ZM - Earnings call transcript Q4 2021 | Zoom Video Communications, Inc.

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Samad Samana

Hi, everybody. Thank you for joining us today. My name is Samad Samana, and I cover software, here at Jefferies, including the enterprise communications space. And we're really happy to have with us today, Kelly Steckelberg, the CFO of Zoom. And Kelly, thank you for your time. hear company. to excited really about the We're Normally, are maybe less these off tell those that with, for familiar what do. I you kick us with the company, after with But aren't a shocker. think Zoom the be last at it if would XX familiar this people I months, point,

we So, start what year, start let's with, about somewhat talk about in think different off last We're coming should maybe maybe once-in-a-generation Zoom. kind moment the for pandemic? how coming And company that we'll the and experienced of a business? out excited of And a as way. year about for let's you're what we're the

Kelly Steckelberg

sure. Yes,

of thank here. give think, we million for a thrilled So, so Zoom. were having for all to of you us XX participants. And us. just to was be year of reminder at as a We're December XXXX, averaging year meeting lifetime, first, last And some I much a in context, daily absolutely

[indiscernible] were ballooned to So, momentum through had last an XX-times participants, And daily meeting for of And million growth us. the that joining so day. continued months on that year. that a April, XXX matter by a really meeting within year average

we two got And in the we've some you were Zoom around PBX to Events, old, but the through that and quarters building a is to and And detail, leveraging continued they could by of of the can maybe and on this about innovation this events really in of announced year webinars virtual. year more think started in Zoom of and over more is to And started we cloud stats talk that and that years -- we it needed see saw find ability on And first ourselves stabilize safe which The which about of through events multiple waiting strategically momentum normalize shifting Zoom to rest couple but sure we that in, of with And with the for we as moved were our companies that focused well. also the in little portfolio. like acceleration started to year, from year that of is as that which where you last we things our UCaaS their productive, that to a same kind some talk could support what lot ago that's of some abnormal at the a adding And we simulcast platform then a meant as webinar grow. like solution Meetings. to even that Phone weeks in-person time. -- things terms then to primarily corporates Phone. and Zoom about organizations product, allows making first-half momentum, and were to employees starting could talk bit, situation buying spawned Phone. the about has had the we a Zoom few the completely large room, greenrooms

is So, is in-office world of really back of go to that year-and-a-half, work, really to their which going support be going employees that, probably a looking work, and that combination some and to and want some the forward last where support to organizations the convenience all working. remote in over we're the experienced but to we've way probably there's to aspect Zoom here

Samad Samana

was as Zoom apartment. in was as my usage even is high with started you home tell that it can when to back go certainty as worry, to completely voluntarily, I I've the sitting don't just I that office, at my

products. you And So, to the newer going that's mentioned some that I away. go think of don't maybe

Samad Samana

address what that I'd think the and love and XXX for you -- And times still going are much million just would more out million-plus, that, Zoom company the just as to is its understand to will thinks when I think room to from the growth meetings users. forget but leaves Zoom? for the company and daily often XXX about guess, I about maybe eye-popping, is helpful opportunity be you to algorithm the position XX I that think opportunity in ahead left it that million numbers market, there how still the ample

Kelly Steckelberg

doesn't it not the the Absolutely. like this question, get Zoom But how sure. case if like year, that made doesn't this often at last it. through need for have somebody have I they it everybody right, point is have that

that use maybe see our So, in anecdotes closed the a and think, we that. had would couple if we a history because penetration metric our you And track assume that a different the examples had to the large they of type can were had financial or of access was of for in Zoom. institution need they the in credit had sales institution. everybody I largest that institution is, is and And point cycle. we But roles interacted organization And to this company's I a It customer-facing to you like departments QX. were, U.S.-based divisions XK. [Ph] There And in that deal access it. multiyear some Zoom, or was the] [in internally access measure probably Zoom, not a they card. individuals in to to Global probably with buying growth continue the they because certain were then customer had, examples

the Global if us. more organization, would mean And today, more at with sizable deployment a a spending year $XXX,XXX you obviously a that XXXX, year. size than are them $XXX,XXX of an of than So, only XX% look

that are some down with year have XX%, of when an drop $X,XXX a So, you probably has with yet us, XK more says deployment a lot us. to there that that than up take of to to that organic to XX% the organizations more in those there's spending the number shows are well hold. over that goes opportunity me XK Global many spend Global And how metric the which

is still And that expand, how it. so we again, that's think that, to continue about and to opportunity there

