Conference Transcript - ZM 2026-06-02

Arjun Batia, Analyst — William Blair

you got a chance all right um we'll go ahead and um get started thank you everyone for joining us thank you michelle for being here michelle's cfo of zoom um before we get started some disclosures my name is arjun batia i am the research analyst here at william blair who covers zoom for a full list of disclosures and conflicts go to our website at williamblair.com all right let's get started um so zoom i think you've been on quite a journey as a company um i think maybe a lot of investors here that still think you know zoom is just a meetings company there's a kind of maybe an updated version of of what you do but just talk about how the company has changed since the initial sort of um hockey stick in 2020 what's different about the platform and how it's sort of broadened out from just meetings to everything that you do today yeah awesome um is this on

Eric Yuan, CEO

okay so um it's such a good question and such a good way to kind of start the day because um look it's it's a blessing and i guess a little bit of a curse when you have such a strong brand that everybody associates uh with you know with the meetings and so So really, if you think about it, Zoom went through just, you know, enormous growth in the pandemic and then went through years of what I would call reinvention and differentiation, really, you know, diversifying our product set, taking a moment to say where are national adjacencies that we can go. and really what you're seeing i would say in the last year year and a half is us fully stepping into and the rest of the world getting to see a little bit of all that we've become and so this picture kind of describes it but let me maybe breathe a little bit more life into it so um if you think about like we have this core in meetings we move naturally into you know phone which is another big business for us and there were natural adjacencies of sort of webinar and then came sort of this AI era and we've moved more into contact center and new AI revenue streams but all of this sort of a way to say if you think about all that Zoom can see of what happens inside the organization You know, when you're on that meeting, you're having the conversation, be it a sales call, you know, internal call to try and make some decisions. There's so much unstructured data and so much context and decisions that can be easy to get lost. and so it's the power of sort of all that Zim knows about what happens on inside an organization as well as now a much more diversified product portfolio that also expands beyond the boundaries of an organization and products like customer experience and really if you think about it where we are going is about reinventing the modern workplace into a system of action We used to be just about conversations and having a great quality conversation, but for us now, the journey going forward is far more about that context of what we can see inside and outside the organization and how we can help bring together really into meaningful action. so we call it conversation to completion for our customers because ultimately completion is what what you know drives business value so i'm sure we'll get into different pieces of that um but a high level moving far more from the meetings to more of a platform diversified product set all in service to this concept of reinventing the modern workplace into a system

Arjun Batia, Analyst — William Blair

of action is there like um a like real world sort of practical example of what this system of action

