasizing an AI-first strategy [17] Management's Comments on Operating Environment and Future Outlook - Management noted strong demand across the business, with no significant impact from macroeconomic conditions on online business [44] - The outlook for enterprise business is cautious due to elongating deal cycles and increased scrutiny on deal terms [44] - The company raised its full-year revenue guidance by $15 million, reflecting increased product value [25] Other Important Information - The company accelerated its share buyback plan, purchasing 5.6 million shares for $418 million, indicating a commitment to delivering shareholder value [24] - The company expects to recognize 61% of total RPO as revenue over the next twelve months, up from 59% in Q1 of last year [23] Q&A Session Summary Question: Adoption of Zoom AI Companion in SMB segment - Management noted that the number of active users has significantly increased, with more customers realizing the value of AI features [31][32] Question: Customer traction with higher price SKUs in contact center - Management highlighted that Q1 was the largest quarter for ARR contribution from the contact center, with many customers opting for elite SKUs due to AI value [40][42] Question: Competitive dynamics in core video meeting solutions - Management emphasized that employee preference for Zoom remains high, and the total cost of ownership is favorable compared to competitors [48][49] Question: Early reception of online monthly pro pricing increase - Management indicated that the pricing increase reflects incremental value delivered to customers, with no significant churn observed [66][67] Question: Trends in enterprise deal elongation and down sells - Management reported continued low churn rates in enterprise and online segments, with no significant down sells noted [114]