Zoom celebrated AI’s impact across its portfolio in its latest earnings call at “no additional cost” while calling out “other vendors who have to charge the customer a lot”.
In its call for Q2 FY24, the company’s CEO, Eric Yuan, celebrated that AI Companion’s feature set has been integrated across its series of collaboration services, notably citing its new Workplace solution and Zoom Contact Center. As Yuan highlighted Zoom’s “large base of AI users”, he teased that the company is transitioning into the “2.0 phase of AI-enabled work”.
A cornerstone of Zoom’s product value around AI Companion and its sale to the market is that it incurs “no additional cost” for customers with paid Zoom licenses. This will not change during this 2.0 phase, with Yuan keen to stress the distinction with competitors who do charge customers for AI features.
“I want to share with you that our customers really like Zoom AI Companion,” Yuan said in response to a Q&A question about AI Companion’s most common usage.
First of all, it works so well. Second, it is at no additional cost, not like some other vendors who have to charge the customer a lot.”
For example, Microsoft charges customers $30 a head per month for its enterprise-targeting Copilot 365.
In the Q&A, Yuan was also asked about NICE’s new $5-a-month UCaaS offering and its relationship with its contact centre business in the context of Zoom’s own “pipeline” for its UC and contact centre.
“It’s hard to comment on our competitors’ move, right, into UC, and the timing will tell,” Yuan replied.
In my view, that’s absolutely a mistake because how could they compete against the others like Zoom and others, right? We had so many years of experience with a great, scalable architecture. This is hard to believe they are going to win UC space. So, I could be wrong, but I have a high confidence they are not going to win UC space.”
These comments echo 8×8 CEO Samuel Wilson earlier this month, who swiped at NICE and RingCentral for the former’s $5-a-month UCaaS offering, describing it as a “marketing splash”. Wilson also referred to NICE’s go-to-market partner, RingCentral, as a “certain company in Belmont, California, that starts with an ‘R’ and ends with ‘Central'(…) who suddenly decided they want to go in a different direction.”
In eye-catching figures and business wins, Zoom announced that AI Companion has now been activated by 1.2 million customers and won its largest-ever Contact Centre deal with a company that chose Zoom’s Elite CX package coupled with Zoom Phone.
Meanwhile, Workvivo has “roughly” doubled its customers year over year, reaching 69 customers with over $100,000 in ARR. Zoom highlighted major wins for Workvivo this quarter, including a leading Southeast Asian bank and a famed European automotive brand.
Zoom also confirmed that CFO Kelly Steckelberg will depart after Q3. Steckelberg has held the role for seven years.
Zoom’s Financial Health
Zoom reported revenues of $1,162.5 million for Q2, a 2.1 percent year-over-year increase. Enterprise revenue grew by 3.5 percent, while the company’s online revenue remained flat.
GAAP income from operations increased to $202.4 million, with a 17.4 percent operating margin. Non-GAAP income from operations slightly decreased to $455.5 million, reflecting a 39.2 percent margin. GAAP net income rose to $219.0 million, or $0.70 per share, while non-GAAP net income reached $436.4 million, or $1.39 per share.
The company’s cash flow strengthened significantly, with free cash flow up 26.2 percent year over year, totalling $365.1 million.
The results this quarter illustrate Zoom’s steady growth in enterprise revenue and overall profitability despite a flat online segment. Strong cash flow and improved margins highlight its efficient cost management and financial health under Yuan, positioning the business for further stability and potential growth.
Zoom’s August So Far
Zoom began the month by announcing the availability of Zoom Docs, its new AI-powered collaborative docs solution.
Powered by the business’s Gen AI assistant, Zoom AI Companion, Zoom Docs will essentially allow improved collaboration capabilities across Zoom Workplace by accessing information from Zoom meetings and converting it into the most relevant and beneficial format.
Last week, Zoom introduced new AI companion capabilities and customisable landing pages for Zoom Events and Zoom Sessions.
In its latest update, Zoom has enhanced meeting summaries and incorporated generative AI into Zoom Clips as part of its companion features. The release also includes updates to Zoom Whiteboard and introduces new integrations between Workspace Reservation and both Slack and Teams.
Meanwhile, last week, Zoom announced that its Webinars can now host up to one million attendees.
Zoom has expanded its webinar offerings with a range of single-event packages designed for larger audiences. These new options allow customers to host webinars with capacities ranging from 10,000 to up to one million attendees. Each package also includes support from Zoom’s Event Services team, ensuring hosts can deliver a polished and engaging experience for their audience.
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