Eric Yuan, CEO

looks like once it's implemented yeah um we were laughing last night because i'm like sometimes these things feel like corporate words so let me give two tangible examples of what i mean maybe i'll give a inside organization one and then outside um organization um so think about inside the organization. You're a seller, right? You're having to meet with a customer, but you meet with customers all day. So you don't remember last time when you met with the last customer, what the heck you talked about. Well, all of a sudden with AI, you can query all your meetings. You've had various conversations with them over the year. Maybe other people in your organization have had conversations. So all of a sudden you're preparing for the meeting with far more context and richness of information than you've ever had before then you go to the meeting right it goes in all sorts of different directions right you conversation wanders customer you know has various needs and all of a sudden you have a very easy package summary of what happened in the meeting that can just automatically be sent off in the way that you want to to recap what the meeting happened but let's say you're a seller who hates updating Salesforce afterwards you can just it's listening to your entire conversation of your meeting and it's updating Salesforce in the background let's say you decided that you wanted to have a follow-up meeting it's listening in the background it's matching your two calendars and it's figuring out when you can meet next well let's say the conversation was a long one and there's a lot going on with the customers and there's a million tasks that you you need to follow up on it's capturing all of those in the background that can go into the meeting summary or can just be for you and your personal context so that you don't forget because you've got five more customer meetings afterwards and so that whole concept is then you can begin to get a sense of how that meetings lifecycle gets a lot more rich and becomes much more of a system of action where you're taking that action in the context of kind of where the work is getting done let me give you another one inside or across outside the organization and it'll go into inside as well so let's say you're a agent in a contact center right you get a call from a customer let's say it goes even to a virtual agent before they have some quick simple needs that just get addressed without even having to involve an agent let's say there's a more complex problem it goes to an agent the agent is new the agent like there's a lot of turnover in contact center um has never dealt with this problem but all of a sudden ai is assisting them in solving the problem and using the richness of all the things that have happened before and it knows how to solve the problem even though the agent might not have been aware previously let's say the third problem that the customer had when they called in is extra complex right and they need to talk to manufacturing or they need to talk to engineering and let's say it even is complex where they need to like show them the problem with video all of a sudden you have the richness of being able to turn on a camera show the problem route the call back into the inside of the organization to get it resolved to go back and serve the customer let's even take it a step further with ai um because all of a sudden you can see how this system of action that we're talking about is already delivering much more value for the customer let's say now with a product that we just released in the spring let's say you're the head of engineering and you don't want to just know about that single customer you want to know what are the top problems that people are calling and let's say you're the ceo who wants to know you know what are the top three things and are they changing and let's say you just want to get this update you know daily you can essentially have an agent that is looking across the richness of your contact center organization feeding it up to you and you have that richness of that system of action and and intelligence in new and cool ways uh that we think are really frankly going to develop you know new value for our customer like gone are the days where we just have excitement for ai for ai's it's about can you prove real-life business value so we're excited about

Arjun Batia, Analyst — William Blair

very interesting and in that first example you're essentially taking all this unstructured data that from conversations that are happening on zoom in in some cases you're even feeding into third-party systems and those systems can then take action based on a conversation and it's such a good

Eric Yuan, CEO

point because look those conversations don't just have to be on zoom they can be on meet they can be on teams they can be in person so with we have a new

Arjun Batia, Analyst — William Blair

product called my notes where it's basically like a virtual personal note

Eric Yuan, CEO

taker so you can just turn it on so in any scenario you know we're there to meet the customer and have that conversation so that you can kind of experience that and you don't just have to be on Zoom. Yeah okay very interesting and I think

Arjun Batia, Analyst — William Blair

yesterday you announced yeah yeah that's right and product okay I got you okay perfect so what how do those sort of add on to this value proposition sort of your own personal assistant or maybe you can talk a little bit about that yeah

Eric Yuan, CEO

and so for those you guys are all busy that may have missed that line basically you know how I talked about this concept of a conversation to completion zoom made is really this completion part so if you think about where zam started their ai journey it was a lot of you know conversation and and recording the conversation summarizing it capturing the key decisions the actions and stuff and so what we announced in zoom mate we've been working our way there um but this is sort of the rebounding and the big moment of completion um is really our paid AI office sort of horizontal of our meetings and phone business. So Zoom, just as background, took kind of a differentiated position where we decided that AI values should be in the core of our meeting suite and our phone suite to our paid customers at no additional cost. So ZoomMate is sort of the paid tranche of that, the higher value, and you basically get three things in Zoom. One, the ability to search. The ability to search over third-party data, the ability to search over your own company's you know assets, the ability to search of course over web, and then also your personal notes and stuff like that. So a really powerful search engine. How many times a day do we all try and find something? Second piece of value is really about orchestration and in this it's that multi-tier you need to take an action writing back to a jira ticket writing back to the salesforce ticket you know being able to in the flow of your work take action and go um in multi steps sometimes that can be creating tasks and and executing them scheduling a meeting like the example that i talked about sometimes is also third party like rewriting you know up to sales for surgery the the third part is really about this concept of completion and it's where you get back into the ai productivity suite um and so look we we announced uh things that would be sort of like a document writer a spreadsheet and you know sort of a slides concept and this is really not about productivity suite for productivity suite's sake because i think we're in a different an app with the AI where again everything in an AI world is kind of getting rethought and and so this is about in the flow of the work take that meeting example with the sales that we talked about earlier we we went in different directions I heard things unique to the customer and I have some kind of canned decks that I like to share after the fact about how we can meet their problem but now all of a sudden I can say if I have zoom mate create a personalized PowerPoint for my customer that's an RFP right and and so look you're always gonna want to have human in the loop and all those things but all of a sudden I can walk out of that meeting take action not just to summarize the meeting and do the actions like we talked about before but actually to turn it into like a customized presentation that you can leave the customer with in case there were other people that weren't able to attend or they want to think further about it yeah so it's really that completion of the circle it becomes like