Samad Samana

is Phone That's a of we you using strong that. a think reported year, to to still just appropriate going million that great. on just quarter off probably understand in out is And ahead mentioned jump the in that is decisions The and -- coming triage, strategically last there. that I of and are to where And strategic lot company that ask conversation, offering? about go you remind investors, that. and videoconferencing And to that made that momentum part impressive. UCaaS you there's I maybe was it's what's incredibly the to for and overall everybody lines, try that's X.X ahead that's Zoom of component but what Maybe the later one Phone, trying left companies us are Zoom be how core video with together it help driving to was

Kelly Steckelberg

Yes.

also for on first-half organizations on-prem our our install the advantage plunge And into and that as strategy on selling They you laptop pause everybody have kind gives I Phone can where having of said the sell at I can a into don't them that's taking need the expensive think, moving started in there. and phone of is that mobile sitting back-half Zoom them being to into of last they little phone aren't on the they offices earlier, finally took Phone year. came carry or being looking the phone phones lines the sitting their So, as But existing to, around by desktop. of And from And cloud, and very device; people. their are realize no lines thousands really used they are. by that there base. phone an that matter year, they in the

You could phone. to headset a your be really leverage

really using handsets them, time, last asked reason the phone CIO in a In taking so Zoom cell why said, just that to quarters of you million, tone, our one there's pick that, approach. And as There which months And dial And Phone because and headsets momentum has with have "Well, coupled we we that on. [spurred] much had Phone in And had benefits some is seven accomplish. later, Meeting. when absolutely took to organizations that approximately X.X to from X announced lots closet. Zoom cloud. for it there. that think works, of And it phone sitting really fact, somewhere that with servers million seeing there's that of four in gone changed to has just when this terms really having so than seats And rather mess XX% [Ph] we by tackled pandemic -- us he that area December, are a I up cost-effective phone gotten right. buying it." announced, I one million for been are IT more think we said, a I the deployments But it you

call it to your more then Phone have users one for when client And now all, using like -- get video from launch you a into Chat, using you're a of video one-click meeting. the in an launch into of approach. Meeting just vendor simplifies is meeting. First integration, Zoom Zoom It very existing terms if audio phone Or or your icon you benefits intuitive other one-click as it's a there.

seen from having we've those of for together. lot phone their how now customers that meeting a really have transformed their trust do there's we benefits come So, experiences that experience. amazing same the could And

Samad Samana

X.X impressive. what's averse, XX your It maybe hear. clearly the making enterprise them even that I more we're there That's And great just and guys shows to momentum. generally think out with smaller very large not XX,XXX-plus stood -- gain is And you they're momentum it's But thaw me obviously, there. seats, helping risk what enterprise Maybe the seeing more right. was to clearly customers. but is customers million, the

So, would driving as well? the what's understand market love success up maybe to

Kelly Steckelberg

than And customers seats XX,XXX we're actually today. to up XX that applied more have Yes.

Samad Samana

Well, on like event, news Nasdaq I the I co-hosted Jefferies and a that. so breaking

Kelly Steckelberg

And our Phone seeing really Meetings has running the us in I general giving very backbone a that Meeting. is And in as again, part as customers early Zoom is in have momentum, rise of we'd to actually days. And enterprise think remember, that from from brand. what reliable how so, in the comes been. that strength Zoom And had same trust Zoom on Zoom Phone the

ever that you've Zoom your used is that, difference on easier to calls. Zoom joined on. either using phone and computer, the Phone runs Zoom end If The same spontaneous opportunity via that Phone for number of you're the management and it the meeting audio made a created you've have infrastructure

of larger datacenter to given work And all organizations, come reliability. a And organizations, so, we've they've is from as Phone Zoom for that built Zoom around things area the Zoom especially another availability. international from this the same we our to Meetings. time right, expect one and lot look spend key And our -- they strategy the investing expect they of infrastructure, modern then is in that

available natively that is native a Phone international is in cloud XX basis availability Zoom you're from any the markets. countries markets on So, find going providers. to of most of And and perspective an the that

own the had that globe. And Zoom means we to is do, so it deployment approach that's that integrated large because gives they And important to enterprises native, full a the maybe that before really for native And benefits hybrid allows larger a approach the like around the to do a a do that organizations, in capture I and extension. appointment is them integration, all including that's, that said, broad able availability, carrier as having important. to other things them do And international given the to without could phone and example, features, like your availability, U.S., in with market. international that of employees do an simple are bring that but this really now, more their do

of largest needs. availability for customers to have meet our that waited their Some

