Zoom(US:ZM)2022-05-24 01:30Financial 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]