Arjun Batia, Analyst — William Blair

very end-to-end versus just yeah okay right and maybe let's talk about monetization so zoomate will be monetized maybe talk about like where you are just generally on the AI monetization journey today yeah and because this is an evolution right of things that you've had so yeah talk about that and then like how you see that sort of changing in the future

Eric Yuan, CEO

For Zoomate in particular or Zoom at large?

Arjun Batia, Analyst — William Blair

Zoomate in particular, start with that and then we can go other directions, yeah.

Eric Yuan, CEO

So look, I guess broadly, and we'll get back to this, like to me, AI monetization, the true barometer has to be does it inflect your revenue growth all up, right? These concepts of just putting out big stats, I think are a little dated, you know? They can be good for flashy stuff, but like ultimately what matters is does it inflect the overall revenue growth of the company? and so that's how we think about it and and so to answer the headline at a high level yes it's already inflecting our revenue growth it's it's a an important point of what's uh driving sort of zoom's revenue growth inflection i talked about how uh we put ai companions to think about that is that's the summary of the conversations in the meetings that's the stuff that's included in our paid skews at no additional cost so that's our indirect monetization zoom mate is the horizontal play on top of that and it's a 20 skew with some ai credits in it meaning you you have it per user per month so you get that predictability with a certain amount of consumption to experience it and then you'll have packs on on top of it okay interesting and then um i think your point on just

Arjun Batia, Analyst — William Blair

it has to inflect the revenue growth like that's the barometer for success I think it's an important one and you have been AI companion has been included in your free plans like what has that done just from a competitive perspective like is it driving more customers to the platform is it reducing churn like what are the positives that you see from adding that value to customers yeah I

Eric Yuan, CEO

mean I think look we think about it on a couple of different lenses and then I'll maybe talk about the competitive well let me hit the competitive and then get back to why Zoom and look I think you know at the time Zoom took a differentiated position and putting it in our paid SKUs at no additional cost that's things like meeting summaries capture my actions send the notes out afterwards those kind of uh I join a meeting late I can't join a meeting I have access to be able to query with AI all the sorts of things that I would want to know and look that was differentiated uh at the time um with the intent of really like zoom is a very customer focused company like wanting our customers to really get in and understand what ai in a meeting scenario uh would look like um and so we're we're pleased with our results but i think competitively let me hit that the you've seen some in the market move to that try to monetize and then move and And then I think there's others that have large CapEx bills that are hanging on more so to trying to monetize from step one. And look, from our standpoint, we've taken much more like we want to get that virality of use in our customer base. We want them to be out there experiencing it. And we want to start to create that meetings lifecycle in part because of some of the indirect monetization elements that you talked about. Like it will bring in new customers. It will bring in, we have quite a large free base at Zoom, you know, we'll have some of that that may come into a monetization skew. So there's sort of the free conversion certainly creates more sticky and reducing churn. And then we've certainly seen a lot of this AI value bring in new customers. So for us, we look at as barometers to success, indirect monetization, but also just getting that virality of usage. And in our last earnings, we announced that our Mal was up 184%, been up two to three times for many years or quarters since we've had it out. So something that we're excited about. And then we also announced this concept of MyNotes. So think of this as like your personal note taker, granola-ish. You can have it even if the host doesn't want to turn on a note taking capability. you have the ability to take notes at the same time and we announced that my notes even four months into its introduction has hit a million or 1.5 million so interesting we're excited about a lot of the new scenarios coming