Samad Samana

of intended, has broadly, Great. very And outside there pun on been since traction international may but how think look think and more obviously, mentioned how think we it top international probably for but strong, portfolio opportunities at about as should maybe you we maybe about the if Zoom's U.S. out it's and we should be it International, the today? growth about generally, overall not Zoom we

Kelly Steckelberg

in years, So always that for one of because reasons. pandemic of several key strategies two heightened the has our last been it's international is happened growth really the what has

all, global of the of acceleration amazing. communication adoption of video First been has

But did I pre-pandemic in I the half about and Tom that. adoption. years U.S. video experiencing ago a all we're case think my behind Roadshow I a don't and the terms of was Investor was then, Europe a and anymore. observation so an think that of couple year obviously, that's

everybody then a video that really now globally, brand also think become with. during accelerated specifically I adoption time. comfortable has mode this awareness Zoom And is has communication

would so for on we the hire And years, done that what will is that market. put can open to marketing have need spends, markets, a going to we're is not that longer, been markets really rep market not us hire up in before because few we them we to any pre-pandemic into reps a market cold for lead that that's way see do as typically with demand see roadmap our we able a they're don't And quickly and we a where we as hire. that sales

excited. reps already would invested the Latin not would in America couple and years for are yet, like hired really of we've example, a have for probably next So, we be that there place and

in one fact, Latin was America performing our strongest In regions QX. of

continue XX% of little and revenue QX. see to International, tremendous was over in we So, opportunity our a it

For XX% be the should opportunity XX% our revenue, lots they of we long-term, expect of to there. so

Samad Samana

right? used beyond I think video sales conferencing or selling users the as and always a market guy think us core sold maybe about I about think side do strategy, more adoption. the because, going it's the And the it And thing there's you're into because was or Zoom, sold sales how we Great. you go to especially it call international. firm, time you morality the I've Zoom girl becoming one wasn't first platform, as thought and if larger use guy go it driving distribution, a that of it at to or on but Jefferies bundles I that, is was just to customers? that's about whether some it, and because to communications remember or U.S. both think And it about management it and were you larger told lot it

Kelly Steckelberg

freemium Zoom we continues part embrace day, mentioned, so important the free model we and a of to Yes, the market to virality very go Every our you as be is and hosts. and of our love strategy.

a it, during to became In initially. how pandemic. aware significantly host tend opportunity free how if fact, of think carbs, grow have to you starts meeting, a somebody time free which expose And every even the it you to you're they is about exactly else about the talking

continues And global so happen a to that on basis.

then, users paid we The people present bucket leads for sorry, limit. that upgrade try from to to we of due Now, minutes a what convert to present, free that course to to offers is to the of them is XX reason paid. most a common

And is people so motivate upgrade. also the platform a promoting to way usage great on to

how should putting been still "Hey, enterprise We'd there mostly events we are out say, free agreement we them that And is a domains and and a in also base account and and become then an but multi-product doing in for user is place?" in they of free things can license it's if CIO. they'll free the upmarket, CIO start he to certain what's which to reach see our We we concentration general, global That's out changed. look user, to or enterprise IT that to have they upgrade work hearing to and of VP basis encourage try hasn't then a like account to named day our will the Zoom then happening within of there Phone they'll their them the And worked talk teams, to into our who upmarket. to them, major about see also we In motivates market love domain, especially in often users reach free users. amazing. account our have users on that if and a name, terms reps one

to One doesn't of though during relationship he And relationships a first, a be been there fewer even continue for our be as builds top and very carry CIOs building he sales to have referral valuable through quota, has strong that reps, even network many continued with the though often, pandemic, events. us well.

an to then follow important the talk as to an meetings, phone is meeting once And sell I Zoom that. so And and as rooms, have with strategy that, we opportunity around whole of there's course, to then, that's strategy opportunity as after for and organization, a an well said, events us. for and Zoom that

Samad Samana

them we promise. them and to if into submit but you can maybe, gears, I'll me, ask you switch and of online, right the box, leave through And Great. in screen, hand few the have to I if investors questions, a for conversation, want and the questions, I they'll come on just the side your

hear that another gears, last the were of investors the call, in September. CCAP. I'd interesting with center mentioning partners to switching after And are to news what and strategy, maybe in the know earnings a a on, great. are Eric company's he was terms maybe that you doing when maybe say And of companies mentioned, piece contact Eric some that what was from that focused trying love are just in company So, thoughts leading terms Zoomtopia lot partner of I of

Kelly Steckelberg

Yes.

