Zoom(US:ZM)2025-02-24 23:00Financial Data and Key Metrics Changes - Total revenue for Q4 grew approximately 3% year over year to $1,184 million, exceeding guidance by $4 million [20] - Non-GAAP gross margin in Q4 was 78.8%, slightly lower than the previous year due to strategic investments in AI [24] - Operating cash flow increased 21% year over year to $425 million, while free cash flow grew 25% to $416 million [26] - For FY '25, total revenue grew 3% and total enterprise revenue grew 5% year over year [27] Business Line Data and Key Metrics Changes - Enterprise revenue grew approximately 6% year over year, now making up 60% of total revenue [20] - The number of enterprise customers contributing over $100,000 in trailing twelve months revenue grew 7% year over year [21] - Zoom Docs usage more than doubled quarter over quarter, indicating strong adoption [12] Market Data and Key Metrics Changes - Americas revenue grew 4% year over year, EMEA grew 2%, and APAC grew 3% [23] - The number of contact center customers with over $100,000 in ARR grew over 100% year over year [14] Company Strategy and Development Direction - The company is focused on expanding AI capabilities to drive customer value and rapidly innovate within Zoom Workplace [17] - Strategic partnerships, such as with Amazon, are expected to enhance distribution channels and drive growth [66] - The company aims to return its online business to growth while continuing to move its enterprise business upmarket [54] Management's Comments on Operating Environment and Future Outlook - Management described the macro environment as mixed but stable, with positive momentum in the enterprise segment [62] - The company is encouraged by the traction of its value proposition and total cost of ownership in the market [17] - Future growth is expected to be driven primarily by enterprise customers, with online growth anticipated to be flat to slightly down [48] Other Important Information - The company plans to launch a custom AI companion add-on in April to automate workplace tasks [8] - Non-GAAP diluted net income per share in Q4 was $1.41, exceeding guidance by $0.11 [24] Q&A Session Summary Question: AI capabilities as a tailwind for business growth - Management believes AI investments are already enhancing service stickiness and driving customer value, with plans to monetize AI features for enterprise customers in the future [34] Question: AI's impact on larger customers' decisions - Management noted that customers are increasingly recognizing the value of AI features without additional costs, which builds trust and long-term relationships [40] Question: Top three drivers for new revenue in FY '26 - Management indicated that enterprise growth will be the dominant driver, with contact center and AI also contributing significantly [46] Question: Go-to-market investments and large customer deals - The company is prioritizing moving upmarket and accelerating channel partnerships to drive growth in contact center and other services [54] Question: Demand environment post-election - Management characterized the demand environment as mixed but stable, with improvements in churn rates and enterprise momentum [62] Question: Use cases for the custom AI companion - The company aims to provide flexibility for customers to customize their AI needs, enhancing productivity and collaboration [73] Question: Margin profile for AI products - Management expects increased usage in AI to be offset by efficiencies, maintaining a focus on profitability while investing in growth [81]