Arjun Batia, Analyst — William Blair

and it's all becomes like searchable under one sort of umbrella which is I think a challenge and I personally have a lot with my we have this concept of we

Eric Yuan, CEO

call it canvas right think of it as you know again third party meetings in person let's say you and i were just having a conversation i could turn on my notes have it listen to the full context of our meeting teams google zoom no matter how or where you meet because a lot of our customers meet on various platforms even in the context of a day and then all of a sudden it's writing back to canvas and um you have literally every meeting that you've ever participated in you have the meeting summaries as well as you have other things and all of a sudden you have the richness of an ai you know data set to be able to search over i'm sure you meet with oodles of investors and clients and you know think about the power of what that can unlock i think that sounds very

Arjun Batia, Analyst — William Blair

valuable um okay i want to touch on monetization of now that sort of the upgrade path right customers come in you're saying ai sort of what you've embedded into the platform is driving new customers it's driving a free to paid sort of conversion um and then you have this premium skew with with zoom what is um getting customers to sort of upgrade um and i would love to hear just maybe i hear about this like you know customers are very they're dealing with a lot of ai from a lot of directions and they're trying to figure out how to implement ai to get sort of practical value so where are customers sort of in that readiness journey to upgrade from the free embedded zoom ai capabilities to then you know premium a premium skewer are we still early on or

Eric Yuan, CEO

is this sort of i think the ai journey is still at a meta level early on um look there's some customers that are that are all in and embracing it and and you know fully into that and and then there's others that are you know maybe more like okay i want to try the my notes skew i want to try the summaries i want to try that and so experimentation really our whole land and expand is about kind of providing an entry point no matter where you are in sort of the maturity if you want to go all in and you know we haven't talked a lot about contact center but that's another huge huge ai inflection point for us you know we have that full platform suite and then we have everything down to i just want to turn on note taker um and so i think at a meta industry level we're we're early on but look it is to just re-emphasize my point earlier it is inflecting our

Arjun Batia, Analyst — William Blair

revenue growth uh all up already okay let's talk about um some of the other you know the other drivers because you have also broadened out the platform quite a bit from you know just meetings to phone contact center um you know even internal sort of employee experience type use cases so maybe we'll start with phones since i think it's the it's the biggest um you've announced it's past 10 million seats it's sort of sustaining growth in the in the mid teens um where are we in the journey of sort of penetrating the zoom phone tam and you know how much more runway is there left for growth in that in that product it seems like a big

Eric Yuan, CEO

contributor yeah so our phone business you gave all the stats so I won't reiterate but it's it's a great area of growth for us in mid teens and one where we're clearly taking shares so let me talk a little bit I mean I could give you the market stats right like our cloud seeds they estimated something like um 130 million plus on-prem 150 million plus we're winning on on both fronts right um so let me maybe talk a little bit about why i think we're winning and seeing such continued share yeah um there's all the traditional zoom and fast pace of innovation strong quality security kind of all the you know customer ethos and and innovation so setting those aside even though they're great And I think increasingly what you're seeing in phone is winning on kind of three vectors. And I think you see this on a lot of the customer examples and our earnings remarks, but we spend a lot of time doing kind of last mile engineering to open opening up some verticals, which is really just you've got those scenarios there are unique for those that maybe don't spend all their day on the phone, there are verticals where this is a critical component. So we've done some last mile vertical engineering that's really opening up new markets. Second one is AI. You can imagine if, and maybe for us that spend our day in front of a computer, it's a little hard to realize, but there's a ton of people that spend all day on the phone, Imagine having to summarize that with AI and all the voicemails and that. And so there's some really powerful AI examples that are turning out to be big wins for customers. And then the third vector is we're one of the only players in the market that has scale and UCAS and CCAS. And so this concept of the system of action is better together and having that is a clear win. So we're seeing a lot of our large phone wins print in our largest contact center and vice versa.