different said, what spending learning So, today that strategy more the players in InContact, partner our learned areas so as last year they is in contact time how including over center FiveX, or with you space, the is, this we of the all And I've Talkdesk. Genesys, strengths. all great have

them have really there of need of great them all the needs that enterprises, of customers. the potentially of solution of some But are internationally. distribution, fits that than meet like needs strong domestic they center more some Some that the are contact one some that really really of be, meet isn't Zoom's

of to to for of partnering that organic in is option segments our through development certain for hybrid How our from Eric a I'll And at tease And an an September. fortune approach, meaning all see terms directly or acquisition individuals since evolve all the contact XX. of I another of to opportunity to little a it to we for all you or as what customer to, you'll needs segment there's of was a to bit probably going something meet of in encourage hybrid come start and potentially more approach, And think of that. that's piece think a maybe we range And way to up provided and are base, so an customer. leave to them the I think starting customers providing about, alluding the a Zoomtopia us center? have

Samad Samana

liked leave, I to to know I about learn I in like it. And desired something be to like leave the to future.

I'm So, everybody sure well. into listening as will webcast be on this that

may guess, I perspective? the you? contact motion is a just I the typically, more about going referral so, you Are be partnerships just you And maybe -- it think partners of help as customers brought a you it together, Are generically understand how Where work are on jointly from with relationship? us into? to are center, is technology

Kelly Steckelberg

so of partners. have we the any Yes, with a relationship don't commercial

a be integrations on and might So, want that how is works understand those of submitting both how our assessment, other or with same we system referral, approaching their phone time, responding depending they it's and customer what these how work. more at to centers RFPs the it contact proposals or the to

something. go So, that's we their that then about in relationships talk as the of sales well have to organizations if tight case, course, and with

Samad Samana

Great.

questions. of So, investor gotten couple I've a

So, read them I'm going to out.

screen I but So, where they're at. in coming for looking another eyes have my I apologize up,

renewing we So, At how retention are customers? they annual long-term? should an what what the basis? about And is stickiness think rate of on

Kelly Steckelberg

customers They we more this the with customers monthly and customers And majority proxy XX organization. with aligned in and agreements. about than that customer by employees, that call with are think to is online, our about XX talk them base to our the the really than a way on on is segment with than the retention way typically or for well. customers employees touched on buy aren't buying the than annual So direct more as really agreements XX fewer fewer and sales employees versus XX buying of them multi-year customers with

have don't long-term contract. committed they So, a

we the much XX really if as in the imagine, So, retention you retention details, want ever fewer can the the of than to than around get the that only way or SX, is to was specific XX. greater in metrics churn into all than fewer you XX. back customers disclosed higher with for metric and And customers than time our with the is the it customers

back you would there, the XX. for a So, what it is want I or is churn fewer [indiscernible] for say and is fraction if to that of go -- the that the way what customers than all

first Now, weren't to that the the coming year, sure going customers about these customers see were planning, pandemic. renewal we're the early were turn was And into this on would going for year how or those as thinking we to out behave. renewables we how it bought in

that. was we We a So, we took It greater had very pleased with were with conservative renewals in than to XX. approach the and customers actually the stronger the retention forecast. than

the that was of gets is basis. for was XX% overachiever our business reminder increase buying is part XX, individuals, of on great. guidance most like the XX%, but the that And then grown definitely that And given more of of that couple what full-year. revenue, a guidance small also one, customers businesses, it's in our been our and key in monthly a that is quarters us said, it than them fewer revenue. it to And of the segment it's are this XX% with I of it's last Pre-pandemic for importance. volatile increase our allowed of So,

So, I most about. business remain that's the cautious that of the the area

then you you'd where, you highest within And an the businesses back is months. of then or this a customers, pull see you tail this cohorts, three very and base, the from is cohort to to subscribes way and individual long what a enter a retention. on other for two look cohort, be these when and customer rate then at of curves the probably Now, that churn retention look these similar it's subscription typically

and through what is that's through we're so tail and And is think the I kind these few moving rate into going them. settle periods more long of these churn to really moving pandemic segment of think during business in then take focused will to a renewal our of high cohorts, going the this a nice of described stabilize to for really that these a time, this be as a but quarters cohorts get capacity And And for on to than I our renew to a that there. stabilized period. XX expect adding then to consistent invest continuing sales on with basis. we customers greater grow we're And over upmarket business we're we're

for So, percentage to of while will customers expect consistent, than of be a amount these dollar time fewer as the decrease. with revenue over XX we probably it

