In This Article:
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Total Revenue: $1.184 billion, a 3% year-over-year increase.
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Enterprise Revenue: Grew 6% year over year, comprising 60% of total revenue.
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Average Monthly Churn: 2.8%, a 20-basis-point improvement year over year.
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Non-GAAP Gross Margin: 78.8%, slightly lower due to strategic investments in AI.
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Non-GAAP Income from Operations: $468 million, a 5% year-over-year increase.
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Non-GAAP Operating Margin: 39.5%, an improvement of 81 basis points from last year.
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Non-GAAP Diluted Net Income per Share: $1.41, $0.11 above guidance.
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Deferred Revenue: $1.35 billion, a 7% year-over-year increase.
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Operating Cash Flow: $425 million, a 21% year-over-year increase.
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Free Cash Flow: $416 million, a 25% year-over-year increase.
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Cash and Marketable Securities: Approximately $7.8 billion.
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Share Buyback: 4.3 million shares purchased for $355 million in Q4.
Release Date: February 24, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Zoom Communications Inc (NASDAQ:ZM) reported a 3% year-over-year revenue growth in Q4, surpassing their top-line guidance.
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The company saw a significant increase in the adoption of its AI capabilities, with Zoom AI Companion's monthly active users growing by 68% quarter over quarter.
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Zoom's enterprise revenue grew by 6% year over year, now constituting 60% of total revenue, indicating strong enterprise traction.
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The Contact Center achieved its largest ARR deal in history with a Fortune 100 US tech company, showcasing its ability to win large enterprise customers.
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Zoom's strategic partnerships, such as with Mitel and Amazon, are expanding its market reach and enhancing its platform's appeal.
Negative Points
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Despite revenue growth, the overall growth rate remains modest at 3%, with guidance for FY26 indicating only a slight increase.
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The company faces ongoing macroeconomic challenges and uncertainties, which could impact future growth.
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Zoom's online business continues to experience churn, although it has improved to a record low of 2.8% in Q4.
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The transition to AI-first initiatives involves significant investment, which may impact margins in the short term.
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There is a potential risk of increased competition in the AI space, as many vendors are pitching their AI capabilities to customers.
Q & A Highlights
Q: Eric, as you look ahead, do you think AI capabilities could become a tailwind for your business and drive revenue growth? A: Eric Yuan, CEO: AI investment is a priority for us. AI Companion is part of our service at no additional cost, making it very sticky for low-end customers. For high-end customers, we plan to monetize customized AI Companion starting in April. Our business services, like Contact Center, are already benefiting from AI features, which is a great way for us to monetize AI.