Arjun Batia, Analyst — William Blair

And contact center, you're actually, I think it was a year ago that you announced you've passed 100 million in ARR. We're actually seeing sort of displacements. I think you're seeing legacy, but also modern sort of CCAS players. And so what's the sort of the edge there that you have? it's UC and CC together but I'm sure there's others from like a product

Eric Yuan, CEO

perspective yeah and so you gave the stat about the you know crossing 100 million we've also you know continued over several quarters to grow at high double digits meaning closer to a hundred right and even in the last two quarters inflecting further yeah and so what what is driving that it's this concept of ai unlike a legacy player this is i think one of the things that maybe um you know we we're continually out there talking to investors about um because they look at like a nicer genesis and they say well you know aren't you going to lose seats you know with agents and zoom is coming at this in a very different chapter with a fresh modern ai perspective where we don't have either the legacy tech debt or the legacy business models and we come at it where it's in essence all agreed and that's why we're taking shares so like if you look at our top 10 deals eight of 10 and it varies it's usually like somewhere in between eight and ten per quarter our legacy ccas providers you tend to not have the modern in the top tens but they're we're winning in both and we're winning as you said on on the sort of the UCAS and CCAS and strength and that's really a differentiator but look we also win on just the fullness and the strength of our platform our customers constantly say you can you know what we put on a list and ask like a legacy player to provide they tell us we'll be ready in a year or two and and you're able to deliver in three to six months so that fast pace of innovation as well as that full um you know concept of we've got a virtual agent that virtual agent for zoom uh is a relatively new entrant it's an area where we spent a lot more time so that's part of what is inflecting that high double-digit growth so we got a virtual agent an ai assisted agent uh skew and now we've got this intelligence layer that i referenced earlier across the top and so look we think it's that fullness of that platform as well as the UCAS, CCAS as well as just strengthen the product in general that's really a differentiator

Arjun Batia, Analyst — William Blair

for Zoom. Okay I want to sort of bring it all together a little bit because you have all these like different growth vectors that are driving the business you've said growth is already inflecting I think you know in the past it was low single digits now it's getting closer to mid-single digits and so what is what are your kind of aspirations for the business over time like what can the growth rate be what do you aspire to

Eric Yuan, CEO

yeah get the business to operate at maybe I'll do a little bit because we haven't really hit on this before but I've just been grounding and kind of James business 40% of our business is our online business think of that as solopreneur SMB 60% is enterprise think of that as SMB all the way up to full you know fortune pen um we've really been and i separate this in our growth story because i think they have two different stories of growth in online this is the area where post pandemic we were declining right and so we've worked very hard on stabilization right and we've taken it from declining eight percent to flat to now last year we took it to grow and i think that's a lot that platform value um some of it is just sheer distance from the pandemic 70 close to 75 percent of our customers have been with us for over 16 months um you know so just it's a very different base um and now i'm getting super excited and we'll start talking to investors more but i think that path to land and expand and online is getting clearer you know bringing down products that might you know that already exist in enterprise and bringing them to online we made a cool acquisition in bonsai that's sort of like an all-in-one package for solopreneurs to get started on that's crm and billing and things like that and so adding with acquisition stabilizing the base um and then bringing in ai value things like my notes when was the last time beyond a meeting limit that we had something kind of new and differentiated to sell that free base so i'm getting excited about a lot of the routes that we'll see in online but for right now it's like moderate kind of low single digit growth that we're kind of that's how i think about that and And look, it's our enterprise business that's really going to be the differentiator for growth. That's where that full suite, if you will, of product differentiation comes in. That's where the fullness of our AI platform, the fullness of this vision that we talk about comes in. And growth really comes from product diversification, AI monetization, and new routes to market. so we haven't talked as much about channel but Zoom has been working very much to build out a channel essential when you're in sort of phone and contact center businesses and I think we're we're seeing great fruits of labor there so all right all right that is all the time we have

Arjun Batia, Analyst — William Blair

Michelle thank you so much. Fascinating conversation. Thank you everyone for joining.