Samad Samana

very And going another I'm question. helpful. read to investor Great,

Google companies. conferencing these Meet two environment. innovate in have that perhaps in And concern there offerings. the to competitors their moment more years, teams large does on the is that's are that So, last continue Microsoft and What the of Zoom couple but

competitive So, maybe maybe environment differentiate? do that you and standpoint, how how just, to a think about from continue Zoom does

Kelly Steckelberg

I as the everyone. the huge in so way a Fortune the for those there's we year then all that yes, the be experience of seen or Zoom and use, differentiated up last user and the the a all product work again markets beginning opportunity been from are kindergartener the of all, to is And XX to very ease innovation makes continues focus reason largest company. been reliability, from this certainly two on the across things has So, the think and is our of what combination have first

to is with We is still sure. in today users with but the competitor that for want to for see leverage use. For that they preferred really also with the about compete it we do product most the we the We teams long-term, believe and Zoom. Microsoft conjunction want to think Zoom want that Microsoft that aspects use partner most of that customers certain the suite,

So, meetings use often phone. they Zoom for chat, example, but for to they teams use want want and for to

integration you an from have like do allows that with launch we one interface. a So, Microsoft the to teams meeting

a Microsoft enabled Zoom You room. can also a launch within meeting conference

room, lot of have our mean, understand we to a you to as listen but what able about conference experience room, to the we way or the room Smart a think when have you and even they're time of conference in to relationship, about we office, I that spend walk a customers into on Microsoft, this in join So, a not, that are of we back choice for talking create like so everybody's continuing is innovate. respect are device. the Gallery, things Companion which the them seeing needs some strong high screen, preferred stay the from then to mode the innovation by to experiencing, deal some when face especially the you're continue meeting going your

is audio echo video, that making as seamless really the So, as room we video on these your embedded. into think going chatter things you an cause or in back like can to doesn't mode office your a and in send moving on participate be about in polling, but communication to do send start it the video

using just Zoom I that but doing much. your through as you that the still just as what And to you're you're and exactly license you even though in-person said, video back in we're that's is think about enabled. office, it move in experience, a and As easy way all seamless

Samad Samana

I'm Maybe card one is for any can about ambition monthly the can card, credit of out world, you both do converting there annual that for there question, investor to of company billings, millions talk of credit users customers to you more push the great. in sure time? Hundreds all over

Kelly Steckelberg

customers, only also of growth since because spent offers and to making them their all focus more types currencies, early people significant everything this annual online can give started providing an to that to to time last want amazing be so the continue And a that year to marketing website that of our retentive, to as in never both, of a but globally, has doing amazing. but for in that you job ours add see offer have buying for only to leave lot in our been we payment discounts to easy it monthly invest not to customers well, them customers also and making different upgrade for is best convert experience examples really to very much additional have offers buy make product the that paying products we been include great. to example, they adding online sure expand we itself, Yes, not as product base, a of to has convert customer multi the are absolutely our make way in it team there great is, this online saw get opportunity, segment about are to to

that we're investing so in today. And a lot

Samad Samana

Great, last maybe we'll of all I been mostly talked But really think this, incredible the I know how Zoom about and through one technology. question. of even we've with things end with about hyper the profitable is growth growth. one it's

we years? So, margins as been think the just the about and especially last for should profitability, several it's how company's how strong

Kelly Steckelberg

Yes, a do appropriately, focusing on being the company. on as focus really investing so we always obviously thank but you, ROI

honestly we other was fact of the the elevated at an margins quarters the margins, terms last from keep the a Now growth that to couldn't perspective, you've over up the and of revenue are pace with last investment that year couple due seen hiring spending. in

in So we margins QX. XX% had over

to under be today was investing that XX% want plus also the currently For today. really investing we're in R&D, long-term, in in of currently long-term for the X% of marketing, you more X.X%. R&D we're margins our and QX sales range should then be the to We XX% and in range expect under to as the

our on as so more sales adding really And investment. well as marketing increasing focused capacity, we're long-term, the

from But focusing need feel building in both we awareness, there. we Events future. away Product like now Zoom strategy of previous and targeted the to don't brand Moving a in spend really Marketing more Apps on probably Zoom around

Samad Samana

my and I they say let's tell strong on very and the know, can you nephew brand's even get Zoom. niece

it appreciate and but it a Zoom think at So, I time continues. of half We We're verb, it's I end great hope success really Kelly, the become top just it's been there. the hour. your today. And we we'll think

Kelly Steckelberg

all you. much Thank so you Thank your support. for

Zoom Video Communications (ZM) 17 Jun 212021 Q4 Earnings call transcript